When the company was first founded, its original objective was to create a next-generation, CD-based video game system which would be manufactured by various partners and licensees; 3DO would collect a royalty on each console sold and on each game manufactured. To game publishers, the low $3 royalty rate per game was a better deal than the higher royalties paid to Nintendo and Sega when making games for their consoles. The launch of the platform in October, 1993 was well-promoted, with a great deal of press attention in the mass media as part of the "multimedia wave" in the computer world at the time.
The 3DO console itself was priced at $699, and the promised "early adopters" never showed up to purchase mass quantities of games. The lack of console and subsequently game sales achieved trumped the low royalty rate and proved a fatal flaw. In October 1995, The 3DO Company sold its next generation console, codenamed M2, to Matsushita and changed its business to develop and publish games for other game consoles and PCs.
After abandoning the 3DO console the company acquired Cyclone Studios, Archetype Interactive and New World Computing. The company's biggest hit was its series of Army Men games, featuring the generic green plastic soldier toys that had been re-popularized by the unrelated movie Toy Story. Its Might and Magic and especially Heroes of Might and Magic series from subsidiary New World Computing were perhaps the most popular among their games at the time of release. During the late 1990s, the company published one of the first 3D MMORPGs: Meridian 59, which survives on to this day at the hands of some of the game's original developers.
With the exception of its well-received High Heat Baseball franchise, most of the company's games were critically panned and failed to catch on with many consumers who eventually avoided purchasing sequels to the earlier 3DO games that disappointed them.
After struggling for several years, the company filed for Chapter 11 bankruptcy in May 2003. Employees were laid off without pay, and the company's game brands and other intellectual properties were sold to rivals like Microsoft, Namco, Crave, and Ubisoft, and also to founder Trip Hawkins who paid $405,000 for rights to some older brands and the company's "Internet patent portfolio". Trip went on to found Digital Chocolate, a mobile-based gaming company.