In the video game industry, a console war describes the competition between two or more
video game console
A video game console is an electronic device that outputs a video signal or image to display a video game that can be played with a game controller. These may be home consoles, which are generally placed in a permanent location connected to ...
manufacturers in trying to achieve better consumer sales through more advanced console technology, an improved selection of video games, and general marketing around their consoles. While console manufacturers are generally always trying to out-perform other manufacturers in sales, these console wars engage in more direct tactics to compare their offerings directly against their competitors or to disparage the competition in contrast to their own, and thus the marketing efforts have tended to escalate in back-and-forth pushes.
While there have been many console wars to date, the term became popular between
Sega and
Nintendo during the late 1980s and early 1990s as Sega attempted to break into the United States video game market with its
Sega Genesis console. Through a novel marketing approach and improved hardware, Sega had been able to gain a majority of the video game console market by 1991, three years after the Genesis’ launch. This caused back and forth competition between the two companies throughout the early 1990s. However, Nintendo eventually regained its market share and Sega stopped making home console hardware by 2001.
Background and etymology
The video game console market started in 1972 with the release of the first home console, the
Magnavox Odyssey
The Magnavox Odyssey is the first commercial home video game console. The hardware was designed by a small team led by Ralph H. Baer at Sanders Associates, while Magnavox completed development and released it in the United States in September ...
. As more manufacturers entered the market and technology improved, the market began to coalesce around the concept of console generations, groupings of consoles with similar technical specifications that vied in the consumer marketplace. Since 1972, there have been nine such console generations, with two to three dominant manufacturers controlling the marketplace as an
oligopoly.
As with most industries without a single dominant leader, console manufacturers have marketed their products in a manner to highlight them in a more favorable manner compared to their competitors', or to focus on features that their competitors may lack, often in aggressive manners. For example, console manufacturers in the 1980s and 1990s heavily relied on the word size of the
central processor unit
A central processing unit (CPU), also called a central processor, main processor or just processor, is the electronic circuitry that executes instructions comprising a computer program. The CPU performs basic arithmetic, logic, controlling, and ...
, emphasizing that games had better capabilities with 16-bit processors over 8-bit ones.
This type of aggressive marketing led video game journalists to call the competitive marketing a "war" or "battle" as early as August 1988.
As each new console generation emerged with new marketing approaches, journalists and consumers continued to use variations of the "war" language, including "system wars" and "console wars". By the early 2000s, the term "console war" was most commonly used to describe heated competition between console manufacturers within any generation.
Sega versus Nintendo
While not the only console war, the rivalry between
Sega and
Nintendo for dominance of the North American video game market in the late 1980s and early 1990s is generally the most visible example of a console war. It established the use of aggressive marketing and advertising tactics by each company to try to gain control of the marketplace, and ended around 1995 when a new player,
Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professiona ...
, entered and disrupted the console space.
Background
The United States video game industry suffered a severe
market crash in 1983 from numerous factors which led to a larger market recession and increasing popularity of personal computers as a video game platform. A key contributing factor to the crash was the loss of publishing control for console games. Early success by some of the first third-party developers like
Activision
Activision Publishing, Inc. is an American video game publisher based in Santa Monica, California. It serves as the publishing business for its parent company, Activision Blizzard, and consists of several subsidiary studios. Activision is one ...
for the
Atari VCS
The Atari 2600, initially branded as the Atari Video Computer System (Atari VCS) from its release until November 1982, is a home video game console developed and produced by Atari, Inc. Released in September 1977, it popularized microprocessor- ...
console led to venture capitalists bringing in teams of inexperienced programmers to try to capture the same success, but only managed to flood the market with poor quality games, which made it difficult for good quality games to sell. The video game crash impacted other factors in the industry that were already in decline, such as video game arcades.
In Japan,
Nintendo had released its
Famicom
The Nintendo Entertainment System (NES) is an 8-bit Third generation of video game consoles, third-generation home video game console produced by Nintendo. It was first released in Japan in 1983 as the commonly known as the The NES, a redes ...
(Family Computer) console in 1983, one of the first consoles of the
third generation Third generation may refer to:
* ''Third Generation'' (album), a 1982 album by Hiroshima
* ''The Third Generation'' (1920 film), an American drama film directed by Henry Kolker
* ''The Third Generation'' (1979 film), a West German black comedy b ...
or the "8-bit" generation. Japan did not have a similar third-party development system in place, and Nintendo maintained control on the manufacturing of game cartridges for the Famicom using a licensing model to limit which third-party games were published on it. The Famicom did launch with a technical fault that Nintendo scrambled to fix, but by the end of 1984, the Famicom was the best-selling console in Japan.
Nintendo looked to release the unit in the United States, but recognized that the market was still struggling from the 1983 crash. Nintendo took several steps to redesign the Famicom prior to a United States launch. It was made to look like a
VCR
A videocassette recorder (VCR) or video recorder is an electromechanical device that records analog audio and analog video from broadcast television or other source on a removable, magnetic tape videocassette, and can play back the recording. ...
unit rather than a console, and was given the name the "Nintendo Entertainment System" to distance it from being a video game console.
Further, Nintendo added a special
10NES lockout system that worked as a lock-and-key system with game cartridges to further prevent unauthorized games from being published for the system and avoid the loss of publishing control that had caused the 1983 crash.
The NES revitalized the U.S. video game industry and established Nintendo as the dominant name in video game consoles over Atari. In lifetime sales, the NES had sold nearly 62 million units worldwide, with 34 million in North America.
