I am going to say that the PlayStation 2, genuinely was a better system.
Before I get called a PS fanboy or some other crap like that, I have both systems. I had a Dreamcast right next to my PS2 back in 2001. I liked the Dreamcast, it was a good system, it's just that the PS2 was a great system, and I'll explain why.
The first thing that comes to mind is the PS2's DVD drive. Back in 2001, DVD players were no where near as ubiquitous as they are now. A 2-in-1 system was a big deal since now you didn't need to spend another couple hundred dollars for a separate device to play movies on. I remember I specifically bought a 3rd party remote control so my dad could use my PS2 as a DVD player. It was great for multimedia, but it also gave a benefit to game developers. They now had a bigger storage medium, and therefore bigger games. Bigger in more ways than one. Developers now had more options, multiple audio tracks if they wanted, multiple control schemes if they wanted, or more content.
Or cut scenes like Yuna's concert in Final Fantasy X-2.
Next is the hardware. I don't want to talk too much about the hardware and specs since that can be debated till the sun burns out. Though the PS2 was more powerful (not by too much) and it did have better looking games.
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To be as fair as I could I found two games that were held up for graphics on both systems that came out around the same time period in each of their respective console's life span. It just wouldn't be fair to compare a Dreamcast game to something on PS2 that was made after the Dreamcast was continued, like Zone of the Enders 2 or Ace Combat 05, when developers really started figuring out how to squeeze the most out of the PS2 (one could argue the Dreamcast wasn't around long enough for developers to really get out it's full potential). On the left we have Shenmue which came out in Japan in 1999, the year after the Dreamcast was launched in Japan. On the left is Metal Gear Solid 2 which came out the year after the PS2 had launched in Japan. Compared to Ryo, the Russian mercenary looks to have more detail and more crisp detail. Compare Ryo's belt buckle to the buckles on the mercenary's equipment harness. I'll admit I might be comparing apples to oranges a little bit given that one screenshot is outdoors while the other is indoor, but I tried to find the screenshots that bring out the games visuals the best.
But at the end of the day, graphics aren't everything, and I only wanted to briefly touch on this.
Then there's the control. Oh the controller. Fuck the Dreamcast controller, there I said it. By 2001 I've played the NES, SNES, Genesis, PS1 (OG controller, Dual Analogue and Dual Shock), Saturn, and the N64. I would easily consider the Dreamcast controller to be one of the worst. I'm not going to complain about the shape since that's something that's largely subjective, but I will call the Dreamcast controller obsolete.
Why is the controller a big deal? Well the controller is the way the player interacts with the game's world. The more versatile the controller, the more the player can interact with the world. Be it more things the player can do, or the more in-depth the player can interact with the world.
When the Sega Saturn came out in 1994 it came out with this controller. One D-pad and eight total buttons (6 face buttons, 2 shoulder buttons), that means at least 8 functions that the player can do in the game's world.
In 1997 the PlayStation came standard with the Dual Shock controller. Two analogue sticks and 10 buttons not counting Start and Select (4 face buttons, 4 shoulder buttons, and two more buttons integrated into the sticks). This controller worked very well for multiple games, especially action shooter games, and it's layout would become the standard for gaming controllers from then on out.
So what the hell was this...?!
I honestly find this design baffling. It has only six buttons, four face buttons and two triggers, a single d-pad and a single analogue stick. The single stick is a real head scratcher for me given that the dual stick design already proved itself in how well it works for First Person Shooters like Medal of Honor and Medal of Honor: Underground, for Third Person action games like Siphon Filter, and has been very intuitive even for flight simulators like Ace Combat 3. Love the controller all you want, but at the end of the day this controller design was a step back. The lay out would have been great when the Saturn came out, but when the Dreamcast hit the US it was already 1999.
This is a big deal, because this controller quite possibly limited how developers can make their games. Lets take Zone of the Enders. ZoE took full advantage of the PS2's dual analogue design to control your mech in three dimensions. The left stick moved you around while the right stick allowed you to look around in all directions, you're ability to look and move was very precise. Having two sticks made moving and looking in a three dimensional environment very intuitive.
Compared to the PS2, had the Dreamcast continued on past when it was discontinued, unless Sega introduced a new controller with dual analogues, Dreamcast games would have gotten the same criticism that the PSP gets in terms of 3D action games. Metal Gear Solid 3 is considered one of the best games in the PS2's library. Hardware issues aside, had the game been ported to Dreamcast, because of the lack of four buttons and a stick, the game would have to play like either MGS: Portable Ops or MGS: Peace Walker in order to be playable. MGS:PO was very awkward compared to the console games, and your actions in MGS:PW were limited to compensate for what the PSP was capable of control and gameplay wise.
Part of the reason the PS2 was able to bring out a lot of these great games was because the controller was able to make developer's ambitions a reality. I can conclude this because many games made use of every or very nearly every button. MGS3 in the form that it came in on the PS2 literally could not be done on the Dreamcast, not without a new controller design. MGS3 on Dreamcast would have been like MGS:PW. Other games like Devil May Cry or Onimusha would have worked well on the Dreamcast's controller, but others like Red Faction would have had to be gimped to compensate for the controller.
Then there is networking/internet capability. I certainly have mention that. There's certainly no argument that Sega had a one-up on Sony in that regard and the Dreamcast, while not the first, was certainly a pioneer in online console gaming. But it lost that edge it have over the PS2 with the introduction of the PS2's Network Adapter in 2001. Given a choice would you rather play Unreal Tournament on a Dreamcast, or on a PS2?
Of course this isn't to say the Dreamcast wasn't good, this certainly isn't to say that it's library wasn't good. The original Soul Caliber remains on of the best games in the franchise. While hard as balls, Ikaruga is certainly one of the most fun overhead shooters. Aero Wings 2 is definitely a fun game for the aviation enthusiast, like a more realistic version of Pilot Wings. I would definitely love to see the Dreamcast library ported over to the PlayStation Network and to Xbox Live. But did the Dreamcast fall prey to a giant unstoppable hype machine? No, it was simply a case of "may the best system win" and PS2 came out on top. Sure the PS2 had a lot of media hype at it's launch, but it talked the talk and walked the walk.
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