By the time the Dreamcast came out the writing was already on the wall. The Sega CD and 32x were both expensive and had little support while still looking barely as good as what the SNES could do with the Super FX chip and similar. Then the Saturn was basically forgotten despite being stupid powerful for its day and given the Osborne effect by the CEO of Sega of America. When the Dreamcast came out mid-cycle in 1998 nobody who had bought a PlayStation or N64 in the previous couple of years was in the market for a new machine and a lot of Sega fans weren’t willing to jump in before seeing how serious Sega was. Sega on the other hand was on the heels of low sales and relative failure and so keen to wait for the Dreamcast to be a hit. That chicken and egg paradox was the death knell. They also weren’t helped by Microsoft who had been their partner on the Dreamcast and who basically threw them under the bus to develop the Xbox based on what they learned (not for the first time, MS also did the same thing to IBM by developing Windows while working on OS/2 with IBM). This is why ‘The Duke’ controller looked so much like a Dreamcast controller and why, according to some reports, the Xbox could play Dreamcast games earlier in its development.

TL;DR Sega killed the Dreamcast before it even came out and Microsoft happily looted the corpse.