"I remember it like it was yesterday," said Bellfield. "We presented a strategy in September 2000 that said we were not viable as a hardware player in the States beyond Christmas 2000 and that we needed to get out of the hardware business. That meeting was the first time Japan had ever heard that we could not be successful against the power of Microsoft, who had not yet announced their intention to come into the space, but we knew they were."
"They were hearing from the one region, the US, that had been successful with the Dreamcast launch, that the future of the Dreamcast was not going to be rosy. North America was the one lifeline that they had left -- that maybe success in the US would allow them to bridge doing another hardware platform, or to extend the life of this platform, or allow it to be reinvented in Japan and Europe."
"When we told them that staying in the hardware business was not our advice, the next thing that happened was all of the heads of all the studios got up and walked out without saying a word. That, in the Japanese culture, is pretty rude. But they were shocked."
Moore's document stated that Sega was arguably one of the greatest software companies ever, and it should focus on its major strength: software. The industry was going through a significant transition which created a quandary: Japanese content was becoming less and less relevant to the West, and Western developers were growing in stature.
Moore argued that the new generation of hardware enabled gamers to play more realistic-looking games. "Video game companies like ourselves needed to be in line with gamers' tastes, and quite frankly, that meant creating more mature content that was a reflection of what they were watching in the movies and TV."
In a meeting that shocked even those who suspected Sega was in trouble, on January 31, 2001, Sega announced it would end manufacturing Dreamcast by March 2001, and transition into a third-party software publisher. Approximately 50-plus titles would still be published, capped by Visual Concepts' March release of NHL 2K2.