That’s the best time to market. They simply didn’t have the big IP that Nintendo and Sony had been marketing at the time. Sega at that time led with Sonic - as they always do - and then a few properties that were really fun and original, but required an expensive console to even try and get aquatinted with.
This is not even bringing up the prior hardware failures they had launched. They just miscalculated on the popularity of Sonic globally. It’s not enough to get people with consoles that are working just fine and still have years of games to come to switch.