@beardalaxy Pretty much. The PS2 having DVD support was what made so many people wait for it. Sega couldn't make a deal with the DVD Forum and went with their own proprietary CD-based format known as GD-ROM (Gigabyte Disc ROM) instead. GD-ROMs were just basically CDs but with the microscopic pits more tightly compact so they can store a gigabyte of data. DVDs on the other hand, can store 8GBs. Sega talked about having a DVD player add-on but that never came into fruition.

Sega also had another CD-based format for the Dreamcast called MIL-CDs. They were basically music CDs that also included software (things like karaoke or music videos) that could run on a Sega Dreamcast. MIL-CDs never had copy protection. Because of that, people realize that they can burn Dreamcast games as MIL-CDs and run them on a Dreamcast without any modifications. Sega did correct this with a hardware revision, but it was already too late. Though the MIL-CD exploit was what allowed the Dreamcast to have a vibrant homebrew community.

Though honestly, the Saturn pretty much killed Sega as a hardware manufacturer more than the Dreamcast. If Sega still had a little bit more money, the Dreamcast could be on par with the GameCube in terms of sales.

Also, Sega never had a console that was a worldwide success. The Master System did well in Europe and South America, but failed in the US and Japan. The Genesis/Mega Drive did well in North America, South America, and Europe, but failed in Japan. The Saturn did well in Japan, but failed everywhere else. It made sense for them to go third-party.