DVD and Sony signing publishers to not put games on the system comparable to what Sony was doing to Xbox.
Sega's 7 years of transgressions preceding it basically doomed the whole console. It sold historically well out the gate but they burned so many bridges with their mishandling of the Saturn that when the PS2 came around, they didn't have the necessary support from third-party developers and retailers to compete. And since Sega was deep in the red (they needed a stimmy from their former president purely out of the goodness of his heart to keep from going bankrupt), it just wasn't feasible to stay in the console business.
Dreamcast actually had superior hardware and specs to the PS2 but PS2 supporting DVDs in a time where DVD players were DUMB expensive was an underrated game changer, too. DC only supported GD-ROMs