Space Channel 5 follows news reporter Ulala, a reporter for Space Channel 5, the TV station that she works for, in her quest to report on the breaking news of space aliens known as Morolians, forcing people to dance. Ulala is also tasked with saving these dancing hostages in the process of reporting by, how else, dancing right back at the aliens! Along the way, she runs into rival news reporters Pudding, and Jaguar (JAGUAAAR!), who she must out-dance.
Space Channel 5 is essentially a dressed-up version of the classic electronic game Simon. The player is given a series of commands in rapid succession which they must memorize and repeat (i.e. "Up, Right, Left, Down, Shoot, Shoot, Shoot!"). As this is a rhythm game, the commands must also be repeated at a specific tempo. When Ulala successfully saves hostages these characters become Ulala's back-up dancers.
The game's characters all dance and move in real-time, whereas the backgrounds are streaming pre-rendered video.
In the earlier part of 2003, Lady Miss Kier, formerly of the band Deee-lite, sued SEGA for using her likeness as the basis for Ulala's character. She cited SEGA's use of knee-high boots, short skirts, and pink ponytails as evidence of SEGA copying her persona to make Ulala. She also claimed that SEGA had offered her $16k to license her name, songs, and image for the game, which she rejected. She later discovered that SEGA went ahead and used her image anyway, so she brought a legal suit against them. She ended up in losing the suit and also the appeal and was required to pay for SEGA's legal fees totaling approximately $600k.