This is a pretty solid summary. Part of why they didn’t make their money back on software was because of how easy it was to copy and share. It didn’t help that they had alienated so many 3rd party devs by prematurely abandoning platforms so many times. They stuck with the Genesis for a long time, trickled out 32X and CD add-ons and only put out a handful of games for those, released and immediately ditched the Saturn, and then didn’t go as all in on the Dreamcast as they probably should’ve. At least they knew to cancel the Neptune, which was just gonna be a standalone 32X.
They should’ve not done the CD and 32X and instead dumped those resources into getting the Saturn out like a year earlier. Then they could’ve taken their time building that library, and then go all in on the Dreamcast, bringing lots of 3rd party support that happily made money off of betting on the Saturn. But hindsight is 20/20.