Sega unveils plans for free Dreamcast, online gaming

Sega of America Incorporated has taken a page from the online services playbook, offering a $200 rebate on hardware when a customer signs up for Internet access, in this case two years worth. But what makes this offering particularly intriguing is that the hardware in question is Sega's Dreamcast video game console, which costs only $200. So for the price of two years of Internet access, you're essentially getting a free Dreamcast. And with this decisive move, the video game just got very, very interesting.

This extreme strategy change was clearly a response to recent moves by Sony and Microsoft, which have released or announced new game systems that leapfrog the Dreamcast's capabilities. But the Dreamcast includes a modem out of the box, with a high-speed broadband option in the works, something its competitors won't have until 2001 at the earliest. So Sony is going for it with an online strategy, a first for a video game console. Sega has sold two million Dreamcasts in America since its release last fall; the company expects to have sold 6 million units by 2001. But this pales somewhat when compared to Sony's PlayStation 2, which sold almost one million units over its first weekend of release in Japan. The PlayStation 2 is widely expected to be a huge success in the United States, though the recent announcement of Microsoft's X-Box has somewhat overshadowed that system as well.

"Our audience wants to go the next level," said Sega spokesperson Charles Bellfield. "They want rivalry and competition and they can only get that by competing with each other.