In 1997, Irimajiri enlisted the services of IBM's Tatsuo Yamamoto to lead an 11-man team to work on a secret hardware project in the United States, which was referred to as "Blackbelt".
The price reduction and release of Namco's Soul Calibur helped Sega to gain 17 percent on its shares."Let's take the conservative estimate of 250,000 Dreamcast units at presage—that's a quarter of a million units at $200.
We'll have a ratio of 1.5 or two games for every Dreamcast unit sold. We think we'll be .5 to one on VMUs and peripheral items such as extra controllers and what have you. What has ever sold $60 to $80 million in the first 24 hours? Peter Moore, a fan of the attitude previously associated with Sega's brand, worked with Foote, Cone & Belding and Access Communications to develop the "It's Thinking" campaign of 15-second television commercials, which emphasized the Dreamcast's hardware power.
On November 27, 1998, the Dreamcast launched in Japan at a price of JP¥29,000, and the entire stock sold out by the end of the day.
However, of the four games available at launch, only one—a port of Virtua Fighter 3, the most successful arcade game Sega ever released in Japan—sold well.
After the launch of the Nintendo 64, sales of the Saturn and Sega's 32-bit software were sharply reduced.
As of August 1997, Sony controlled 47 percent of the console market, Nintendo controlled 40 percent, and Sega controlled only 12 percent.
Because the Saturn had tarnished Sega's reputation, the company planned to remove its name from the console entirely and establish a new gaming brand similar to Sony's Play Station, but Irimajiri's management team ultimately decided to retain Sega's logo on the Dreamcast's exterior.
Sega spent US–80 million on hardware development, 0–200 million on software development, and 0 million on worldwide promotion—a sum which Irimajiri, a former Honda executive, humorously compared to the investments required to design new automobiles.
The Dreamcast was Sega's final home console, marking the end of the company's 18 years in the console market.