![Sega-SG-1000-Console-Set](https://upload.wikimedia.org/wikipedia/commons/7/7b/Sega-SG-1000-Console-Set.jpg)
At the same time,
Sega was looking to get into the video game console industry as well, having been a successful arcade game manufacturer, but due to the downturn in arcade game business, looked to use that expertise for the home market. They released the
SG-1000
The is a home video game console manufactured by Sega. It was Sega's first entry into the home video game hardware business. Developed in response to a downturn in arcades starting in 1982, the SG-1000 was created on the advice of Hayao Nak ...
console in Japan the same day as the Famicom in 1983, but sold only 160,000 units of the SG-1000 in its first year.
Sega redesigned the SG-1000 twice to try to build a system to challenge Nintendo's dominance; the SG-1000 Mark II remained compatible with the SG-1000 but failed to gain any further sales.
The next iteration, the
Sega Mark III
The is an 8-bit
third-generation home video game console manufactured by Sega. It was originally a remodeled export version of the Sega Mark III, the third iteration of the SG-1000 series of consoles, which was released in Japan in 1985 and ...
, was released in 1985, using Sega's arcade hardware for its internals to provide more refined graphics. The console was slightly more powerful than the Famicom, and Sega's marketing attempted to push on the more advanced graphics their system offered over the Famicom.
However, Sega found that Nintendo had also contracted other developers to only develop their games exclusive to the Famicom, and Sega was forced to develop their own titles or to port the games from the other developers themselves, limiting the size of the Mark III's library in Japan.
Sega attempted to follow Nintendo with a worldwide release of the Mark III, rebranded as the Master System. The Master System was released in the United States in 1986, but Nintendo had similar licensing practices in the U.S. to keep developers exclusive to the NES, limiting the library of games that Sega could offer and to also ensure that another gaming crash didn't begin. Further, Sega's third-party distributor, the toy company
Tonka
Tonka is an American producer of toy trucks. The company is known for making steel toy models of construction type trucks and machinery. Maisto International, which makes diecast vehicles, acquired the rights to use the Tonka name in a line of ...
, opted against localizing several of the Japanese games Sega had created, further capping the game library Sega could offer in the U.S. Only a total estimated two million systems were sold.
Entering the United States’ market
The
fourth generation of video game consoles
In the history of video games, the fourth generation of game consoles, more commonly referred to as the 16-bit era, began on October 30, 1987, with the Japanese release of NEC Home Electronics' PC Engine (known as the TurboGrafx-16 in North Ame ...
was started by the launch of
NEC
is a Japanese multinational information technology and electronics corporation, headquartered in Minato, Tokyo. The company was known as the Nippon Electric Company, Limited, before rebranding in 1983 as NEC. It provides IT and network soluti ...
's
PC Engine
The TurboGrafx-16, known as the outside North America, is a home video game console designed by Hudson Soft and sold by NEC Home Electronics. It was the first console marketed in the fourth generation, commonly known as the 16-bit era, thoug ...
in 1987 in Japan. While the PC Engine used an 8-bit CPU, it included 16-bit graphic rendering components, and NEC marketed this heavily as a 16-bit game console to distinguish it from the Famicom and Mark III; when NEC brought the PC Engine worldwide, it was rebranded as the "TurboGrafx-16" to emphasize this. After the release of the TurboGrafx-16, use of the bit designation caught on. Which led manufacturers to focus their advertising heavily on the number of bits in a console system for the next two console generations.
NEC was another competitor to Sega and Nintendo. Following a similar path they had done for the Mark III, Sega used their arcade game technology, now using 16-bit processor boards, and adapted those into a home console, released in Japan in October 1988 as the
Mega Drive
The Sega Genesis, known as the outside North America, is a 16-bit fourth generation home video game console developed and sold by Sega. It was Sega's third console and the successor to the Master System. Sega released it in 1988 in Japan a ...
.
Compared to its prior consoles, the Mega Drive was designed to be more mature-looking and less like a toy compared to the Famicom to appeal to an older demographic of gamers, and "16-bit" was emblazoned on the console's case to emphasize this feature. While the system was positively received by gaming magazines like ''
Famitsu
formerly ''Famicom Tsūshin'', is a line of Japanese video game magazines published by Kadokawa Game Linkage (previously known as Gzbrain), a subsidiary of Kadokawa. ''Famitsu'' is published in both weekly and monthly formats as well as in the f ...
'', it was overshadowed by the release a week prior of ''
Super Mario Bros. 3'' for the Famicom.
As with the Master System, Sega also planned for a major push of the Mega Drive into the United States to challenge Nintendo's dominance among other markets, with the unit rebranded as the Sega Genesis. Sega was dissatisfied with Tonka's handling of the Master System and so sought a new partner through the
Atari Corporation
Atari Corporation was an American manufacturer of computers and video game consoles. It was founded by Jack Tramiel on May 17, 1984, as Tramel Technology, Ltd., but then took on the Atari name less than two months later when Warner Communica ...
led by
Jack Tramiel
Jack Tramiel ( ; born Idek Trzmiel; December 13, 1928 – April 8, 2012) was an American businessman and Holocaust survivor, best known for founding Commodore International. The Commodore PET, VIC-20 and Commodore 64 are some home comput ...
. Tramiel was bullish on the Genesis due to its cost, and turned down the offer, instead focusing more on the company's computer offerings.
