By Steve Boinodiris on 6/9/00 Article Discussion Forum

1989 - 1995: FIFTH GENERATION (16 bit-era)

Backed by impressive resources, NEC was 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 in the video game industry. After refining 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. But video game players wanted artistic finesse in entertainment rather than engineering, and NEC did not have the acumen for keeping up with game development as their competitors did. When the Sega Genesis was released, its dramatically more impressive graphics, sound and gameplay turned the TurboGrafx-16 passé overnight. Having never produced entertainment software before, NEC designers had taken a casual approach to producing games. Many of their games had all the flash of a 16-bit title but little in the way of depth of gameplay.

At this time, third parties were relied upon to do game development for both stand-alone games and PCs. Stand-alone game development required special relationships between development shops and hardware developers for stand-alone games. This later became an obstacle since such contracts were locking in games for one company alone (i.e. Nintendo). At this point, opening games on general purpose PCs took time, and stand-alone units had cost and performance advantages over PCs. Until low cost, specialized hardware for PCs that produced the same effect as the stand-alone units appeared and PC performance and proliferation expanded, stand-alone games remained in demand.

NEC also depended on third-party developers to build a library of games. 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, the main CPU was merely 8-bit (a 6820, to be exact).

• Year: 1989
• Company: NEC
• Program: TurboGrafx-16
• Type: Home Version
• Debut Price: $190

Although Sega was demolished in the 8-bit era, and the only profits keeping them afloat came exclusively from their arcade base (only to be swallowed by the black hole of debt surrounding the Master System), they were about to make a big comeback. 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." Sega was beaten to the punch, however, when NEC's TurboGraphix-16 was released 6 months before the slated Genesis release. But the Genesis would obliterate the Turbographix when it was released because of one key point: games. The Genesis debuted with a smash hit Sega arcade game packed inside (Altered Beast). Several companies, including Electronic Arts, initially left Nintendo to produce Genesis titles. They were followed by many more as time went by and if was discovered that a 16-bit Nintendo system was merely a rumor.

During the Fourth Generation, Nintendo dominated the industry with control of 85 to 90 percent of the market on both sides of the Pacific. So when Nintendo's competitors began buzzing with rumors of 16-bit systems, Nintendo continued unabated in their production of 8-bit hardware. Nintendo's lack of aggression cost them dearly as 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, who was much more aggressive in developing technologies and whose ads were much more fun and really honed in on what game players liked.

When the 16-bit Nintendo was finally released in 1991, two years after the Sega Genesis, many predicted it would take control of the market. 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. 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 Sega CD system was produced in 1992 for $300 (despite a failed attempt by NEC to do the same) which became quite popular.

• Year: 1989
• Company: SEGA
• Program: GENESIS
• Type: 16 bit Home Version
• Debut Price: $190

By mid-1991, (13) it had become evident to everyone, including Nintendo's president Hiroshi Yamauchi, that Nintendo was quickly on its way out if something was not done. Yamauchi put 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. In 1990, Nintendo released Super Mario 3, the all-time best-selling video game cartridge. Also in 1990, SNK, a long time Nintendo developer and maker of such games as Ikari Warriors and Crystalis released 24 bit Neo Geo in arcade and home formats. The graphics and sounds beat those of Genesis and TurboGrafx, but costs buried SNK. Despite friction between Nintendo and developer companies, Nintendo got a one-year exclusive contract for Street Fighter II and commitment to release for Teenage Mutant Turtles in 1992.

• Year: 1991
• Company: Nintendo
• Program: Super Nintendo Entertainment System
• Type: 16 bit Home Version
• Debut Price: $200

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

No longer able to control its licensees as they had in the fourth generation, Nintendo was forced into new agreements with the third party producers. While some producers 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. At the same time, PC games proliferated further. Competition between Nintendo and Sega brought new functions into games, which were duplicated in PCs. Ultimately, during the last few years of the fifth generation, the industry started buzzing about the forthcoming sixth generation and its 32-bit hardware.

Today, there is much debate as to 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 still been far more Genesis systems purchased since 1989.