Console Wars - 16-bit Era

16-bit Era

The "16-bit era" is mostly known for the rivalry between the Mega Drive (known as the Sega Genesis in North America due to trademark reasons) and the Super Nintendo Entertainment System (often abbreviated to SNES or Super NES; known as the Super Famicom in Japan). The Mega Drive/Genesis came out about two and a half years earlier than the SNES; however, it did not perform well at retail until the release of Sonic the Hedgehog, which drove sales. A Sony focus group found that teenage boys would not admit to owning a SNES rather than a Genesis, supporting the idea that the Genesis was more popular among older gamers. The late November 1994 release of Donkey Kong Country changed the pace for Nintendo. After three holiday seasons of coming in second to Sega in the American 16-bit console market, Nintendo had the biggest game of the year. Sega still outperformed Nintendo in overall holiday sales, but 500,000 copies of Donkey Kong Country that Nintendo sent out in its initial shipment were mostly sold in pre order, and the rest sold out in less than one week. Donkey Kong Country paved the way for Nintendo to win the waning years of the 16-bit generation, and for a time, hold its own against the PlayStation and Saturn. In 1998, Sega licensed the Genesis to Majesco in North America so that it could re-release the console. Majesco began re-selling millions of formerly unsold cartridges at a budget price together with 150,000 units of the second model of the Genesis, until it later released the Sega Genesis 3. Majesco released the Genesis 3 at $50, Nintendo matched its price with their new model of the Super NES. Majesco then dropped the price of the Genesis 3 to US $40 and again to US $30, with Nintendo matching them dollar-for-dollar every step of the way. Software prices for both systems remained stagnant, ranging anywhere from US $10 to US $25 per title. By this time 16-bit sales only accounted for 10% of the total U.S. console market, but it was a brisk and fiercely fought share. Majesco would wind up selling between 1 and 2 million Genesis 3 consoles, along with 10 million or so Genesis cartridges for fiscal year 1998. In comparison, Nintendo would only sell 1 million SNES consoles and 6 million SNES carts. According to a 2004 study of NPD sales data, the Sega Genesis was able to maintain its lead over the Super NES in the American 16-bit console market.

In early 1991, Sega revealed the Sega Mega-CD add-on, and announced its release in Japan in late 1991 and in North America (as the Sega-CD) in 1992. While this add-on did contain a faster CPU, more memory and some enhanced graphics capabilities over the Mega Drive/Genesis itself, the main focus of the device was to expand the size of games; cartridges of the day typically contained 8-16 megabits of data, while a CD-ROM would hold 640 megabytes (5120 megabits). While it became known for several games, including Sonic CD and Night Trap, the expansion only sold 6 million units worldwide.

At June 1994's Consumer Electronics Show, Sega showed off the 32X as the "poor man's entry into 'next generation' games." The 32X was originally conceived as an entirely new console by Sega of Japan. Sega of America R&D head Joe Miller convinced Sega of Japan to strengthen the console and convert it into an add-on to the existing Genesis, but they would not make it a competitor to the forthcoming Sega Saturn. Although this add-on contained two 32-bit CPU chips and a 3D graphics processor, it failed to attract either developers or consumers as the superior Saturn had already been announced for release the next year. Originally released at US$159, Sega dropped the price to $99 in only a few months and ultimately cleared the remaining inventory at $19.95; at least 600,000 units were sold.

Also, NEC and Hudson Software entered the market with their PC Engine/Turbografx-16, another 16-bit system. The PC Engine actually predated the Mega Drive in Japan. However, the Genesis came just before the TurboGrafx-16 in America. Hudson, attempting to reach the same level of popularity as the Super Famicom/SNES and Mega Drive/Genesis, designed their own mascot to stand beside Mario and Sonic, named Bonk the Caveman. While NEC did not have as big an impact in the market as Nintendo or Sega, they still sold more copies than expected for an all-new hardware system. The PC Engine further weakened Sega's position in Japan, with the Mega Drive remaining in third place in Japan behind the Super Famicom and PC Engine throughout the 16-bit era.