Sega instead used its dormant Sega of America branch to run a limited launch of the console in August 1989 in test markets of New York City and Los Angeles, with its launch system being bundled with the port of the arcade game ''
Altered Beast
''Altered Beast'' is a 1988 beat 'em up arcade video game developed and manufactured by Sega. The game is set in Ancient Greece and follows a player character chosen by Zeus to rescue his daughter Athena from the demonic ruler of the underworl ...
''.
In October 1989, the company named former Atari Entertainment Electronics Division president Michael Katz as CEO of Sega of America to implement a marketing strategy for a nation-wide push of the Genesis with a target of one million consoles. Katz used a two-prong strategy to challenge Nintendo. The first was to stress the arcade-like capabilities of the Genesis with the capabilities of games like ''Altered Beast'' compared to the simpler 8-bit graphics of the NES, and devising slogans such as "Genesis does what Nintendon't."
Katz also observed that Nintendo still held most of the rights to arcade game ports for the NES, so the second part of his strategy was to work with the Japanese headquarters of Sega to pay celebrities for their naming rights for games like ''
Pat Riley Basketball
''Pat Riley Basketball'' is a video game which was released for the Sega Genesis, for the Mega Drive in Japan on March 2, 1990 under the title and Europe under the title ''World Cup Basketball''. It was released in 1990 in the United States. It w ...
'', ''
Arnold Palmer Golf'', ''
Joe Montana Football
''Joe Montana Football'' is an American football video game developed by Electronic Arts, and published by Sega for the Genesis in 1991. Although the game does feature Joe Montana (as the title respectively says) as a playable character, since S ...
'', and ''
Michael Jackson's Moonwalker
''Michael Jackson's Moonwalker'' is the name of several video games based on the 1988 Michael Jackson film ''Moonwalker''. Sega developed two beat 'em ups, released in 1990; one released in arcades and another released for the Sega Genesis and ...
''.
Most of these games were developed by Sega's Japanese programmers, though notably, ''Joe Montana Football'' had originally been developed by Mediagenic, the new name for Activision after it had become more involved in publishing and business application development alongside games. Mediagenic had started a football game which Katz wanted to brand under
Joe Montana
Joseph Clifford Montana Jr. (born June 11, 1956) is an American former football quarterback who played in the National Football League (NFL) for 16 seasons, primarily with the San Francisco 49ers. Nicknamed "Joe Cool" and "the Comeback Kid", ...
's name, but unknown to Katz at the time, the game was only partially finished due to internal strife at Mediagenic. After the deal had been completed and Katz learned of this, he took the game to
Electronic Arts
Electronic Arts Inc. (EA) is an American video game company headquartered in Redwood City, California. Founded in May 1982 by Apple employee Trip Hawkins, the company was a pioneer of the early home computer game industry and promoted the ...
. Electronic Arts had already made itself a significant force in the industry as they had been able to reverse engineer the cartridge format for both the NES and the Genesis, though Electronic Arts' CEO
Trip Hawkins
William Murray "Trip" Hawkins III (born December 28, 1953) is an American entrepreneur and founder of Electronic Arts, The 3DO Company, and Digital Chocolate.
Career
A fan of the Strat-O-Matic Football pen and paper games, Hawkins started his f ...
felt it was better for the company to develop for the Genesis. Electronic Arts used their reverse engineering knowledge as part of their negotiations with Sega to secure a freer licensing contract to develop openly on the Genesis, which proved beneficial for both companies. At the time Katz had secured Mediagenic's ''Joe Montana football'', Electronic Arts was working on its ''
John Madden Football'' series for personal computers. Electronic Arts was able to help bring ''Joe Montana Football'', more as an arcade title compared to the strategic ''John Madden Football'', to reality, as well as bringing ''John Madden Football'' over as a Genesis title.
The second push in 1991
The Genesis still struggled in the United States against Nintendo, and only sold about 500,000 units by mid-1990. Nintendo had released ''Super Mario Bros. 3'' in February 1990 which further drove sales away from Sega's system. Nintendo themselves did not seem to be affected by either Sega's or NEC's entry into the console market.
Sega's president
Hayao Nakayama
is a Japanese businessman and was the former President and CEO of Sega Enterprises, Ltd from 1983 to 1999.
Early life and career
Nakayama was born into a family of doctors, and was expected to pursue medicine as a career. However, Nakayama de ...
wanted the company to develop an iconic mascot character and build a game around it as one means to challenge Nintendo's own
Mario
is a character created by Japanese video game designer Shigeru Miyamoto. He is the title character of the ''Mario'' franchise and the mascot of Japanese video game company Nintendo. Mario has appeared in over 200 video games since his cre ...
mascot.
Company artist
Naoto Ohshima
(born February 26, 1964) is a Japanese artist and video game designer, best known for designing Sonic the Hedgehog and Dr. Eggman characters from Sega's '' Sonic the Hedgehog'' franchise. Although Yuji Naka created the original tech demo aroun ...
came up with the concept of
Sonic the Hedgehog, a fast anthropomorphic character with an "attitude" that would appeal to teenagers and incorporating the blue color of Sega's logo, and
Yuji Naka
, credited in some games as YU2, is a Japanese video game programmer, designer and producer. He is the former head of the Sega studio Sonic Team, where he was the lead programmer of the original '' Sonic the Hedgehog'' series on the Sega Mega ...
helped to develop the game ''
Sonic the Hedgehog'' to showcase the character as well as the graphics and processing speed of the Genesis.
