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I have the Dreamcast HKT-3030 PAL E model which has been modified with the installed VGA and 3.5 mm audio ports on the back.

I loaded up Legacy of Kain: Soul Reaver and all the opening titles and opening movie play and sound fine. But when I get to the first in-game cutscene which has this voiceover narration, the sound quality is really bad. I mean the voiceover audio sounds like it's coming through an old telephone.

Is there any way to check if this version of my game is actually a pirated/ripped version? Or could this be a problem with the console itself? I tried with both the VGA+audio cable and the AV Out composite cable: same result. So it's not the cables.

The game disc looks legit. It has all the imprints of Sega Enterprises on the clear side. It looks identical to my other DC game Vanishing Point which I also tested and it has normal audio throughout the game.

Which is more likely: that the game is a fake/pirated version or that this VGA modded console can't play certain audio files with the original bit depth or sample rate?

What condition is the disc in? Have you tried a burned copy of the game? If so, do you get the same result?

I know for some rare Sega CD games like Snatcher there have been fakes produced but I don't know of any bootleg Dreamcast games. (Granted, I haven't followed the DC scene for a long time.)

Edit: and I don't know why a "bootleg" game wouldn't work. Most DC owners have a spindle of burned iso's and those games generally work fine provided you had a clean rip.

The disc is in excellent condition and has all of the regular imprints and watermarks of Sega in the silver side of the disc. Also the case and manual look original and are in excellent condition. If this is a fake version, they've done a good job replicating everything. I haven't tried a burned copy.

I wonder if the audio was just reduced in quality to fit in more. I own this but haven't booted it up in quite a while so I don't remember. Have you tried your game on another console?

Sadly I don't own another console or know anyone that does. I've compared the cutscene audio with gameplay videos from Youtube, and the sound is fine on all of those Youtube videos. And to clarify: the first FMV video sounds normal, it's only when the first ingame cutscene starts, the narration sounds almost incomprehensible, it's such low quality, it really reminds me of a telephone voice effect.

Here is a Google Pictures link to photos of the disc.

https://photos.app.goo.gl/xfLuNwcVsoK1yWCo8

It barely has any scratches, and it has the ring on the silver side which has the Sega stamps, ID codes, watermarks, everything etched into the ring.

Could a fake/reproduction or rip or copy look this authentic?

I think your disc looks okay. I just noticed in the op that you mentioned you're playing on a PAL system. Could this just be a case of the PAL version of the game running like crap compared to ntsc? You're comparing your game to YouTube videos (which may or may not be ntsc/pal, or emulated, or vga out, along with a bunch of other random variables.)

You mentioned your other game worked fine so it could be just the game like marurun said.

Oh, if the PAL version contains spoken audio in multiple languages, it could be a quite compressed. It sound effects are also scratchy?

It's only in English, there doesn't appear to be any other languages to choose from.

The sound effects and music sound normal to me. I've played the first level for a while and all of the spoken audio in the cutscenes sound incomprehensible because of the telephone effect.

If only I could get my hands on another copy of the game or another console to test.

A handful of games had known issues, audio included. That's why you see the "hot new" logo on some titles, to indicate it's v2.0 patched. I had the original NFL Blitz (2000?) with the audio issue. I can confirm audio would randomly act up.

SR isn't on that list IIRC but worth mentioning the quality control was all over.