Though the Dreamcast launch had been successful, Sony still held 60 percent of the overall video game market share in North America with the PlayStation at the end of 1999.
On March 2, 1999, in what one report called a "highly publicized, vaporware-like announcement" Sony revealed the first details of its "next generation PlayStation", which Ken Kutaragi claimed would allow video games to convey unprecedented emotions.
The center of Sony's marketing plan and the upcoming PlayStation 2 itself was a new CPU (clocked at 294 MHz) jointly developed by Sony and Toshiba—the "Emotion Engine"—which Kutaragi announced would feature a graphics processor with 1,000 times more bandwidth than contemporary PC graphics processors and a floating-point calculation performance of 6.2 gigaflops, rivaling most supercomputers.
Sony, which invested $1.2 billion in two large-scale integration semiconductor fabrication plants to manufacture the PlayStation 2's "Emotion Engine" and "Graphics Synthesizer", designed the machine to push more raw polygons than any video game console in history.
Sony claimed the PlayStation 2 could render 75 million raw polygons per second with absolutely no effects, and 38 million without accounting for features such as textures, artificial intelligence, or physics.
With such effects, Sony estimated the PlayStation 2 could render 7.5 million to 16 million polygons per second, whereas independent estimates ranged from 3 million to 20 million, compared to Sega's estimates of more than 3 million to 6 million for the Dreamcast.
The system would also utilize the DVD-ROM format, which could hold substantially more data than the Dreamcast's GD-ROM format.
Because it could connect to the Internet while playing movies, music, and video games, Sony hyped PlayStation 2 as the future of home entertainment.
Rumors spread that the PlayStation 2 was a supercomputer capable of guiding missiles and displaying Toy Story-quality graphics, while Kutaragi boasted its online capabilities would give consumers the ability to "jack into ‘The Matrix’!"
In addition, Sony emphasized the PlayStation 2 would be backwards compatible with hundreds of popular PlayStation games.
Sony's specifications appeared to render the Dreamcast obsolete months before its U.S. launch, although reports later emerged that the PlayStation 2 was not as powerful as expected and distinctly difficult to program games for.
The same year, Nintendo announced its next generation console would meet or exceed anything on the market, and Microsoft began development of its own console.

Sega's initial momentum proved fleeting as U.S. Dreamcast sales—which exceeded 1.5 million by the end of 1999—began to decline as early as January 2000.
Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000, which followed a similar loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss.
Although Sega's overall sales for the term increased 27.4%, and Dreamcast sales in North America and Europe greatly exceeded the company's expectations, this increase in sales coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan.
At the same time, increasingly poor market conditions reduced the profitability of Sega's Japanese arcade business, prompting the company to close 246 locations.
Knowing that "they have to fish where the fish are biting", Sega of America president Peter Moore (who assumed his position after Stolar had been fired) and Sega of Japan's developers focused on the U.S. market to prepare for the upcoming launch of the PS2.
To that end, Sega of America launched its own Internet service provider, Sega.com, led by CEO Brad Huang.
On September 7, 2000, Sega.com launched SegaNet, the Dreamcast's Internet gaming service, at a subscription price of $21.95 per month.
Although Sega had previously released only one Dreamcast game in the U.S. that featured online multiplayer (ChuChu Rocket!,
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Though the Dreamcast launch had been successful, Sony still held 60 percent of the overall video game market share in North America with the PlayStation at the end of 1999. On March 2, 1999, in what one report called a "highly publicized, vaporware-like announcement" Sony revealed the first details of its "next generation PlayStation", which Ken Kutaragi claimed would allow video games to convey unprecedented emotions. The center of Sony's marketing plan and the upcoming PlayStation 2 itself was a new CPU (clocked at 294 MHz) jointly developed by Sony and Toshiba—the "Emotion Engine"—which Kutaragi announced would feature a graphics processor with 1,000 times more bandwidth than contemporary PC graphics processors and a floating-point calculation performance of 6.2 gigaflops, rivaling most supercomputers. Sony, which invested $1.2 billion in two large-scale integration semiconductor fabrication plants to manufacture the PlayStation 2's "Emotion Engine" and "Graphics Synthesizer", designed the machine to push more raw polygons than any video game console in history. Sony claimed the PlayStation 2 could render 75 million raw polygons per second with absolutely no effects, and 38 million without accounting for features such as textures, artificial intelligence, or physics. With such effects, Sony estimated the PlayStation 2 could render 7.5 million to 16 million polygons per second, whereas independent estimates ranged from 3 million to 20 million, compared to Sega's estimates of more than 3 million to 6 million for the Dreamcast. The system would also utilize the DVD-ROM format, which could hold substantially more data than the Dreamcast's GD-ROM format. Because it could connect to the Internet while playing movies, music, and video games, Sony hyped PlayStation 2 as the future of home entertainment. Rumors spread that the PlayStation 2 was a supercomputer capable of guiding missiles and displaying Toy Story-quality graphics, while Kutaragi boasted its online capabilities would give consumers the ability to "jack into ‘The Matrix’!" In addition, Sony emphasized the PlayStation 2 would be backwards compatible with hundreds of popular PlayStation games. Sony's specifications appeared to render the Dreamcast obsolete months before its U.S. launch, although reports later emerged that the PlayStation 2 was not as powerful as expected and distinctly difficult to program games for. The same year, Nintendo announced its next generation console would meet or exceed anything on the market, and Microsoft began development of its own console.
Sega's initial momentum proved fleeting as U.S. Dreamcast sales—which exceeded 1.5 million by the end of 1999—began to decline as early as January 2000. Poor Japanese sales contributed to Sega's ¥42.88 billion ($404 million) consolidated net loss in the fiscal year ending March 2000, which followed a similar loss of ¥42.881 billion the previous year and marked Sega's third consecutive annual loss. Although Sega's overall sales for the term increased 27.4%, and Dreamcast sales in North America and Europe greatly exceeded the company's expectations, this increase in sales coincided with a decrease in profitability due to the investments required to launch the Dreamcast in Western markets and poor software sales in Japan. At the same time, increasingly poor market conditions reduced the profitability of Sega's Japanese arcade business, prompting the company to close 246 locations. Knowing that "they have to fish where the fish are biting", Sega of America president Peter Moore (who assumed his position after Stolar had been fired) and Sega of Japan's developers focused on the U.S. market to prepare for the upcoming launch of the PS2. To that end, Sega of America launched its own Internet service provider, Sega.com, led by CEO Brad Huang. On September 7, 2000, Sega.com launched SegaNet, the Dreamcast's Internet gaming service, at a subscription price of $21.95 per month. Although Sega had previously released only one Dreamcast game in the U.S. that featured online multiplayer (ChuChu Rocket!, a puzzl
Dreamcast