The game was ready by early 1991 and launched in North America in June 1991.
Separately, Sega fired Katz and replaced him with
Tom Kalinske
Thomas Kalinske (born July 17, 1944) is an American businessman, best known as having worked for Mattel from 1972 to 1987, where he was credited with reviving the Barbie and Hot Wheels brands, launching Masters of the Universe, then being promoted ...
as Sega of America's new CEO in mid-1990.
Kalinske had been president of
Mattel
Mattel, Inc. ( ) is an American multinational toy manufacturing and entertainment company founded in January 1945 and headquartered in El Segundo, California. The company has presence in 35 countries and territories and sells products in more ...
and did not have much experience in video games but recognized the
razor and blades model
The razor and blades business model is a business model in which one item is sold at a low price (or given away for free) in order to increase sales of a complementary good, such as consumable supplies. It is different from loss leader marketin ...
, and developed a new strategy for Sega's push to challenge Nintendo's dominance in America with four key decisions, which included cutting the price of the Genesis from to , and continue the same aggressive marketing campaigns to make the Genesis look "cool" over the NES and of Nintendo's upcoming
Super Nintendo Entertainment System (SNES).
Further, Kalinske pushed hard for American developers like Electronic Arts to create games on the Genesis that would better fit American preferences, particularly sports simulation games which the console had gained a reputation for. Finally, Kalinske insisted on making ''Sonic the Hedgehog'' the bundled game on the system following its release in June 1991, replacing ''Altered Beast'' and even offering those that had purchased a Genesis with ''Altered Beast'' a trade-in replacement for ''Sonic''.
Under Kalinske, Sega also revamped their advertising approach, aiming for more of a young adult audience, as Nintendo still was positioning the SNES as a child-friendly console. Advertising focused on ''Sonic'', the edgier games in the Genesis library, and its larger library of sports games which appealed to this group. Television ads for the Genesis and its games ended with the "Sega Scream" – a character shouting the name "Sega" to the camera in the final shot – which also caught on quickly.
These changes, all predating the SNES's planned North American release in September 1991, gave Sega its first gain on Nintendo in the U.S. market. Further, the price cut to made the Genesis a cheaper option than the planned price for the SNES led many families to purchase the Genesis instead of waiting for the SNES. The Genesis had a larger library of games for the U.S. with over 150 titles by the time the SNES launched alongside eight games, and Sega continued to push out titles that drew continuous press throughout the year, whereas with the SNES, its game library was generally held up by flagship ''Mario'' and ''Zelda'' games that only came at out once a year, along with less which further made the Genesis a more desirable option.
For Nintendo, up until 1991, they had been passive towards Sega's approach in North America, but as the SNES launch approach, the company recognized that they were losing ground. The company shifted their advertising in North America to focus on more of the advanced features of the SNES that were not present in the Genesis, such as its
Mode 7
Mode 7 is a graphics mode on the Super Nintendo Entertainment System video game console that allows a background layer to be rotated and scaled on a scanline-by-scanline basis to create many different effects. The most famous of these effects ...
to create simulated 3D perspective effects.
The initial shipment of one million SNES units sold out quickly and a total of 3.4 million SNES were sold by the end of 1991, a record for a new console launch, but the Genesis maintained strong sales against the SNES.
The Genesis's resilience against the SNES led several of Nintendo's third-party developers to break their exclusive development agreements with Nintendo and seek out licenses to also develop for Genesis. Including Acclaim, Konami, Tecmo, Taito, and Capcom. The latter of which arranged to have a special licensing mechanism with Sega, allowing them to publish select titles exclusively for the Genesis.
During this period, the push for marketing by both Nintendo and Sega led to the growth of
video game magazines
Video game journalism is a branch of journalism concerned with the reporting and discussion of video games, typically based on a core "reveal–preview–review" cycle. With the prevalence and rise of independent media online, online publicat ...
. Nintendo had already established ''
Nintendo Power
''Nintendo Power'' was a video game news and strategy magazine from Nintendo of America, first published in July/August 1988 as Nintendo's official print magazine for North America. The magazine's publication was initially done monthly by Ninten ...
'' in 1988 in part to serve as a help guide for players on its popular titles, and was able to use this further to advertise the SNES and upcoming games. Numerous other titles grew in the late 1980s and early 1990s, giving Sega the opportunity to market its games heavily in these publications.
The war escalates in 1992 and 1993
Nintendo publicly acknowledged that it knew it was no longer in the dominant position in the console market by 1992.
A year into the SNES's release, the SNES's price was lowered to to match the Genesis, to which Sega reduced the Genesis to shortly after. The SNES was helped by Capcom's decision to maintain exclusivity of its home port of its popular brawler arcade game ''
Street Fighter II: The World Warrior'' to the SNES when it was released in June 1992. While the SNES outsold the Genesis in the U.S. in 1992. the Genesis still had a larger install base.
By the start of 1993, the Genesis had captured about 55% of the market, a stark contrast to 1990 when Nintendo had controlled 90% of the market.
The success of ''Street Fighter II'' both as an arcade game and as a home console title led to the growth of the
fighting game genre, and numerous variations from other developers followed. Of significant interest was
Midway's ''
Mortal Kombat'', released to arcades in 1992. Compared to most other fighting games at the time, ''Mortal Kombat'' was much more violent. The game showed combatants’ blood splatter during combat and allowed players to end matches in graphically intense "fatalities.” Because of its controversial style and gameplay, the game proved extremely popular in arcades.
