The pirates strike back
The one marketing front on which Sega was still nervously chewing its nails was Dreamcast software. Why? Software piracy. So far, Sega had been incredibly lucky that no one had been able to pirate Dreamcast games. The custom GD-ROM format Sega employed for Dreamcast software thwarted many an effort by the best Asian software houses to duplicate it in a cost-effective manner. Despite rumors of pirated Dreamcast games showing up in the usual places (Hong Kong, Taiwan, Malaysa, etc.), very few people had actually seen, let alone buy, a Dreamcast bootleg. The GD-ROM format required specially modified CD-R/RW drives to duplicate and simply would not play in a standard CD-ROM without extensive modification. Thus, Sega had enjoyed 100% of what profits were available from Dreamcast software sales, low as they were, for the simple reason that Dreamcast piracy was practically non-existent. In fact, Sega was so confident that the status quo would continue that some of its future software sales predictions didn't take potential Dreamcast bootlegging into account. Sega had managed to prevent bootlegs of Dreamcast games from being released for almost two years now. It was a timespan quite unprecedented in recent videogame history, yet the sands of Sega's hourglass were about to run out.
Ironically enough, it was none other than Sega of Japan who had made Dreamcast piracy not only possible, but an inevitable reality.
Back up if you will to the spring and summer of 1998. Sega of Japan's R&D divisions are finishing up their work on the Dreamcast. For their convenience and in order to speed up software development on the console, Sega's programmers hide a series of special routines inside the code of the master console BIOS that will eventually be duplicated and burned into every single Dreamcast console produced for all markets. Mind you, this hidden code is buried fairly deep inside the Dreamcast BIOS. You would have to know where it is and for what you were looking in order to find it.
"What was this hidden code?" you eagerly ask. It was the ability for a stock Dreamcast console to boot and run software using standard CD-ROMs instead of Sega's proprietary GD-ROMs.
Remember, these hacks were something nobody was ever supposed to learn about. According to my inside sources (which shall forever remain anonymous), Sega of Japan intended to add protection features to every Dreamcast game released that would prevent it from being booted from CD-ROM should those hidden BIOS routines ever be discovered. The only problem was that they did such a good job of hiding Dreamcast's secret CD-ROM game-playing capability that they soon stopped protecting the software against it. Once official Dreamcast devkits went out to the third parties and everybody accepted doing business Sega's way with GD-ROM, the whole affair was apparently forgotten. Thus, Sega set itself up for its own downfall - one that would take place a mere two years later. You see, it was only a matter of time before software pirates would stumble across a means of unlocking Sega's proprietary GD-ROM disc format for Dreamcast and devise a means of duplicating the software. The key would be getting their bootlegs to work on a real Dreamcast console without any major hardware hacks involved. This is where Sega of Japan's hidden BIOS routines come into play. If a hacker somehow found those BIOS routines and got that code to work with a game that had been dumped from GD-ROM to standard CD-ROM, well then ... Sega's software sales were going to take a royal pounding before all was said and done.
The first such public indication that the hackers were getting close to cracking open the Dreamcast's secrets was on 19 June 2000, when RealWorld Technology released the Dreamcast Debug Developer. It was a wonderful piece of reverse-engineering that gave this team of German hackers what they needed to code their own demos on the console. It was a pure hardware hack interfaced to a Wintel-based PC or high-end Amiga computer running appropriate host software, but it was still quite an accomplishment and worked as advertised. All those who saw the Dreamcast Debug Developer in action were suitably impressed, and many of them rightly guessed then and there that it would not be long before other such efforts would surface.
Actually, at the beginning of 2000, several pirate groups had obtained full-blown legit copies of both Dreamcast SDKs along with the appropriate hardware through various and sundry means, enabling them to read GD-ROMs directly and figure out how to decode them onto standard CD-ROMs. The key breakthrough apparently came in the spring of 2000, not long before the Dreamcast Debug Developer was made, when one of these groups chanced upon a security hole in the Dreamcast's bootstrap sequence that had been deliberately put there by Sega of Japan. When activated by what has been described by some as "a convoluted control sequence," it enabled a stock Dreamcast to access those hidden BIOS routines we talked about earlier. Instead of reading a Dreamcast GD-ROM the way it was supposed to do, from the outside in, it resequenced the bootstrap routine to read the disc from the inside out. This meant accessing the low-density, standard format area of a GD-ROM (the inner hub) instead of the high density area with its proprietarly format (the outer, larger hub). In other words, this group had just uncovered how to make a Dreamcast boot off of a standard CD-ROM. From that point onward, it was only a matter of time until this or another such group devised a means to both enable standard CD-ROM support for Dreamcasts games and to come up with a way to convienently download game program code stored on GD-ROM to CD-ROM.
On 23 June 2000, another group of German videogame hackers stunned the world. Team Utopia became the first "release group" to successfully decode and burn a GD-ROM based Dreamcast title onto a standard CD-ROM, thus enabling it to be copied at will. Use of their so-called "DC backup" required a special boot disc for the console, which was distributed along with the illegal bootleg (and quickly made available for sale by a shadowy Chinese firm named Lik-Sang). The subject of the first Dreamcast bootleg was the highly acclaimed fighting game Dead or Alive 2, but other such "Utopia backups" of games like Soul Calibur and Resident Evil - CODE: Veronica followed within days.
