[bityard]

Services like XBAND were either unavailable or prohibitively expensive for a large swath of the population at the time. Like a lot of early technology, I guess.

For XBAND, you had to buy the modem, you had to pay for the service, and you had to pay for the phone call. Where I lived when growing up, a "local call" was about a 2-mile radius, and that radius contained maybe 700 phone lines. I was one of a handful of people who even had a 16-bit video game console in the area and I was pretty fortunate that my parents were somewhat okay with spending hundreds of dollars (over the course of a few years) in mindless entertainment.

The Sega Channel would have been a complete non-starter since, even if I happened to live in one of the few service areas, you had to pay for a subscription to the Sega Channel which was a pricey add-on to your existing cable bill.

Even back then, I thought it would have been smarter for Sega to charge for the modem (as they did) but subsidize the cost of the channel delivery to customers. They could recoup the costs of delivery through more marketing of upcoming games or even showing ads. But I assume that if it was even feasible, the cable companies would have laughed it out of the room anyway. ("You want us to provide a channel for FREE?!")