By 1993, Both Nintendo and Sega recognized the need to have ''Mortal Kombat'' on their consoles. However, Nintendo, fearing issues with the game’s violence, licensed a “clean” version of the game from Acclaim for the SNES. Which included replacing the blood splatter with sweat and removing the aforementioned fatalities. Sega also licensed a censored version of the game for the Genesis. However, players could enter a
cheat code
Cheating in video games involves a video game player using various methods to create an advantage beyond normal gameplay, usually in order to make the game easier. Cheats may be activated from within the game itself (a cheat code implemented by ...
that reverted the game back to its original arcade version. Both home versions were released in September, and approximately 6.5 million units were sold over the game’s lifetime. But the Genesis version was more popular with three to five times more sales than its SNES counterpart.
The popularity of the home console version of ''Mortal Kombat'', coupled with other moral panics in the early 1990s, led to concerns from parents, activists and lawmakers in the United States, leading up to the
1993 congressional hearings on video games
On December 7, 1993, and March 5, 1994, members of the combined United States Senate Committees on Governmental Affairs and the Judiciary held congressional hearings with several spokespersons for companies in the video game industry including N ...
first held in December. Led by Senators
Joe Lieberman
Joseph Isadore Lieberman (; born February 24, 1942) is an American politician, lobbyist, and attorney who served as a United States senator from Connecticut from 1989 to 2013. A former member of the Democratic Party, he was its nominee for ...
and
Herb Kohl
Herbert H. Kohl (born February 7, 1935) is an American businessman and politician. Alongside his brother and father, the Kohl family created the Kohl's department stores chain, of which Kohl went on to be president and CEO. Kohl also served as a ...
, the Senate Committees on
Governmental Affairs and
the Judiciary brought several of the video game industry leaders, including
Howard Lincoln
Howard Charles Lincoln (born February 14, 1940) is an American lawyer and businessman, known primarily for being the former Chairman of Nintendo of America and the former Chairman and Chief Executive Officer of the Seattle Mariners baseball tea ...
, vice president of Nintendo of America, and Bill White, vice president of Sega of America, to discuss the way they marketed games like ''Mortal Kombat'' and ''
Night Trap
''Night Trap'' is a 1992 interactive movie developed by Digital Pictures and published by Sega for the Sega CD. Presented primarily through full-motion video (FMV), ''Night Trap'' tasks the player to observe teenage girls having a sleepov ...
'' on consoles to children. Lincoln and White accused each other's companies of creating the issue at hand. Lincoln stated that Nintendo had taken a curated approach to selecting games for their consoles, and that violent games had no place in the market. White responded that Sega purposely was targeting an older audience than Nintendo, and had created a
ratings system for its games that it had been trying to encourage the rest of the industry to use; further, despite Nintendo's oversight, White pointed out that there were still many Nintendo titles that incorporated violence.
With neither Lincoln nor White giving much play, Lieberman concluded the first hearing with a warning that the industry needs to come together with some means to regulate video games or else Congress would pass laws to do this for them.
By the time of the second hearing in March 1994, the industry had come together to form the
Interactive Digital Software Association
The Entertainment Software Association (ESA) is the trade association of the video game industry in the United States. It was formed in April 1994 as the Interactive Digital Software Association (IDSA) and renamed on July 21, 2003. It is based in ...
(today the Entertainment Software Association) and were working to establish the
Entertainment Software Rating Board (ESRB), a ratings panel, which ultimately was introduced by September 1994.
Despite Sega offering its ratings system as a starting point, Nintendo refused to work with that as they still saw Sega as their rival, requiring a wholly new system to be created.
The ESRB eventually established a form modelled off the
Motion Picture Association of America
The Motion Picture Association (MPA) is an American trade association representing the five major film studios of the United States, as well as the video streaming service Netflix. Founded in 1922 as the Motion Picture Producers and Distrib ...
(MPAA)'s rating system for film, and the committee was satisfied with the proposed system and allowed the video game industry to continue without further regulations.
The arrival of Sony and the end of the war
In 1994 and 1995, there was a contraction in the video game industry, with
NPD Group
The NPD Group, Inc. (NPD; formerly National Purchase Diary Panel Inc. and NPD Research Inc.) is an American market research company founded on September 28, 1966, and based in Port Washington, New York. In 2017, NPD ranked as the 8th largest mar ...
reporting a 17% and 19% year-to-year drop in revenue. While Sega had been outperforming Nintendo in 1993, it still carried corporate debt while Nintendo remaining debt-free from having a more dominant position in the worldwide market, even beating Sega in the North American and US market winning the 16 bit console war. To continue to fight Nintendo, Sega's next console was the
Sega Saturn, first released in November 1994 in Japan. It brought in technology used by Sega's arcade games that used 3d polygonal graphics, and launch titles featured home versions of these arcade games including ''
Virtua Fighter
is a series of fighting games created by Sega-AM2 and designer Yu Suzuki. The original '' Virtua Fighter'' was released in October 1993 and has received four main sequels and several spin-offs. The highly influential first ''Virtua Fighter'' ga ...
''. While ''Virtua Fighter'' was not a pack-in game, sales of the title were nearly 1:1 with the console in Japan.
Sega, recognizing that they had numerous consoles with disparate games they were now trying to support, decided to put most of their attention onto the Saturn line going forward, dropping support for the Genesis despite its sales still being strong in the United States at the time.
