Sega of America earned a record $98 million the day its 128-bit Dreamcast gaming console was launched in North America, but reports of glitches with hardware and software threw a shadow over the event, which was supposed to be a celebration for the arrival of the console. The company admits that a certain run of Dreamcast "GD-ROM" CDs that were shipped with the game consoles had defects, rendering them unusable. The CDs include one that includes Sega's Web browser and two games, Sonic Adventure and Blue Stinger, as well as at least two other games. Sega insists that the problem affects less than 1% of new Dreamcast owners, but even a cursory look around the Web shows a vocal and angry group of people that had been waiting months to get their hands on the new system, only to be disappointed by a system that refuses to play games.

"(We have) massive returns," says Mat Kurwitzky of the Software Etc. store in San Jose, California, host of one of four national launch events. "Sonic [Adventure], Blue Stinger, NFL 2000 and Ready 2 Rumble are all [being returned]. Probably one out of five of those games are defective. One out of ten easily."

Sega insists that the Dreamcast hardware is not the problem but that individual CDs were simply burned incorrectly. Sega spokesperson Jennifer Walker says that users can call the company toll-free at 1-(877)-383-3291 to trade their defective disks in for working versions.

"This is not a hardware problem," she said.

Problems aside, retailers nationwide are reporting that the Dreamcast units and most games completely sold out within 24 hours. Toys R Us says that all 705 of its stores sold out of the unit the first day it was available.