Console war
A console war is the competition between two or more video game console manufacturers. While console manufacturers are generally always trying to outperform 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.
The term became popular to describe competition 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. 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. As more manufacturers entered the market and technology improved, the market began to coalesce around releases of more advanced hardware every few years on a predictable cycle, which are typically grouped into generations. Since 1972, there have been nine console generations, with two to three dominant manufacturers controlling the marketplace.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, 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.
Nintendo versus Sega
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, 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 for the Atari VCS 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 console in 1983, one of the first consoles of the third 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. 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 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.
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 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, 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. 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 of America developed a licensing plan 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 did not begin. Further, Sega's third-party distributor, the toy company Tonka, 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 was started by the launch of NEC's PC Engine 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 one of many competitors 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. 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, 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 led by Jack Tramiel. 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.
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, Arnold Palmer Golf, Joe Montana Football, and Michael Jackson's Moonwalker.
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'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 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 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.