Sega Enterprises said Tuesday that its new flagship Dreamcast vidgame console has hit the 1 million sales mark in the U.S. and could easily sell an additional 500,000 players by the end of the year — 50% more than previously anticipated.

Sega officials upped their initial projections after seeing stronger-than-expected demand and improved production capacity six months ahead of schedule. It now anticipates selling 2 million units by March 31 and 6 million by March 31, 2001.

The 128-bit system, which features advanced graphics bowed Sept. 9 in the U.S. Nintendo’s N64, features a 64-bit processor.

In Japan, where the Dreamcast flopped last year, Sega is trying to win back consumers’ attention by marketing the Dreamcast as an Internet terminal. The system includes a 56K modem and Web browser software.

Sega is currently working on developing online games for the Dreamcast, which can be used to log onto the Internet. The first games, allowing multiple users to compete against one another online, will be introduced in a year.

Phenomenal U.S. sales, however, should help the company rebound from its small 3% market share and catch up to rivals Sony and Nintendo, who have slashed prices of their own consoles.

The rivals are planning to bow their own replacements for the PlayStation and N64 systems next year, which could hurt Sega’s comeback plans.

Until then, it appears that Sega has the upper hand. Once the new competing systems hit store shelves, Sega officials said they may slash the price of its $200 console to compete.

“We feel there will be a great window of opportunity for the next eight to 10 months,” said Peter Moore, a veep with the company’s U.S. unit.

The 1 million-unit figure surpasses records set by PlayStation and Tickle Me Elmo.

Launched in September 1995, PlayStation sold 1 million units in nine months, according to research outfit NPD Group. In 1996, it took Tyco Toys’ much-sought-after Tickle Me Elmo doll more than five months to reach the mark. Apple’s iMac hit the milestone in six months.

“One million units in the United States has long been considered a minimum threshold for a platform to be considered successful,” said industry analyst Sean McGowan of Gerard Klauer Mattison.