This is the part in these discussions that does genuinely piss me off, because people trying to blame Sony for Sega are just completely brainless and ignorant about Sega's own history in the console market, and the mistakes they made which led to their own demise as a platform holder. And I say this as a Sega fan. Off the top of my head:
-Packing in Sonic 1 with Genesis. Massively boosted Genesis sales, BUT Kalinski also cut the price of the Genesis while doing so. Sega probably lost a lot in revenue on this strategy even if it boosted their install base
-Focusing on FMV for Sega CD in the West instead of meaningful translations of games from the Japanese Mega CD library. Only companies like Working Design really focused on this, and they didn't have the resources to do it at the scale Sega could've. This hurt Sega's reputation with customers over the course of Sega CD's commercial run in the West
-Being reactionary and making the 32X whatsoever. If Sega of Japan weren't so secretive with the Saturn, Sega of America would have probably withheld on the 32X and gone with enhanced SVP carts instead. 32X strained their chip capacity line for Saturn (both systems used dual-SH2s) and diluted development (hardware, software, SDK) resources that could've gone towards Saturn instead. Complete waste of time and money, badly hurt Sega's reputation with gamers, devs and pubs
-Surprise May '95 Saturn launch in America. Complete disaster. Sony didn't force them to do this; Sega of Japan did, out of greed. Sega alienated many American retailers, some of whom refused to carry the system even when it was officially available (KB Toys). Almost zero marketing between May and September, both by Sega and magazines, giving PlayStation carte blanche on magazine coverage by default. Barely any games between May-September (6 launch games, TWO additional releases in the months up to September). Buggy Daytona and Virtua Fighter (btw they had VF Remix ready by the time of the surprise May release; they just wanted to double-dip with the bugged release and then VF Remix after around the official launch date). This surprise launch, of Sega's own doing, pretty much killed most of Saturn's potential in the West
-Horrid SDK environment for early Saturn development which turned off MANY developers, including Squaresoft (who considered going with Saturn at one point before calling it an engineering nightmare) and Namco. Saturn did not adopt a SDK with C language built in mind; Sony did. By the time AM2 made SGL 1.0 widely available, many 3P devs were already deep into first-generation PlayStation development and acclimated with that architecture. If Sega didn't split their focus with the 32X, maybe they would've had a more robust SDK for Saturn before the Japanese launch
-Publishing 155 GAMES in 1995!!! (across Genesis, Sega CD, 32X, Pico, Nomad, Game Gear, Arcade, and PC. EIGHT platforms!!!)
-Hiring Bernie Stolar; there's a reason Sony fired him
-Bernie Stolar's "5 Star Policy" for Saturn which cut out most 2D games (shmups, JRPGs, etc.) from ever getting English translations; this pissed off Working Designs' Victor Ireland and they dropped support for Saturn in late 1997 to focus on PlayStation instead (doesn't sound like a moneyhat to me
)
-Sega failing to acquire Core Design leading up to Saturn; they knew Core were working on Tomb Raider, and Core focused a LOT of their console games from 1993 - 1995 period on the Mega CD. If STI was falling apart, and you still needed a strong Western dev, why not pick up Core Design before Tomb Raider blew up (on PlayStation)? Core Design even wanted to make Tomb Raider exclusive to Saturn but Eidos, the publisher, eventually mandated a PS1 version
-Sega of Japan shutting down Saturn versions of MULTIPLE SoA games (Streets of Rage, Eternal Champions, Vectorman etc.)
-Sega of Japan prioritizing NiGHTS over a proper Saturn Sonic game
-Sega doing bare-bones home ports of their arcade games to Saturn (i.e very little or no extra content over the arcade versions)
-Sega intentionally limiting production of Saturn units in order to fudge fiscal reports and reduce operating costs on the hardware
-Bernie Stolar publicly saying Saturn was "not their future" at E3 '97. Led to mass exodus of 3P support for Saturn in the West, MANY games planned were cancelled
-Sega putting money towards Gameworks that could have probably been better put towards Saturn software and marketing (the Gameworks investments only seemed like a misfire in retrospect, plus Sega did co-invest into it with Dreamworks so I assume they maybe split the costs on venue developments)
-Sega having a public spat with 3Dfx over Dreamcast, dropping them. This upset EA who had shares in 3Dfx. EA wanted exclusivity to sports games on Dreamcast; Sega said no. EA decided not to support Dreamcast with software. This badly hurt Dreamcast adoption in the West (no Madden, no FIFA etc.)
-Sega of Japan rushing the Japanese launch of Dreamcast amid NEC PowerVR 2 chip shortages, and cutting into Saturn's market presence there when the system's audience weren't really ready to jump to a new system that soon. That plus Dreamcast not having a software presence as strong or Sony's or Nintendo's, lacking DVD playback, etc. hurt adoption in Japan. PS2 nearing release just finished the job Sega of Japan themselves started
-Bernie Stolar reducing the cost of the Dreamcast in America to $199 (SoJ wanted $249; Bernie basically forced them to lose an extra $50 per unit); this is probably what led to him being fired from Sega of America
-Sega sinking too much cost into Shenmue when the game did not have global appeal ($70 million was just too much for a game of that style at that time)
There's probably more I could get into WRT Sega's poor business decisions at the time over the course of the mid '90s to early '00s that show how much they were responsible for their own eventual downfall as a platform holder, but some of that info isn't hard to come by. And I'm an actual Sega fan, NOT a fanboy. Meaning, as much as I love quite a lot of their stuff from that era (particularly the Saturn and their 3D arcade games), I can acknowledge their faults and that most of their problems had nothing to do with Sony and PlayStation.
If Sega made smarter business choices back then, they would have fared much better, at least as well as Nintendo if not more so. But hubris and infighting got the better of them; Sony (and Nintendo) just stuck around to benefit from Sega's own mistakes.