A dvd player wasn’t going to fix the internal dysfunction at Sega.
Dreamcast’s strength was the hardware. Adding a DVD player would have just increased the price out of realistic range. The problem was the software and 3rd party support. The library just could not compete with PS1 and N64 and then the greatest console of all time came out and put it out of its misery, the PS2.
If you’re going to go back in time to help Sega, you should go farther back and stop them from releasing the 32x against the Saturn.
Unlike the Gamecube and Xbox, which used DVD-like discs but just weren’t licensed as DVD players (though Xbox later sold a “DVD Playback Kit” meant to cover licensing fees), Dreamcast’s GD-ROMs were closely based on standard Compact Disc technology, just with dual-layer discs.
Upgrading the hardware would’ve increased costs considerably, GD-ROMs were meant to be a lot cheaper than the still very new DVD technology. Tech that did get cheaper by the time the PS2 hit the market nearly two years later, but Sega wanted to be early.