The reason why I find it hard to believe Dinosaur King, Love & Berry, and MushiKing were that popular is because their success was only in Japan. It wasn't until the 4Kids dub of Dinosaur King I ever heard about it, and only found out about MushiKing years after. And I know even less of Love & Berry.
I can accept these games were big hit in Japans arcade, but I imagine Sega didn't figure they would be all that interesting for an international market, and rightly so given Digimon was giving Pokémon a run for it's money as well.
Not saying it would've been impossible for Sega to compete with Pokémon or Digimon, but Dinosaur King, Love & Berry, and MushiKing was catered for Japanese interest than western and international interest.
While Chao were a side-game to Sonic Adventure and was released three years after Pokémon Red and Green which gives Pokémon a enough of a head-start to cement itself as popular battle-monster game, I really and truly believe that if Sonic Team did more with Chao at the time and continue to do so today, whenever a spin-off like Rabbid or side-series to Sonic Adventure, I really-truly believe Chao could've been the direct competition to Pokémon. Just as Sonic is on par to Mario, so could Chao be to Pokémon, if Sega were willing to put in the effort at the time.
| Pokémon | Chao | How Chao make up for it over Pokémon | How Chao can potentially improve |
| Variety of creatures | Over a thousand variety of different creatures. | Just the one creature. | Chao have a more diverse evolution and can take on different shapes and attributes. | Include another state of growth/evolution before death that gives chao more diverse transformation after evolution. Such as hero swim chao being mermaid like while dark swim chao looking shark-like. |
| Combat with creatures | An advance turn-based battle system, with thousands of various attacks. | While there is Chao Karate, Chao Racing is more renown. Both games are mostly just encouraging your chao. | Chao were never about fighting, nor should I believe they should be. Chao are more like virtual pets than pokémon are, and I feel people bond more over chao than they would over pokémon. | Chao could still adopt either a basic turn-based combat system, or adopt MushiKing/Dinosaur King gameplay. Unlike Mushi/Dino which have a variety of dinosaurs and bugs to play and fight over, players can just buy Move Cards, and maybe Bonus cards, given chao raised in gardens will do the fighting for them (instead of actual physical cards, perhaps abilities that can be purchased in Chao Black Market). However, the combat system should not prioritise over raising chao in gardens, simply a better replacement to Chao Karate. |
| Growth with creatures | Pokémon "level up" through combat, but are mostly carried in pokéballs. Only the few recent games where players can groom and play with pokémon outside of battle. | Like traditional virtual pets, can be fed, pet and cared for in Chao Gardens. Depending on their diet of fruit and nuts and how they are raised, may alter their stats for races and karate. | Same as the above point, Chao were never about fighting and more of care and growth in Chao Gardens. It is only recent Pokémon games that allow you more interaction and care with pokémon outside of battle (Pokémon-Amie, Pokémon Refresh and Pokémon Camp) while Chao Gardens prioritise in caring for your chao. | Honestly, Chao Gardens are already Chao' strong point. A revised combat system as I suggested would be more for competitive players, but chao should still be primarily a virtual pet game over battle-monsters game. |
| Usual story/adventure | JRPG-adventure of travelling across the region, catching pokémon and training them in battles, to earn eight Gym Badges in order to compete and win the Pokémon League. | None. Chao Gardens are a side-game to Sonic Adventure. Winning the Jewel Races perhaps closest equivalent to Gym Battles. | While Chao never had their own games, Virtual Memory Units allowed players to take their chao out and about, just as Pokémon games themselves being portable on the Game Boy. "Chao Adventure" was no where near on Pokémon games level, but still allowed you to take you chao on the go and care for them like Tamagotchis. | I like to imagine the successor to Chao Adventure being a Smart Phone game similar to Pokémon Go, where you can upload up to three chao to your phone and take them for walks and make virtual discoveries together. This Chao mobile game being a partner-game to a mainstream Sonic game with revised Chao Gardens (either Sonic Adventure 3, or remake of DX+2B). Like "Bully Chao" in Chao Adventure, perhaps the combat system can be worked into this game to allow players to compete against one another, or perhaps random encounter with badniks or bully chao in the game. |
| Trading Card Game | Pokémon, Magic: The Gathering and Yu-Gi-Oh are perhaps the most popular trading card games out there. | Sega doesn't have a trading card game, other than Japan's exclusive Dinosaur King, Love & Berry, and MushiKing. | Honestly, this is where Sega are lacking in general than just chao. MushiKing, Love & Berry and Dinosaur King are popular in Japan but do not have an international market. | If Dinosaur King simply reuse MushiKing gameplay, why not the same for chao? However, if Chao were to remain on the Dreamcast, there wouldn't be a practical way to scan cards (maybe with the Dreameye). But given the Dreamcast was Sega's last console before Sonic moving onto GameCube and GameBoy Advance, the e-Reader could potentially be used for Chao cards. But, as I suggested, NFC cards could also potentially be used by smart phones for gaming. |
As for more traditional trading card game like what Pokémon, Magic and Yu-Gi-Oh are, I'd recommend either Sonic and/or Sega All-Stars. Preferably the later given there is more content to work with as well as promotional cards for latest Sega games.
Chao Garden restaurants could've been a real thing, if Sega expanded and marketed chao well.
