Dug up this old article, discusses how SEGA planned to make a set-top-box compatible with Dreamcast games and had DVR functions.

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SEGA And Pace Reveal New Digital Home Gateways Platform
Unlike the typical concept of placing a disc or cart in order to play a game, this new PVR features a 40GB hard drive that will allow consumers not only to download 10-20 hours worth move video, but additionally allow you to hold anywhere from 50-60 Dreamcast games.
SEGA And Pace Reveal New Digital Home Gateways Platform - IGN