At the same time, a new competitor in the console marketplace emerged,
Sony Computer Entertainment
Sony Interactive Entertainment (SIE), formerly known as Sony Computer Entertainment (SCE), is a multinational video game and digital entertainment company wholly owned by multinational conglomerate Sony. The SIE Group is made up of two legal co ...
, with the introduction of the
PlayStation in December 1994. Sega, aware of Sony's potential competition in Japan, made sure to have enough Saturns ready for sale on the day the PlayStation first shipped as to overwhelm Sony's offering.
Both Sega and Sony turned to move these units to the North American market. With the formation of the ISDA, a new North American tradeshow, the
Electronic Entertainment Expo (E3) was created in 1995 to focus on video games, to distinguish it from the
Consumer Electronics Show (CES), which covered all home electronics. Nintendo, Sega and Sony gave their full support to E3 in 1995. Sega believed they had the stronger position going into E3 over Sony, as gaming publications, comparing the Saturn to the PlayStation, rated the Saturn as the better system. At the first E3 in May 1995, Sega's Kalinske premiered the North American version of the Saturn, announced its various features and its selling price of , and said that while it would officially launch that same day, they had already sent a number of systems to selected vendors for sale.
Sony's Olaf Olafsson of Sony Electronic Publishing began to cover the PlayStation features, then invited Steve Race, president of Sony Computer Entertainment America to the stage. Race stated the launch price of the PlayStation, "", and then left to "thunderous applause".
The surprise price cut caught Sega off-guard, and, in addition to several stores pulling Sega from their lineup due to being shunned from early Saturn sales, the higher price point made it more difficult for them to sell the system.
When the PlayStation officially launched in the United States in September 1995, its sales over the first two days exceeded what the Saturn had sold over the prior five months.
Because Sega had invested heavily on Saturn into the future, Sony's competition drastically hurt the company's finances.
In the case of Nintendo, they bypassed the 32-bit CPU and instead their next offering was the
Nintendo 64
The (N64) is a home video game console developed by Nintendo. The successor to the Super Nintendo Entertainment System, it was released on June 23, 1996, in Japan, on September 29, 1996, in North America, and on March 1, 1997, in Europe and ...
, a 64-bit CPU console first released in June 1996.
While this gave them powerful capabilities such as 3D graphics to keep up and surpass those on the Saturn and PlayStation, it was still a cartridge-based system limiting how much information could be stored for each game. This decision ultimately cost them
Square Soft who moved their popular ''
Final Fantasy
is a Japanese video game, Japanese science fantasy anthology media franchise created by Hironobu Sakaguchi and developed and owned by Square Enix (formerly Square (video game company), Square). The franchise centers on a series of fantasy and ...
'' series over to the PlayStation line to take advantage of the larger space on optical media.
The first PlayStation game in the series, ''
Final Fantasy VII'', drove sales of the PlayStation, further weakening Nintendo's position and driving Sega further out of the market.
By this point, the console war between Nintendo and Sega had evaporated, with both companies now facing Sony as their rival. Sega made one more console, the
Dreamcast
The is a home video game console released by Sega on November 27, 1998, in Japan; September 9, 1999, in North America; and October 14, 1999, in Europe. It was the first sixth-generation video game console, preceding Sony's PlayStation 2, Nint ...
, which had a number of innovative features including a built-in
modem
A modulator-demodulator or modem is a computer hardware device that converts data from a digital format into a format suitable for an analog transmission medium such as telephone or radio. A modem transmits data by Modulation#Digital modulati ...
for online connectivity, but the console's lifespan was short-lived in part due to the success of Sony's next product, the
PlayStation 2, one of the best-selling home consoles of all time. Sega left the home console hardware business in 2001 to focus on software development and licensing.
Nintendo remains a key player in the home console business, but more recently has taken a
"blue ocean strategy" approach to avoid competing directly with Sony or Microsoft on a feature-for-feature basis with consoles like the
Wii,
Nintendo DS, and
Nintendo Switch.
Legacy
The Sega/Nintendo console war is the subject of the
non-fiction novel
The non-fiction novel is a literary genre which, broadly speaking, depicts real historical figures and actual events woven together with fictitious conversations and uses the storytelling techniques of fiction. The non-fiction novel is an otherw ...
''
Console Wars'' by Blake Harris in 2014, as well as a
film adaption/documentary of the book in 2020.
Sega and Nintendo have since collaborated on various software titles. Sega has developed a biennial ''Mario & Sonic at the Olympics'' series of sports games based on the Summer and Winter Olympics since 2008 featuring characters from both the ''Super Mario'' and ''Sonic'' series, while Nintendo has developed the ''
Super Smash Bros.'' crossover fighter series for numerous Nintendo properties that has included Sonic as a playable character along with other ''Sonic'' characters in supporting roles since ''
Super Smash Bros. Brawl
''Super Smash Bros. Brawl'' is a 2008 crossover fighting video game developed by Sora Ltd. and published by Nintendo for the Wii. The third installment in the ''Super Smash Bros.'' series, it was announced at a pre-E3 2005 press conferenc ...
''.
Sony versus Microsoft
Background
Since the sixth generation, both Sony and Microsoft have been direct competitors for home consoles. Since 2000, both companies have released a new console model within a year of each other with roughly comparable specifications. Because the console hardware does not have distinct technical advantages, the two companies compete more by creating a unique console environment through online services, and offering console-exclusive games from their first-party studios and from third-party studios.
