Lack of a DVD drive killed the Dreamcast. People saw much more value in a PS2.
I had a Dreamcast at launch and still love the games that came out on it. If it had a new revision with a DVD player in it announced at the same PS2 price point to compete with the PS2 and XBOX then Sega might still be in the console business.
It really can't be overstated how important the DVD drive was for the PS2's success. When the first Fast and the Furious movie came out it almost seemed realistic that a criminal gang would risk their lives while attempting to steal DVD players from a truck. That movie's premiere was 8 months after the PS2 was released in the US. A DVD player AND a next gen video game console for $299 was an incredible deal in 2000.
I had a Dreamcast at launch and still love the games that came out on it. If it had a new revision with a DVD player in it announced at the same PS2 price point to compete with the PS2 and XBOX then Sega might still be in the console business.