Many say that in 1989, the video game industry needed a good, firm, kick in the pants.11 The NES had been the only system of choice since 1985, remaining unchanged while the arcade machines raced towards increasing sophistication. Faster and more powerful arcade structures were reducing the price of the older arcade technologies, bringing them within the home video game buyer's price range. The industry (which had been decimated eight years previous only to return more stalwart than ever) was buzzing with rumors of 16-bit monster systems on the horizon.

Sega had managed to stay in business despite the poor performance of its Master System due to their massive arcade base. They had been working on converting their arcade architecture into a home console, and were close to completing it. NEC, a Japanese company with $22 billion annual sales in non-video game arenas, spent $3.7 billion in Research and Development on video games in 1988.14 Both companies should have spurned Nintendo into action to produce their own 16-bit system. Nintendo, however, stayed with their lordly "above-the-fray" stance. "We listen to our players," Bill White, a Nintendo executive, told the press in 1989, "They tell us they are extremely happy with the existing system and are totally involved with the games. We haven't maxed out our 8-bit system yet." This attitude would leave Nintendo in the dust of the coming 16-bit revolution.13

The first of the new systems was to be the NEC Turbographix-16. While its initial success would be very impressive (outselling Nintendo's NES 3 to 1 in its first month) it would ultimately fail after the assault on the industry by Sega with their 16-bit Genesis.

The Genesis was not only more powerful than the Turbographix, it had the arcade hits of Sega to back it. By Christmas of 1989, the Genesis and its games were outselling every other system on the market. By the following summer, Sega had wrestled 20% of the gaming market and 55% of new system sales from Nintendo's iron grasp.12 This sent Nintendo reeling, and caused many of Nintendo's exclusive licensees to cease NES game production in favor of producing Genesis titles. Electronic Arts, who had achieved marginal success under Nintendo's reign, was one of the initial companies to strike a deal with Sega. These games produced by EA for the Genesis would propel the system's popularity even higher.

Nintendo, in an attempt to reclaim the industry, would join forces with NEC to battle Sega. A tentative agreement was made where the Turbographix would be Nintendo's new flagship system. However, when even Nintendo's software aid could not save the Turbographix from destruction, Nintendo would abandon the system and its parent company, leaving them to flounder.

Wary of the fate that felled Atari, Hiroshi Yamauchi set one of his top engineers, Masayuki Uemura, in charge of a top-secret 16-bit system project. In a stark contrast to his insistent pressure during the design of the 8-bit NES, Yamauchi now left the technical specifications of the new system to the designers. Two years later, a completed 16-bit Nintendo system, called the Super NES, would be released with a tremendous amount of fanfare.15

The new system seemed poised to dethrone the Genesis, and regain Nintendo's dominance of the video game market. It sported a better graphic processor, offering nearly 63 times more on-screen colors than the Genesis and hardware scaling and rotation of sprites. It had an increased range of audio output with more channels. Furthermore, it had a 6-button controller as opposed to the Genesis' 3-button.

However, the SNES had a very weak main CPU, running at 3.58 MHz. The Genesis at 7.6 MHz ran at more than twice that speed. Sega took this advantage and ran with it, producing Sonic the Hedgehog, a game designed specifically for a fast system.

The SNES initially could not compete. Tremendous slowdown and games riddled with sprite flicker and tear would hinder the SNES and allow the Genesis to continue to be a powerful force in the market. While the SNES would emerge victorious the Christmas of 1991, it was a very narrow victory, and one that instead of forcing Sega from its throne, would simply make them scoot over.9

Over the next five years Sega and Nintendo would battle for supremacy, neither really pulling out ahead of the other and dominating the market exclusively. The end of year sales reports were indicative of the Pong match between the two Goliaths: 1991- Nintendo, 1992 - Sega, 1993 - Sega, 1994 - Nintendo, 1995 - Sega, etcetera.3

This heated battle between the two companies would greatly benefit the consumer, as both companies would try to best the other in their games. Jobs would also be created by the fiasco, and the industry boomed with many new concepts and ideas seeing light that might have been shunned traditionally. Alternative mediums gained popularity as Sega produced a fairly popular CD system called the Sega CD. Supposed system limitations were continuously toppled. The Genesis was able to display more colors through software techniques such as anti-aliasing and screen flipping. In addition to this, sophisticated scaling and rotation routines were created and refined until the Genesis could match those of the SNES. Nintendo designers shortened code and made software more concise until the SNES could seemingly operate at the same speed as the Genesis.

