Was it really the close-minded fans of Nintendo and Sony which ultimately led the Saturn to it's death? Would we be experiencing a Saturn-dominated market if people simply realized how much better Panzer Dragoon Saga was than Final Fantasy 7? Was the Sega Saturn really a wonderful, advanced piece of machinery?
No. And I'll tell you why.
First of all, the suggestion that Saturn games are superior to those on the Playstation is ridiculous. Are there great Saturn games? Absolutely, without a doubt. Can you like Saturn games better than Playstation ones? Of course. But is Panzer Dragoon Saga really a FF7 killer, and Nights a Crash Bandicoot killer? These are different games with very different game mechanics, each of which has an emphasis on a different style of gameplay. You can no more compare Nights and Crash than you could Madden 98 and Virtua Cop: When games are top notch in as many ways as all these titles are, it comes down to which one more closely meets your personal standards.
Well, if both the Playstation and the Saturn had their own great games, then why didn't they have an equal share of the market? For a few reasons. First was the disastrous 'surprise launch' of the Sega Saturn. Magazines on the stands were talking about rumors of a possible launch of the Saturn in late August when it arrived in stores on June/July. Distribution of the machines to stores was supposedly unequal, leading to some chains refusing to even carry the Saturn due to what they considered poor treatment. In contrast, the Playstation's launch has been hailed by many as one of the best to take place in the industry. Magazines had ample time to hype the launch, stores were eager to sell Sony products.
Did system loyalists kill the Sega? How could they? For a long time the only alternative to a Saturn was a Sony Playstation, and Sony was completely unheard of in console gaming. If they were Nintendo loyalists, why is the Playstation outperforming the N64 in sales and general popularity? If the Saturn had any Sega-haters killing it, they had to come from one of two major groups: People who were upset at how the failed 32x was handled on the Genesis and who feared equal mishandling of the Saturn, or people who bought the Saturn and were dissatisfied with how it was performing in the US, making the jump to a Playstation or a Nintendo 64.
And what kind of mishandling went on with Sega of America? The mistreatment of Working Designs at 1997's Electronics Entertainment Expo probably stands out most in people's minds. But what about how, despite the superior 2-D power of the Saturn and the fact that plenty of games in Japan took advantage of this, next to none were ever released in the US? What about how RPGs were almost completely absent from the US until the Saturn was basically dead anyway? What about how the games which did make it to the Saturn were almost always bad 3D sports or racing knockoffs?
The ultimate reason why the Saturn failed, and why many are skeptical about the success of the Dreamcast, was because of a carryover of executive mentality from the 8- and 16-bit era. To them, action and sports were the breadwinning games and RPGs were these boring pieces of software with lots of words and "strange japanimation characters with huge eyes". This was the mentality of the Sega leadership in America, most notably Ben Stolar, who speaks far too often as if decisions about which games to release in the US were left to focus groups and trendwatching. It was the easy way out: Why release a new and unique kind of game when a Street Fighter 2 clone is less risky?
This would have been a viable option, if Sega's competition operated with a similar boardroom mentality. But after initially following the same, tired lines of thought, Sony broke into new ground. Final Fantasy 7 was not quietly released in the US. There was no need for a fight or a letter campaign to secure it's release. The company launched a successful marketing campaign which destroyed the old belief that RPGs were a niche market, one which may as well be ignored in favor of 'bigger' games. Instead of turning down Parappa the Rapper for porting outside of Japan, Sony went out of it's way to bring it and other 'undefinable genre' games over, from Carnage Heart to Tail of the Sun. And by the time Sega of America was willing to accept that they could have made a mistake in ignoring games like this, it was too late. Plans for the Dreamcast were underway, developers for the Saturn in America were all but told to get lost. After a final wave of great RPGs, games which should have been released all throughout the life of the Saturn, the system was buried.
So to answer the question, "Was the Saturn really inferior?", yes it was. It's direction was led by close-minded and short-sighted executives, who ignored the both the strengths of it's hardware, and the gaming desires of it's owners. It's hardware was more than capable of delivering great games, but it's managers were not. And as far as fear of the Dreamcast goes, it can probably be linked to the fact that the man many consider responsible for Sega of America's greatest errors has since been promoted within the company, and has not shown a bit of evidence that he learned from those mistakes. When talking about his goals for the Dreamcast, Stolar speaks in numbers: He talks about the percentage of market share he wants, or how much money will be put into media blitzes. Until he starts to talk about RPGs, more game translations, and listening to what consumers want, I'll keep my back to the Dreamcast and my money in my wallet.