The 3DO failed because of lack of focus. I mean had EA attacked the market like a true manufacturing company would have (that is another problem), with games like Madden (yeah it eventually came out) at launch, Need For Speed (although back then it was a new IP so it was not a system seller-has it ever been a system seller?) then things may have been a little different. The reason I pick EA out of the bunch that were backing the 3DO is because they were the biggest and most savvy at games (Matsushita had the money to buy their way in like Microsoft did but for some reason didn't).
Also, I think the fact that no one company really was held as the standard of the console made it hard on consumers who may have been confused that the systems were not compatible (remember these were consumers coming from the mindset that if it was made by Nintendo, and carried the Nintendo seal or logo that it would play on a Nintendo), they had Sanyo, Panasonic and at least one more company producing the system. Sega has licensed out their systems in the past and had moderate success but you knew, as a consumer, which was the lead system. 3DO should have had a system of their own available alongside the ones from the other companies (I think that the Panasonic system is the accepted standard since they were first). 3DO just licensed off specs and the companies licensing the specs were free to add to them as they saw fit (like Sanyo offering the digital video card but it was not compatible with Panasonic systems-talk about fragmenting your user base).
Another thing, 3DO had no focus. I mean, they were not going to make games themselves (but they did have Studio 3DO later on). Who is going to set the gaming standard on the system? Who was going to make the Mario of 3DO that would move systems and show fans and consumers what the system was capable of? Apparently, no one. They system seller never came. Sure they got Super Street Fighter II (I don't remember exactly what variation) but it was too little too late. There was rumor of Mortal Kombat III and NBA Jam (neither materialised though) but those would have probably been too late too. They were marketing the 3DO as the end all be all multimedia system for the living room but they didn't give you everything in the box for it to happen (there was rumored to be add-ons to record TV, add memory to the system and even network it to an online network that was to be established later). Shame none of that stuff ever came to be. The price didn't help at all really. By the time they dropped the price to a competitive number it was too late as developer interest had already moved on (although towards the end stores had trouble keeping the system in stock).
Shame really.