Ultimately, neither system would beat the other. At the end of the 16-bit era, both systems had comparable sales, number of games, and, most importantly, respect.

TurboGrafx-16

If any one company seemed poised to commandeer control of the video game industry from Nintendo, it was NEC. With a huge and imposing market share in the computer and communication industries, NEC had been driving their developers since 1988 towards the production of a new video game system. Nintendo's president Hirosi Yamauchi saw NEC as a threat due to their successful semiconductor business, which would give them a "direct [and] inexpensive source" for chips.19 Backed by impressive resources, NEC had been able to saturate any and all industries it wanted, and when the PC-Engine was released in Japan in October of 1987, it appeared as though they would do the same for the video game industry.

After refinement of the PC-Engine it was released in America in 1989, with its name changed to TurboGrafx-16. As the first 16-bit system in a market ready for a new format, the TurboGrafx-16 initially sold quite well, selling more consoles in its first month than its competitors had during the same period.

Video game players are a capricious lot. Trends in popular genres change yearly, with nearly as much modishness as the fashion industry. A particular type of game or system that is popular today, can become an embarrassment to own tomorrow. Unfortunately for NEC, the TurboGrafx-16 was to become the poster-child for this phenomena.

When the Sega Genesis was released, its dramatically more impressive graphics, sound and gameplay turned the TurboGrafx-16 passé overnight. The TurboGrafx became a stigma.

Ultimately, NEC was to blame for this. Having never produced entertainment software before, NEC designers had taken a casual approach to producing games. Many games had all the flash of a 16-bit title, but with little by way of depth of gameplay. NEC also depended on third-party developers to build a library of games.20 However, most developers were contractually obligated to Nintendo, and could not produce software for NEC. In addition to all of this, the TurboGrafx was not true 16-bit. While its graphics processor was 16-bit, its main CPU was merely 8-bit (a 6820, to be exact).10

Despite the poor sales of the TurboGrafx, NEC continued to promote the system. A CD-ROM upgrade made it the first CD console, and a refined, scaled down version would be released as a portable system. Its CD capabilities would give one very well known CD producing company, Working Designs, their start. However, NEC would never achieve much success with their TurboGrafx CD. The reason, as Sheff put it, was that "NEC has arrived too soon with too little." 21

The TurboGrafx would later be reincarnated as the equally ill-fated TurboDuo, once again in direct competition with Sega. During its life, however, less than 1 million TurboGrafx-16 units were sold Sega Genesis

--------------------------------------------------------------------------------

When Sega first announced that a 16-bit system was on the horizon, Nintendo executives did not take them very seriously. To them, Sega was no threat. Sega had been demolished in the 8-bit era, and the only profits keeping them afloat were coming exclusively from their arcade base (only to be swallowed by the black hole of debt surrounding the Master System). Despite Nintendo's nonchalance on the matter of 16-bit systems, other industry players were enthused. Trip Hawkins of Electronic Arts figured that Sega was creating a promising market, with a real future, "for which the price of admission was far less than Nintendo's."11

Sega was beaten to the punch when NEC's Turbographix-16 was released 6 months before the slated Genesis release. However, the Genesis would obliterate the Turbographix when it was released because of one key point: games.

NEC, who had a previous history of electronic entertainment such as CD players, VCRs, and computers, had never actually produced a video game. NEC executives did not know what to look for in a video game designer. Thus, the initial offering of Turbographix titles were very weak. Many game players marveled in the store over displays of "Keith Courage" only to be greatly disappointed when they finally got the system home and found the shallowness of the game.12

Realizing their folly for not designing a 16-bit system, Nintendo attempted to save the Turbographix, in hopes of turning it into the next Nintendo home console. They allowed certain third party developers to produce Turbographix titles.12 But this was too little, too late because Sega debuted its technically superior Genesis shortly thereafter, and quickly seized control of the market.