Approximately one month later on 21 July 2000, in a joint press statement with the IDSA's Douglas Lowenstein, Sega of America's Charles Bellfield publically commented on Sega's action against the sudden rise of the Dreamcast piracy scene. More than 60 Internet sites and over 125 online auctions had been shut down due to the presence of illegal DC "Utopia bootlegs." Bellfield also announced that Sega had formed alliances with many leading service providers to ensure that its intellectual property would continue to be protected under the newly enacted Digital Millenium Copyright Act of 1998 (DMCA). Sega's actions marked the first time that a videogame vendor had invoked the DMCA to go after Internet piracy It was a bold move by Sega and it wasted no time making good its word with swift prosecution of all offenders it could find, yet the bootlegs continued. The day after Bellfield made his anti-piracy statements to the press, the Dreamcast release group Kalisto unleashed the bootleg version of World Series Baseball 2K1 on the Internet. Kalisto had timed it to hit the Internet the same day that the actual game appeared on retail store shelves. By the following week, Sega of Japan had joined the legal battle, joining the efforts of Japanese law enforcement in cracking down on the hundreds of illegal "ROMz sitez" on the Internet promoting the distribution of Dreamcast bootlegs. It was of no avail. Dreamcast piracy had become so rampant within so short a time that by the end of July the company was begging anyone who could (or would) give them information regarding the production and distribution of Dreamcast bootlegs to contact them immediately.
The conflict between Sega and the Dreamcast pirates continued straight through the end of summer and beoynd. On 1 August 2000, the noted online audiovisual store Amazon.com earned a ringing endorsement from Sega for thwarting Dreamcast piracy in all forms via its website. Not to be outdone, the hackers quickly learned how to get around the copy protection that Sega was now requiring its third-parties to include with their games, and the "ripped" Kalisto release of Toy Story 2 was the first such product from that effort. Two weeks later, Kalisto again made people's head spin when it announced it had managed to come up with a way to combine the Utopia bootloader code and Dreamcast bootlegs onto a single CD-ROM. It left a little less space for the pirated game on the disc, but self-booting bootlegs would soon become the standard format for distribution of pirated Dreamcast games. Ironically enough, Kalisto chose Sega's own Virtua Fighter 3tb and Dynamite Cop to tout this accomplishment. Sega and its allies was understandably unimpressed. On 25 August 2000, the eBay online auction service shut down all auctions involving so-called "Dreamcast backups" and promised swift legal action against any customer who used its site to deal in so-called "infringing goods." Kalisto abruptly left the scene one week later, but their shoes were quickly filled by the release group Echelon and the steady stream of Dreamcast bootlegs on the Internet continued unabated. Echelon made the self-booting tools widely available on the Internet in September, and this coupled with pirated versions of both Dreamcast SDKs that got out meant that anybody who wanted make and distribute a Dreamcast bootleg could do so at will.
And as for Team Utopia, the German hackers that started it all? Their true identities were eventually discerned, due in part to their foolishly including a picture of themselves on their Utopia Boot Loader disc. They were eventually arrested by German police on 5 July 2000 and charged with multiple counts of copyright violation. No other news has surfaced concerning their fate as of this date.
For Sega, it was a losing battle and the end results were quite predictable. Every month or two, Sega would succeed in shutting down almost all of the major Dreamcast bootlegging sites on the Internet. Within two to three weeks, even more new ones would appear, many with the latest releases. Sega could never stop the millions of transfers taking place via UseNet, IRC, FTP, FXP, and so on all across the Internet. For every site or auction that Sega and the IDSA managed to shut down, at least three and perhaps as many as four more sprang up in their wake. It still remained dreadfully easy to get Utopia backups off the Internet, provided you knew where to look and were willing to put up with the hassles and posturing of the many strange denizens inhabiting the darker corners of the Internet underground. For all their trouble, Sega's efforts at shutting down Dreamcast piracy on the Internet worked about as well as shoveling sand with a pitchfork. C. H. Phoon, president of Hong Kong's Golden Harvest Studios, described the problem with another metaphor. "[Combating piracy] is like pushing water uphill. We are talking about piracy in 10 or 12 different countries around the region, all with their own legal systems and interpretations of copyright laws. You can solve a problem in one market and it just moves to another." For their part, the pirates claimed that their actions were justified because they helped increase Sega's dismal console sales, with some unofficial sources claiming as much as a 20% boost. The number sounds ridiculously inflated (a lower figure of 11% sounds more reasonable, based on my own independent research at the time) yet in the end it really doesn't matter. Why? Because the software pirates were hitting Sega hard below the belt in the one place where profit mattered - Dreamcast software sales.
If you were an Internet-savvy Dreamcast owner in 2000 and you knew how to get the Dreamcast bootlegs and from where, then one question was obvious. "Why pay for the game when I can download it for free? I know it's illegal, but I've got better ways to spend US$50 than on a videogame that I might only play for a few weeks." Many of these gamers around the world chose to set their morals aside and do just that. Oh, a few would hear the calls of their conscience and actually go out and buy some games, but not all of them. Some, especially the out-of-market releases, could not be obtained in any other way save through pricey export shops. No gamer in their right mind was about to pay close to US$100 for a game in a language he or she couldn't read when it could be downloaded for free off the Internet back channels, and again many chose to do just that. It has been estimated by the Dreamcast bootleggers themselves that they averaged between one and three million hits a day on their pirate file servers whenever popular Dreamcast titles, such as Shenmue, Grandia 2, Resident Evil 2 or the Sega Sports games came up on the Dreamcast bootleg release schedule. The millions of people illegally downloading Dreamcast games from the Internet for the most part didn't care that Sega was losing millions of dollars in lost software revenue as a result of their actions. In the words of one proud FXPer, "F--K SEGA I'LL LEECH THEM DRY."
Dreamcast software piracy was more than just an annoyance to Sega. It was one of the major factors, if not the major factor, that kept the console from ever turning a profit.
