Things are not well at Sega of America headquarters. Having suffered a bleak 1997, Sega announced in mid-January that it has laid off 30 percent of its workforce, including marketing, public relations, and product development staff.

　　With that announcement, Sega officially confirmed the existence of a new "super" console (which is referred to here as Dural) to be released in North America in 1999.

　　"After evaluating the current industry situation and our plans for a new video game platform, we do not believe that launching this year is in the best interest of our customers, retailers, or software partners," said Sega COO Bernie Stolar. "To be fiscally responsible and competitive tomorrow, we have to make some difficult decisions today that will put us on the right path for long-term success."

　　Sega's current position can be traced to the early days of the Saturn. From the start, the Saturn had a tough time gaining popularity. Former Sega President Tom Kalinske, who is currently president of Knowledge Universe, an education technology firm, said that early on the price of the Saturn was a huge roadblock. "The price issue caused us to do all kinds of things that if it had been priced correctly to start with, we wouldn't have done. We knew that Sony was going to come out at a lower price, and if we had been able to price correctly, we wouldn't have launched in the hurried fashion that we did and in just a few places. We would have launched everywhere at a lower price. In truth, shouldn't have been launched at the time it was, and certainly we should have waited until we had both pricing and proper software available."

　　Looking at Sega after he left, Kalinske says a few things have gone neglected that shouldn't have. "The thing that I think has gone wrong for them is they've walked away from some very important software franchises - there should be better Sonic the Hedgehog games out, there should be better sports games out from Sega, not just third parties."

　　It's clear that mistakes from the early days of the Saturn cannot be repeated with Dural. With the Saturn's eventual disappearance from the market and Sega's official confirmation of the Dural's existence, it's time to turn to look at how the company can regain its market dominance. Here are suggestions for Sega on how it might regain its once-great position:

　　THE DEAD PLANETThere is still a handful of loyal Saturn fans out there itching for new games, but with retailers quickly abandoning the system, it's going to be extremely difficult to get new software to players. There are going to be a handful of "must-have" games coming out in Japan that would be great to have English translations of (Grandia, X-Men Vs. Street Fighter, Phantasy Star Collection, and all three scenarios of Shining Force III) in 1998.

　　Fans have already begun petitions on the Internet to get some of these games released here. It's going to be important to cater to your loyalists in '98, even if that means resorting to direct sales to get software into gamers' hands. While some will say that Sega should kill the system off and be done with it, there's a lot to be said for keeping fans happy. Pick a few of the best Japanese games, and license them.

　　CLEAN HOUSEMany of the Saturn's woes are pinned on the guy who's currently at the wheel - Bernie Stolar. His comments at last year's E3 that "the Saturn is not our future" all but doomed the system to obscurity, a move that did nothing to reassure fans of the system's continued strength. The Internet has been ripe with comments like, "Bring back Tom Kalinske," and while that's not going to happen, SoA needs a strong leader and the kind of winning team that brought the Genesis to the forefront in the early '90s to usher in the Dural.

　　WHAT GOES UP MUST COME DOWN Sony may have scored a hit with the PlayStation, but as Sega has proven before, it can topple a monopoly with the right hardware and games. "There's no monopoly long term," said Al Nilsen, the "father of Sonic" and former group director of global marketing for Sega. "When we were first starting out with the Genesis, the consensus was that no one could knock Nintendo from their perch, and we did it." A '99 release of the Dural in America, which is what Sega says it's going to do, could come at the right time. Who knows when Sony will have PlayStation 2, so get in early.

　　BUILD IT RIGHT THIS TIMEThe Saturn was criticized by some as a difficult machine to develop for. Take your time with Dural, and make it developer-friendly. Manufacture the hardware yourself; don't take the 3DO approach. "It concerns me that I'm hearing all these rumors about different manufacturers making Sega's next machine. JVC and NEC and all those companies want to make money on hardware; they're not into the game of making money on the software. They need to build it themselves," says Dave Perry, president of Shiny Entertainment.

　　QUALITY OVER QUANTITYIt's worth looking at Nintendo's strategy with the N64 - fewer games of better quality. Fortunately for Sega, its arcade teams have helped keep the Saturn afloat longer than it would have without them. Sonic Team and Team Andromeda (behind the Panzer Dragoon series) need to be tapped to give the Dural a strong lineup at the beginning. Give us a real Sonic game for once, no Sonic 3-D Blast or Sonic Jam - a 2D game is not a bad thing! Nilsen says, "It's not what's under the hood, it's what you do with what's under the hood." We couldn't agree more.

　　PRICE IS EVERYTHINGConsoles may be cheaper than high-end PCs, but they are still expensive when they're released. The PlayStation debuted with a US$300 price tag, double what it retails for now. If you make the Dural inexpensive at the outset, pricing it competitively, there's a much better chance that gamers will want it. "I think in the end, a lot of people have looked at that $199 price point as maybe a good starting point," said James Lin, an industry analyst at Wedbush Morgan Securities. "If you start out at $249, you'll get a lot of the early adopters buying it, but Sega really needs to be aggressive with this new system." If it is in fact as "super" a system as Stolar says, then what better way to convince gamers that this is a must-have than to price it at $250 or lower. As 3DO learned, a higher initial price is not a good thing - even if that's the way most major consumer electronics work.

　　MAKE IT WORTHWHILEWhatever form Sega's next machine takes, it's going to need games from third-party developers to be a success. Victor Ireland, president of Working Designs, suggests Sega reduce its royalty fees to a quarter of what they are now. Sega currently charges third parties as much as Sony to make games for the Saturn, a choice which hasn't done the system any good. Perry says that it's not royalty fees that will entice developers, but the quality of the hardware. Also, Sega will have to anticipate what kind of challenge Sony's next system will present.

　　As Sega gears up for the challenges ahead in 1999, the company's Saturn releases will probably slow to a crawl. If the rumors and speculation about its power are true, then gamers are going to be in for a treat. We'll be here in another year, ready to play, when Sega releases its new hardware in North America.

　　But what's your take? We're looking to see what you think about Sega of America and what steps it needs to take in 1998 and beyond to get back on top. Send your suggestions or wish list to me (click on my byline) and GameSpot News will include some of your comments in our second installment of Can Sega Be Saved?