The Genesis debuted with a smash hit Sega arcade game packed inside (Altered Beast.) Several companies, including Electronic Arts, would initially leave Nintendo to produce Genesis titles. They would be followed by many more as time went by and a 16-bit Nintendo system was merely a rumor.

When the 16-bit Nintendo was finally released in 1991, two years after the Sega Genesis, many predicted it to take control of the market.12 However, because of the SNES slow processing speed, Sega was able to remain a strong player in the industry. Capitalizing on this, Sega produced a game based on speed. Sonic the Hedgehog, Sega's new mascot, was born. Incorporated in the game play of this revolutionary title, were various environmental themes that had become so popular in the media of the time. This little blue character would cause Sega's sales to soar, keeping the Genesis alive and well.

During this era, Sega used their popularity to experiment with alternative mediums. They produced several popular portable LCD games based upon their popular arcade and home games. Sega ventured into educational software and even designed a system specifically for this purpose. A CD system was produced (despite a failed attempt by NEC to do the same) which became quite popular.

One of the few legal battles Sega was involved in during the Fifth Generation was one that can hardly be called a battle. During the 16-bit era, Sega executives decided that the best way to compete with a company that used key-chips in their hardware was to include key-chips of their own in the Genesis. While the first shipments of Genesis systems lacked this chip, later shipments did not. Accolade, still under contract with Nintendo, but desirous to produce Genesis titles, created a sub-division of their company (calling it Ballistic, to avoid any conflict with Nintendoto) to produce Genesis titles. However, they had not become an official liscensee with Sega. Ballistic, exploiting the fact that most Genesis systems out at that time lacked the key chip, ignored Sega's requests that they cease production until a contract was signed. Because of this, a legal battle almost ensued. However, before it was taken to court, the two reconciled their differences and a contract that was beneficial to both parties was contrived. The contract dictated that for every one game Accolade produced on another system, they must produce five for the Genesis. While this seemed like a very good agreement at the time, later many would complain that this "created a situation where Accolade felt obligated to [produce] titles for the Genesis, whether they sucked or not."4

--------------------------------------------------------------------------------

SYSTEM SPECS:(10) Processor: 680000 Processor Speed: 7.6 MHz Resolution: 320 x 224 Colors: 64 / 512 Max Sprite Estimation: 90 Sprite Size: 32 x 32 Debut Price (1989) $189.99

-------------------------------------------------------------------------------- SNK Neo Geo

--------------------------------------------------------------------------------

SYSTEM SPECS: Processor: 68000 Processor Speed: 14 MHz Resolution: 320 x 224 Colors: 4,096 / 65,536 Max Sprite Estimation: 380 Sprite Size: Programable Debut Price (1990) $899.99 Current Price (1996) Reasonable price used $199.99

Sega Game Gear

--------------------------------------------------------------------------------

SYSTEM SPECS:(10) Processor: Z-80 (8-Bit) Processor Speed: 3.6 MHz Resolution: 160 X 192 Colors: 32 / 128 Max Sprite Estimation: 64 Sprite Size: 8 x 8 Debut Price (1990) $159.99

Super Nintendo Entertainment System

--------------------------------------------------------------------------------

During the Fourth Generation, Nintendo had dominated the industry with control of 85 to 90 percent of the market on both sides of the Pacific 16. They had ruled supreme. Smaller video game companies feared and respected them, none with the clout to usurp their autocracy. This made Nintendo executives feel their company was imperishable. Concerning this, Sheff wrote,

"Nintendo ... suffered from a malaise typical of industry leaders. Fat and happy, it had been lulled into a sense of invulnerability. Yamauchi and Arakawa felt they didn't have to react to competitors simply because they were Nintendo." 16

Thus, when Nintendo's competitors began buzzing with rumors of 16-bit systems, Nintendo continued unabated in their production of 8-bit hardware. Nintendo did not believe that Sega with their 16-bit Genesis was a hazard to the NES preponderate market. While NEC was seen by Yamauchi as a potential threat, the lack of quality programmers for the TurboGraphix-16 was known to (and even somewhat orchestrated by) Nintendo. Thus, Nintendo did not feel a need to enter the 16-bit market.

