Sega to End Dreamcast Console Production, Signs Game Deal With Palm

Sega said Wednesday that in addition to pulling the plug on its Dreamcast game console, the video-game maker will develop games for Palm's (PALM Quote - Cramer on PALM - Stock Picks) handheld devices.

Sega plans to shut down production of the money-losing Dreamcast by the end of March, and will instead focus on making software and games for other console makers. Sega said the games designed for Palm will be geared to wireless handheld devices that allow users the ability to download games.

"The ability to get quality games moving forward in either premium pay-for-play or a subscription-based model is becoming more relevant to the consumer,'' Sega said, according to published reports. "As a result, we are working on a business model that will allow Palm owners, particularly those that have a wireless connection, to be able to subscribe to something like 'Game of the Week.'"