Simply put: Sony dominated the video game market and would continue to do so into the next generation. In fact, the Playstation 2, released in 2000 an able to play original Playstation games, would become the best-selling game console of all time.
The Playstation 2 which was the first console that used DVD's, went up against the Sega Dreamcast (released in 1999). the Nintendo Gamecube (2001), and Microsoft's Xbox (2001).
The Dreamcast—considered by many to be ahead of its time and one of the greatest consoles ever made for several reasons, including its capability for online gaming—was a commercial flop that ended Sega’s console efforts. Sega pulled the plug on the system in 2001, becoming a third-party software company henceforth.