Nintendo's lack of aggression cost them dearly. While the TurbGraphix-16 did in fact fail, it was not beaten out by Nintendo's fame, but by the tremendous popularity of the Sega Genesis. Sega's dream machine went on further to knock the NES out of first place the following Christmas. Long-time Nintendo licensees began to leave to pursue contracts with Sega. Subsequent injury was evident in Total Research Corp.'s annual survey of brand equity that showed Nintendo dropped from its 27th place to 103rd, while Sega had leaped from 131st to 67th.13

Irma Zandl, president of The Zandl Group, a New York-based firm that specialized in youth marketing, said in regard to this, "Sega has basically clobbered Nintendo. Sega has been much more aggressive in developing technologies [and its ads were much] more fun and really honed in on what [game players] liked."13

By mid 1991 sales of the Genesis were in excess of 1 million with cart sales ten times that, and while Nintendo of America had sold 31.7 million NES units in the United States alone, it had become evident to everyone (including Nintendo's president Hiroshi Yamauchi) that Nintendo was quickly on their way out if something was not done.15

Yamauchi had set Masayuki Uemura in charge of producing the 16-bit Nintendo, and after two years, the Super Nintendo Entertainment System (SNES) was released to the public. Continuing the belief that they were still unbeatable, despite this upstart company, Sega, Nintendo advertised the SNES, while confidently ignoring the danger of a Genesis retaliation. Twenty-five million dollars were spent on TV commercials. Gail Tilden at Nintendo Power (Nintendo of America's system exclusive propaganda machine) "hyped the SNES shamelessly."17

Initially, Nintendo's management were not the only ones confidant that the SNES would bring control of the industry back to Nintendo, many video game magazines chimed in, touting on the supremacy of the SNES.10 This was, however, short-lived.

Sega, preparing for the onslaught of its long-time rival, had discovered a flaw in the SNES hardware, the CPU speed, and had designed a game specifically to expose that flaw. Sonic the Hedgehog, Sega's new mascot, was born. The game propelled the Genesis to even greater heights, but did not kill the SNES as Sega had hoped. Instead, the market became split two ways, with dual systems having fairly equal dominance of the industry.

No longer able to control its licensees like they had in the fourth generation, Nintendo was forced into new agreements with the third party producers. While some would still buy cartridges from Nintendo (as had been done with the NES) many would wind up manufacturing their own games (although purchasing SNES security chips was still mandatory) and produce titles for both systems. Attempting to still control this new breed of licensees, Nintendo now required that each company produce three SNES titles a year that achieved a rating of at least thirty points on Nintendo's game rating system. This encouraged many companies to produce games that Nintendo executives "wanted" for their SNES.18

In spite of Nintendo being intensely competitive during the fifth generation, many mistakes on their part left their reputation tarnished. Rumors of a SNES CD system and other vaporware reduced much of the esteem for Nintendo that the consumer had during previous years. 4, 10

Ultimately, during the last few years of the fifth generation, as the industry started booming about the forthcoming sixth generation and its 32-bit hardware, Nintendo attempted one last ditch effort to reign the 16-bit market. Designers and programmers worked overtime to push the SNES beyond the established limits. An unprecedented deal was struck with Rare, a long-time contractor with the pentagon, that produced several big hit games. But none were as amazingly successful as those of the 8-bit era, and the SNES did not dominate the market as the NES had.

Today, many debate which system actually "won"* the 16-bit wars. During the final two years, the SNES had sold more systems than the Genesis (barely), but there have been far more Genesis systems purchased since 1989. Some say that because the SNES came from behind (competing with a system that had been firmly established for two years) it deserves the honor. Others say that because the Genesis (with its older technology) was able to supply heated competition to the younger SNES it should be the winner. However, if all of these arguments are considered together, it becomes evident that neither system "beat" the other, and that this era benefited greatly from the multi-system market.

*-I hate to use the terms "won", "beat", etc., because they are very misleading. If system X sells 5 million systems and system Y sells 7 million, then it is hard to determine a "winner" simply because even the lesser sales figure still warrants continued support from the industry and neither is driven to extinction.

SYSTEM SPECS: Processor: 65816 Processor Speed: 3.58 MHz Resolution: 512 x 418 Colors: 256 / 32,768 Max Sprite Estimation: 60 before slow-down, 128 max Sprite Size: 64 x 64 Debut Price (1991) $199.99