There's Four in the Console Wars
Today Sega is merely a shadow (no pun intended) of what it was in the early '90s, but so many things could have went differently to make Sega stay near the top (mainly Sega of Japan just leaves Sega of America alone). So let's change these things and have Sega be one of the "Four In The Console Wars".
The PODs start with Sega of America seeing the dying "Movie Game" trend in the early 90s, which makes Sega of America realize they will need to start producing actual complete games for the CD addon, including namely Sonic CD and the original "Ghost Space", a horror game about outer space being filled with the ghosts of all those who have died (it will be a prominent title throughout this timeline).
The next part of these PODs is to do with the Saturn system, which in our timeline was a massive failure, mainly due to the nightmare game developers had trying to code for two CPUs and two GPUs and numerous other processors. Tom Kalinske, president of Sega of America, did not want to launch the Saturn due to development problems. In this timeline Kalinske successfully tells off Sega of Japan and begins work on an alternative to the Saturn (although using the shell/case of the Saturn). In late 1993 Kalinske successfully brokers a deal with Silicone Graphics to use their chipsets, and the whole of the console's hardware is modified accordingly, well retaining the shell/case from the Saturn along with the Saturn name. This change causes there to be two Sega Saturns: the "Japanese Saturn" (using CDs) and "American Saturn" (using cartridges); while both look the same their hardware is completely unrelated.
The final POD is Sega of America begins working with Sony in early 1993, with Sony creating a CD addon that would be built into select "American Saturn" consoles along with games for the CD add-on, all of this being done to help "perfect" the "American Saturn". The agreement between the two companies is that each company would get the money for what they individually made.
With this agreement being made, the Sony "PlayStation CD Player", as it is called in this timeline, looks exactly the same as in the Sony PlayStation's CD tray in our timeline (taking up much of the console) but it's built into select "American Saturn" systems and is not a part of its own console in this timeline. The version of the "American Saturn" with the PlayStation CD Player was formally known as the "Saturn CD", and had a modified cartridge port put behind the player; users would put cartridges in behind the player, and CDs would go into the large PlayStation CD Player in front. This partnership ends in 1997, when Sega develops the Dreamcast; Sega switches its partnership to Microsoft.
So, the timeline is set; what follows is everything occurring after these changes are made.
- Sega Saturn JP (1994-2005)
- Sega Saturn US (1994-1999; extended support until 2003)
- PlayStation CD Player (1994-1999; extended support until 2002)
- Sega Dreamcast (1998-2010; extended support until 2013)
- Xbox/Sega Dreamcast Ultra (2001-2010)
- Sega Zeus (2005-2016; extended support to end in 2021)
- Xbox 360/Sega Zeus Ultra (2005-2016; extended support to end in 2021)
- Sega BlueStreak (2012-present)
- Xbox One/Sega BlueStreak Ultra (2013-present)
- Sega Cobalt (upcoming; November 2020)
- Xbox Series X/Sega Cobalt Ultra (upcoming; November 2020)
- Sega Nomad (1998-2011)
- Sega Spellcast (2001-2013)
- Sega Aries (2005-2018)
- Sega Mars (2011-2020)
- Sega Prower (2016-present)
- Sega Marigold (upcoming; November 2020)
Partnership with Microsoft
When Sega partnered with Microsoft, their agreement was that Microsoft's consoles would be branded as Sega consoles in Japan as "Ultra" models for the Sega console, and all Sega consoles would use a similar interface to the Microsoft consoles. In addition, the controller design for Microsoft's consoles took inspiration from that of the Dreamcast, and all Sega titles would also be released on the console. The result, the Xbox, was released on November 15, 2001. This same day was when a new Dreamcast model with the Xbox-like interface was released. It was dubbed "Dreamcast II", and included various new features such as DVD playback and new anti-piracy methods.