This should have been no struggle for Sega. They basically
invented the modern 3D game and dominated in the arcade with
very advanced 3D games at the time
Way different challenges!The Model 2 arcade hardware cost over $15,000 when new in 1993. Look at those Model 1 and Model 2, that's some serious silicon. Multiple layers of PCB stacked with chips. The texture mapping chips were from partnerships with Lockheed Martin and GE. There was no home market for 3D accelerators yet; the only companies doing it were folks creating graphics chips for military training use and high end CAD work.
https://sega.fandom.com/wiki/Sega_Model_2
https://segaretro.org/Sega_Model_1
Contrast that with the Saturn. Instead of a $15,000 price target they had to design something that they could sell for $399 and wouldn't consume a kilowatt of power.
Although, in the end, I think the main hurdle was a failure to predict the 3D revolution that Playstation ushered in.