I truly believe that the DC was competitive only with the early PS2 software. It started growing outdated fast after that.
The DC was dead by the time the PS2 got past its early software.
I recently went through the DC's large collection of games including it's most impressive ones and they all seemed outdated compared to what the PS2 was offering 1+ years later.
1 year later the DC was officially terminated, its final games were creeping along on slashed budgets.
I spent most of this weekend going though my old DC stuff because of this thread, and thought its best stuff held up rather well to anything contemporary. Even in 2001, months after its death sentence had been passed, the PS2 had nothing directly comparable to Phantasy Star Online and especially Shenmue 2 (despite its 1997/8 assets).
And Jet Set Radio still looks good.
I really dont see how the DC could compete even if it lived through.
The same way the PS2 competed against the Xbox - by offering a library of appealing games. Which is the same way the Wii competes against the 360 and PS3.
The PS2 could still produce visuals that could turn heads years after its release. The DC started to reach its peak too soon.
Who's heads were PS2 games turning years after release? Not anyone with a PC, or an Xbox. Or probably even a Gamecube.
The PS2 was turning PS2 owners heads, which is the same thing that any system can do. Continue to impress its fan base, while attracting customers away from technically more impressive systems through a strong software library (or being the system their friends own).
If you're talking about game artistry, then I'm sure the PS2 did continue to turn heads, but so could the DC. Rez still looks great on both systems.
As for peaking too early, the DC reached its peak in 2000. In was killed off in January 2001. There's a reason it reached its peak when it did. Even if no developer ever found out how to extract more performance, ever worked out how to stream data, or ever decided to use shadow volumes or bump mapping, the improvements in assets and resource use that go with experience over the course of a generation would have led to massive improvements on their own.
The system where everyone walks into their first game engine, art asset, or content pipeline maxing out potential on the system doesn't exist, no matter how often people on forums repeat "easy to program".
The DC couldnt produce the majority of effects that were considered standard for the PS2.
The PS2 can't produce the majority of effects that are considered standard for the Xbox. The Wii isn't even on the same planet as the PS360.
I really cant see where it would have led too especially when the PS2 and XBOX were getting multiplatform games that looked great but could not be done on the DC.
They would have relied in large part on first party exclusives, like they'd always done, and like Nintendo has always done to great effect. Sega were selling decent amounts of software on the DC, even with a userbase of under 10 million.
And if the userbase got big enough, the multiplatform games would have turned up. "Technical impossibilities" be damned - the PS2's userbase was so big you didn't see many 3rd party Xbox and/or GC exclusives that were "technically impossible" on the PS2. Just look how many PS360 "next gen HD" games are suddenly getting Wii ports and conversions.
"Technically impossible" is code for "there isn't the userbase to warrant a version".
The performance limitations on the DC showed.
And the performance limitations of the PS2 really showed the day Halo came out. Didn't stop the PS2 supporting appealing games and continuing to impress its users over the lifetime of the system.