In a sense it was. It sold almost 11 million units and was selling more consoles and software than the N64 and the PS1.
But a troubled launch at home and the PS2 launch put Sega in the position of basically hemorrhaging money. The normal response in the face of a new competitor was to cut the console price, but they simply couldn't afford it and they killed it to save the company.
On top of it, people had figured out how to pirate games, and broadband was starting to become a thing.
The Mil-CD piracy was really bad. The Dreamcast used GD-ROMs: 1GB optical discs which were effectively unpiratable as they were custom to the console. Almost as an afterthought though SEGA added a secondary executable disc format: Mil-CD. These were meant to be audio CD singles with a Dreamcast executable embedded. They never really caught on though, and only a few titles were released. The support for booting DC code from a CD remained in the console though, so people were able to rip the bootloader from a Mil-CD, append the data from a ripped GD-ROM (extracted with a buffer overflow in a game and the modem / later ethernet adaptor) and boot that. Took a manual process to set up, but after that it was freely distributable and burnable, and played without any modification to the console. The only games that were safe were those bigger than 760mb, and even then the assets could be resampled down to a smaller size.
It was this same feature that made it so easy to run alternate OSes on the DC too. That was one of my favorite things about the system; I could switch from Unreal Tournament to Linux to NetBSD to classic PC Doom to a NES/SNES emulator, just by switching discs and rebooting.
But a troubled launch at home and the PS2 launch put Sega in the position of basically hemorrhaging money. The normal response in the face of a new competitor was to cut the console price, but they simply couldn't afford it and they killed it to save the company.
On top of it, people had figured out how to pirate games, and broadband was starting to become a thing.