It's sort of a small point, but here's my link for the Alien Front Online deal.
"Four Dreamcasts were set up right next to four Alien Front Online arcade machines, and the eight stations were all linked together. Also, each station had a small headset, which allowed you to hear the action, as well as talk to other players in real-time."
http://www.gamespot.com/articles/alien-front-online-e3-2000-impressions/1100-2571640/GameSpot is a fairly reputable magazine. It was, as I said, tested at e3. It was dropped later, sure - I wasn't disputing that. All I was saying was Sega made it beyond the drawing board with it.
On the issue of price cutting:
Sega cut the price of the Saturn down to 250 dollars in March, 1996.
"The price for the "core" Sega Saturn Unit has dropped to $249.99. Some stores are already selling it at this price but the price drop won't start nationwide until monday. The price of the Saturn w/Virtua Fighter will be $299.99. This is not the "New" Cheaper Saturn, that will be released later at under $200, but a price drop of the original Saturn.
information from Next Generation Online and IGonline"
http://www.sega-saturn.com/saturn/other/march-n.htmSony responded in May, at e3, dropping the price to 200 dollars, to undercut the Saturn and the newly unveiled N64 (and it's 250 dollar asking price). Again, it was so clever because Sony effectively did to Nintendo at e3 1996 the same thing they did to Sega at e3 1995.
http://www.ign.com/articles/1998/08/28/history-of-the-playstationI have no memory of who started slashing prices first in Japan, so I'll cede that to you. I wouldn't be surprised if it was Sega.
I'm not disputing there is still life left in the last generation; what I'm saying is that there's a big difference between a console being outsold by a 5 year old PlayStation 2 (incidentally, the most successful console ever) and a 9 year old XBOX 360 (which, to date, hasn't even sold half of the PS2s final numbers).
As for the real meat of your argument; it's ultimately nonsense. You can't just ignore Creative Assembly, Sports Interactive and Relic. They're part of Sega, as well, and, in the case of the first two, have been for almost a decade now. You're acting as if this is 2000 and Sega and Sega Japan are synonymous. That just isn't the case. Your view on Sega is archaic. Namco and Capcom might support the PC as much as Sega Japan; but not as well as Sega, as a whole, does. Nowhere near. Likewise with mobile.
Likewise, I'm not sure what you're talking about with sales. Sega Japan =/= Sega. Rome Total War was the fastest selling game in the series; it cracked a million back around Jan or Feb. The Football Manager games are outdoing themselves annually. Company of Heroes is a million selling franchise. Sonic is Sonic. So long as Sega has the Alien license, they'll have million sellers there, as well. There is also, I suppose, Yakuza, though that is slowing down. The crossover games have all broken a million. Phantasy Star seems like it's hitting the threshold of being a consistent hit in Japan.
Tell me, how many consistent million sellers did Sega have before the merger? I can think of about three since the MegaDrive days; Sonic, Virtua Fighter and Sega Rally. Most Sega Japan games, like Virtua Fighter, have no market in the west, so as the Japanese console market continues to implode, it would stand to reason that we'll see fewer and fewer of that sort of game. Sega's just adopting to market conditions.