Despite weeks of denial, Sega has finally admitted that it will cease production of its Dreamcast console by the end of April.
The Japanese video gaming giant, which created Sonic the Hedgehog, said it is restructuring the company to focus solely on game content.
Sega said it plans to become a platform-neutral third-party game publisher and license the Dreamcast chipset for a range of devices, including Pace, the set-top box from Micro Technologies.
Kazutoshi Miyake, chief executive of Sega Europe, said: "Our new strategy will allow us to put our software content across a variety of platforms, keeping Sega at the forefront of gaming."
However, when questioned about possible links with software giant Microsoft and its X-box console, a Sega representative declined to comment.
Sega has also claimed that it plans to embrace technologies such as Java to take advantage of different publishing channels and produce Sega games for Palm handhelds and Motorola mobile phones.
"Dreamcast owners need not worry," a Sega representative said. "Sega will continue to make games for the console."
According to a statement from the company, Sega intends to ship more than 100 games to run on Dreamcast, 30 to run on other consoles and an unspecified number to run on internet platforms by March 2002.
Jonathan Fargher, public relations manager at rival Japanese games manufacturer Sony, said: "Sega makes the best arcade games by far," adding that the opportunity to develop Sega games for Sony's own PlayStation 2 console is "very exciting".
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