Sega was already in dire financial straits after the Saturn, so they panicked during the Dreamcast and ended the console’s life cycle very early making developers abandon it within just a couple years.
I’m not sure if there’s anything they could have done differently to be honest. Sony pushed them over the edge with the price war during the Saturn, which was very inefficiently built in comparison making their production costs way higher than that of their competitors. If I remember correctly they were losing about $100 per unit before PSX did its first (very early) $50 price drop and they had to keep up, so that became -$150/ea before the console was even a year old. It was disastrous.