> 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.

That's an even bigger miss on Sega's part then.

Having such kit out in the field, should have given Sega good insight into the "what's hot, and what's not" for (near-future) gaming needs.

Which features are essential, what's low hanging fruit, what's nice to have but (too) expensive, performance <-> quality <-> complexity tradeoffs, etc.

Besides having hardware & existing titles to test-run along the lines of "what if we cut this down to... how would it look?"

Not saying Sega should have built a cut-down version of their arcade systems! But those could have provided good guidance & inspiration.