While Nintendo also has remained a significant competitor to both companies, its development and marketing strategy using the
"blue ocean" approach is considered fundamentally different from Sony or Microsoft that it is usually not considered as major participant in the console war.
Today, it is the most evident ongoing console war, with both Sony and Microsoft controlling 72% of the gaming console market share.
Initial Challenge From Microsoft
Microsoft specifically entered the console market with the
Xbox
Xbox is a video gaming brand created and owned by Microsoft. The brand consists of five video game consoles, as well as applications (games), streaming services, an online service by the name of Xbox network, and the development arm by the ...
console in 2001 as it saw Sony's
PlayStation 2 as a potential competitor to the home computer as a ubiquitous device in the living room. Whereas the PlayStation 2 was developed from mostly custom components, Microsoft approached the Xbox as a highly refined personal computer based on
Microsoft Windows and
DirectX technology. The original Xbox did not compete well against the PlayStation 2, selling only about 24 million units worldwide against the PlayStation 2's 155 million, with Microsoft reportedly failing to profit on the console hardware. Nonetheless, Microsoft, satisfied with the Xbox's overall performance, reaffirmed its commitment to the console marketplace with the reveal of the Xbox 360 in 2005.
Xbox 360 vs PlayStation 3
Microsoft was able to take lessons learned from the first Xbox to its second model, the
Xbox 360
The Xbox 360 is a home video game console developed by Microsoft. As the successor to the original Xbox, it is the second console in the Xbox series. It competed with Sony's PlayStation 3 and Nintendo's Wii as part of the seventh generati ...
released in 2005, beating out Sony's release of the
PlayStation 3
The PlayStation 3 (PS3) is a home video game console developed by Sony Computer Entertainment. The successor to the PlayStation 2, it is part of the PlayStation brand of consoles. It was first released on November 11, 2006, in Japan, November ...
in 2006. Besides the earlier release and an improved design, Microsoft had secured more first-party developers in its
Microsoft Game Studios, mimicking Sony's own first-party developers, as well as other third-party developers for several console exclusives. The PlayStation 3, on the other hand, had fewer exclusives at launch and was hampered by a higher price point at launch, giving the Xbox 360 an edge in the first years of release. Both consoles aimed to include multimedia feature into high-definition movie playback. One miscue Microsoft had was backing the
HD-DVD standard for movie playback over the
Blu-ray
The Blu-ray Disc (BD), often known simply as Blu-ray, is a digital optical disc data storage format. It was invented and developed in 2005 and released on June 20, 2006 worldwide. It is designed to supersede the DVD format, and capable of st ...
standard that Sony had selected, as shortly after the Xbox 360's release, the movie industry had standardized on Blu-ray. The Xbox 360 also suffered from the "
Red Ring of Death", a hardware fault on a large fraction of retail models that cost Microsoft over in repairs over the console's lifetime.
Both consoles were challenged by Nintendo's
Wii and specifically its novel
Wiimote motion-sensing device. To compete, both Microsoft and Sony released their own motion-sensing systems, the
Kinect and
PlayStation Move
is a motion game controller developed by Sony Interactive Entertainment. Initially released in 2010 for use with the PlayStation 3 home video game console, its compatibility was later expanded to its successor, the PlayStation 4 in 2013, its Pla ...
, respectively, for their consoles. The companies also released console refreshes mid-generation. Microsoft released a low-cost Xbox 360 S, shipped with less internal storage space, as well as a high-end Xbox 360 E, shipped with more storage space and the Kinect sensor. Sony released two different Slim models of the PlayStation 3 that reduced the system size and subsequent retail price which helped improve sales. Ultimately, the Xbox 360 sold an estimated 84 million units, based on industry estimates as Microsoft stopped reported its sales, while the PlayStation 3 sold 87 million units;
the Wii comparatively sold over 101 million units.
Xbox One vs PlayStation 4
Sony and Microsoft both released their next consoles, the
PlayStation 4 and the
Xbox One
The Xbox One is a home video game console developed by Microsoft. Announced in May 2013, it is the successor to Xbox 360 and the third base console in the Xbox series of video game consoles. It was first released in North America, parts of ...
, in 2013. For Sony, they considered the difficulties developers had with using the custom instruction set for the Cell processor on the PlayStation 3, and restructured the PlayStation 4 to use more the more-standard
x86
x86 (also known as 80x86 or the 8086 family) is a family of complex instruction set computer (CISC) instruction set architectures initially developed by Intel based on the Intel 8086 microprocessor and its 8088 variant. The 8086 was intr ...
instruction set used by most personal computers helping to bring development in convergence with computer systems.
Microsoft initially wanted to drive the Xbox One as a replacement for a cable box in the living room as a single source for entertainment with features aimed around television viewing in addition to gaming. To achieve this, the Xbox One was to be shipped with Kinect and was to use an always-on Internet connection as to enable numerous features, such as the ability to share games with other family members. However, when these features were first promoted, there was heavy backlash from journalists and consumers, considering these as unnecessary, privacy-invading features. Microsoft had to pull many of these features from the Xbox One prior to launch, such as eliminating the always-connected requirement and the need to use Kinect.
Sony took the opportunity in their PlayStation 4 marketing to play off Microsoft's missteps, such as demonstrating the simplicity of game sharing by simply passing along the physical media to another person, as well as its lower price point. While Microsoft was able to course-correct the Xbox One after launch, Sony had gained enough ground with the capabilities of the PlayStation 4 along with a strong library of console-exclusive titles, and the PlayStation 4 outsold the Xbox One, 106 million units
to 52 million units.
Xbox Series X, S vs PlayStation 5
Both companies released their next consoles in 2020, the
PlayStation 5 and the
Xbox Series X and Series S
The Xbox Series X/S are home video game consoles developed by Microsoft. They were both released on November 10, 2020, as the fourth generation Xbox, succeeding the Xbox One. Along with Sony's PlayStation 5, also released in November 2020, ...
. Both console families represent technology improvements with similar target specifications, including high-resolution and high framerates, high-speed internal storage, and backward compatibility with earlier systems. More recently Microsoft has expanded game offerings beyond consoles, such as
Xbox Game Pass
Xbox Game Pass and PC Game Pass are video game subscription services from Microsoft. Both services grant users access to a rotating catalog of games from a range of publishers and other premium services, including Xbox Live Gold and EA Play, fo ...
and the
xCloud
Xbox Cloud Gaming (formerly known as Project xCloud and colloquially known as xCloud) is Microsoft's Xbox cloud gaming service. Initially released in beta testing in November 2019, the service later launched for subscribers of Xbox Game Pass ...
game streaming service, as to move away from a console war mentality.
Phil Spencer, head of Xbox for Microsoft, stated that they see Xbox in competition with
Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fi ...
and other online streaming services vying for entertainment options, rather than Sony.
Similarly, Sony launched a more intense focus into streaming services. For example, in 2020, a "media remote" was launched, advertising "effortless control of a wide range of blockbuster entertainment on the PS5".
Furthermore, there have been rumours of both companies launching further consoles in the future, with a Sony executive claiming that further consoles will come out in a six to seven-year cycle. Microsoft going one step further claiming it has consoles which "will not come to light for many years."
With Microsoft's acquisition of
Zenimax Media
ZeniMax Media Inc. is an American video game holding company based in Rockville, Maryland, and founded in 1999.
The company owns publisher Bethesda Softworks with its development unit Bethesda Game Studios (developer of ''The Elder Scrolls,'' ...
in 2021 and a
planned acquisition of
Activision Blizzard
Activision Blizzard, Inc. is an American video game holding company based in Santa Monica, California. It was founded in July 2008 through the merger of Activision, Inc. (the publicly traded parent company of Activision Publishing) and Viven ...
, announced in January 2022 and expected to close in 2023, the potential for escalation in Sony/Microsoft console war grew, as Microsoft could potentially make
Bethesda Softworks and Activision Blizzard's games exclusive to the Xbox line. Microsoft's potential owernship of the ''
Call of Duty'' series had become a focus of Sony's concerns of the acquisition. While Microsoft has given Sony written commitment to keep the ''Call of Duty'' series on the PlayStation consoles for several years, Sony has expressed concern that this is not adequate and that Microsoft would make the series Xbox-exclusive following that period.
Legacy
In 2013,
South Park lampooned and satirized the eighth-gen console war between the Xbox One and PlayStation 4 with their fan-favorite "
Black Friday Trilogy".
Differing from Sega vs Nintendo there appears to be an increasing divide between the two companies rather than collaboration. Xbox remains the more expensive of the two, however both console prices are high when compared to the traditional console market, setting a trend for ever more expensive consoles.
Other Console Wars
1990s handheld consoles
A number of major handheld consoles were released on the market within about a year of each other: Nintendo's
Game Boy
The is an 8-bit fourth generation handheld game console developed and manufactured by Nintendo. It was first released in Japan on April 21, 1989, in North America later the same year, and in Europe in late 1990. It was designed by the same t ...
, Sega's
Game Gear
The is an 8-bit Fourth generation of video game consoles, fourth generation handheld game console released by Sega on October 6, 1990, in Japan, in April 1991 throughout North America and Europe, and during 1992 in Australia. The Game Gear pri ...
, and the
Atari Lynx
The Atari Lynx is a hybrid 8/16-bit fourth generation handheld game console released by Atari Corporation in September 1989 in North America and 1990 in Europe and Japan. It was the first handheld game console with a color liquid-crystal disp ...
. While the Game Boy used a monochromatic display, both the Game Gear and Lynx had colour displays. As these handheld releases were alongside the Sega v. Nintendo console war, they were also subject to heavy marketing and advertising to try to draw consumers.
However, the Game Boy ultimately won out in this battle, selling over 118 million units over its lifetime (including its future revisions) compared to 10 million for the Game Gear and 3 million for the Lynx. The Game Boy initially sold for or more cheaper than its competitors, and had a larger library of games, including what is considered the handheld's
killer app
In marketing terminology, a killer application (commonly shortened to killer app) is any computer program or software that is so necessary or desirable that it proves the core value of some larger technology, such as computer hardware, a video game ...
, ''
Tetris
''Tetris'' (russian: link=no, Тетрис) is a puzzle video game created by Soviet software engineer Alexey Pajitnov in 1984. It has been published by several companies for multiple platforms, most prominently during a dispute over the appro ...
'', that drew non-gamers to purchase the handheld to play it.
In video games
The
Hyperdimension Neptunia
is a series of role-playing video games created and developed by Compile Heart and Idea Factory. The series debuted in Japan on August 19, 2010, with the video game of the same name for the PlayStation 3, later re-released as an enhanced rem ...
series of video games started as a parody of the console wars, incorporating personified consoles, developers, consumers, and other such figures within the gaming industry.
References
{{History of video games
History of video games
Business rivalries