Retro Game Consoles – Third Generation Game Console

Third Generation Game Console

Atari 7800

In 1986, Atari released the Atari 7800, three years after it was designed. Wit the video game crash of 1983/84, Atari cancelled plans for the 7800. Had it been released in 1984, it would have become a great success.

Atari 7800 game console

Above: Atari 7800 game console

However, compared to the Nintendo NES and the Sega Master System, the Atari 7800 was outdated, and despite its compatibility to the 2600, the Atari 7800 was cancelled in 1989. Gamers wanted the latest and greatest. There was no retro gaming market back in the 1980s.

In 1989, Atari released the Atari Lynx, the first hand-held colour game device. The unit was actually developed by Epyx, which had trouble funding the project. The machine could display an incredible 4096 colours on a 160 x 120 pixel screen.

However, Atari once again stole defeat from the jaws of victory. There was high demand for the device, but Atari could not meet demand, leaving people to purchase the colourless Game Boy instead. When Sega released the GameGear in1991, it ended Atari’s dominance in the colour hand-held market. Moreover, Sega had more titles and began to outsell the Lynx. Atari pulled the Lynx from the market in 1993.

Nintendo Entertainment System

In 1984, Nintendo released the Nintendo Entertainment System,, which is widely known as the NES. Some consider Nintendo’s entry into this market to be a gamble due to the video game crash and Commodore’ C64 harsh marketing and price cutting. However, there were very few console still in the market and Nintendo very quickly became the top selling game console.

Nintendo Entertainment System

Above: Nintendo Entertainment System game console

This was a dramatic change for a company was previously a simple toy company. Nintendo also learned from Atari’s earlier successes by porting important arcade games while also developing their own games such as the popular Zelda series.

Nintendo always seemed to balance the market needs for a competitive while providing a depth in games and still manage to make a buck or two. In fact, Nintendo still has one of the popular modern consoles in production, the Wii.

Nintendo began it’s gaming history producing arcade hits like Donkey Kong and Mario Bros, and selling the licensing rights to those games for home console use (See Colecovision). Eventually Nintendo decided to take a crack at the home console industry.

Sega Master System

In 1986, Sega released the Sega Master System three months after the NES. However, Sega went to Tonka Toys for distribution and marketing. Sega also encounter Nintendo software restrictions that prevent game developers from making games for any other console makers. As a result, the Sega Master System did not reach the same level of success as the NES.

Sega Master System

Above: Sega Master System game console

Nintendo was proving once again that gaining market dominance in this market was not all about price and features, it was locking in software restrictions that prevented its companies like Sega from accessing top selling games.

While Sega was not that successful in North America, it was extremely popular in the UK and Brazil mainly due to currency premiums that made the NES much more expensive.

By the time the second generation games came out, Sega started to show off its superior technical ability, which insured them a spot in the market for several generations.

Phillips and Sony partnered up to create a new CD multimedia system with interactive sound, images and computer instructions. However, as the Amiga found out, people were not ready for multimedia and the Phillips CD-I 210 failed to achieve any sort of success.

Instead of letting their technology go to waste, Phillips made some modification to the device and re-released the device as a videogame console in 1991.

However, with a price of around US$400.00, the unit never took off with sales around 500,000.

Game Boy

In 1989, Nintendo released the Game Boy handheld game console, and at a price of US$79.95, the device helped to further Nintendo’s dominance in the market. By 2004, Nintendo had sold close to 70 million units worldwide.

Part of the reason for its first good start was that is was bundled with the highly addictive and popular Tetris. More over, the unit was easy to control and easy to carry around due to its compact size.

Sega Game Gear

In 1989, Sega released the Game Gear colour handheld device, competing directly with the Atari Lynz, the only other colour handheld.

Sega implemented a similar architecture in the Game Gear as they in their Sega Master System to facilitate easy porting of games. However, despite being superior to the Game Boy Mono, it’s battery life was woefully inadequate at only three hours.

The unit achieve a moderate level of success having sold almost nine million units worldwide before being retired in 1997. It sold about one-tenth the number of units as Game Boy.


SNK (Shin Nihon Kikaku, translated as “New Japanese Project”), a small third party software developer for the Nintendo NES, decided to try their hand in the arcade market in 1989. It seemed like a bad business decision since gamers no longer flocked to arcades. Nonetheless SNK released the MVS (Multi-Video System). The MVS allowed the arcade operator to house many different video games in a single cabinet.

The MVS’s strengths lay in the design of its hardware. Its brain was composed of a 16-bit microprocessor (68000) and an 8-bit microprocessor (Z80). They were plentiful, cheap, and quite powerful for the time. Using them kept production costs down and made coding much easier. Both the 68000 and the Z80 were in common use at the time (Sega’s Genesis had the same CPU combination, for example).

The real magic of the MVS lay in its custom graphics chipset, and its ability to hold up to four games at once while switching between them at will. While this multi-game concept had been tried before (one example being Nintendo’s Playchoice system), SNK’s hardware was far superior to any of the multi-game systems currently available, and its vast ROM storage capacity allowed for detailed graphics.

In 1990, SNK made a gamble in releasing the Neo Geo at a price around US$650. Moreover, most of the games cost close to US$200.00 each. Granted, the graphics and sound were incredible and literally brought arcade quality gaming to the home.

However, SNK based this home system off the Arcade system. While each looked different in size, the insides were the same. Both systems had a Motorola 68000 and Z80 processors. Porting games from one system to the other was simple. But SNk did not promote the Neo Geo much, feeling that they had enough of a presence in the arcade.

In fact, the popularity of Street Fighter, Fatal Fury and the Art of Fighting did boost sales of the units. Still, the arcade was losing its influence as the place for top new games.

While in production for 14-years, it never sold more than one million units. SNK stopped producing games for the unit in 2004.

At first SNK marketed the Neo Geo falsely by calling it a “24-Bit System” (due to its combination of a 16-bit and 8-bit processor). After the initial advertising campaign, SNK decided not to advertise their home system anymore, since games could be seen in nearly every arcade (and kind of advertised themselves).

SNK’s gamble of entering the arcade / home game markets eventually paid off. In 1992, an game called Street Fighter 2 brought gamers back to the arcades. SNK took advantage of this by releasing similar arcade games such as Fatal Fury, and Art of Fighting. The games were quite successful, and many more were spawned. Third Party developers such as Data East began also producing titles for the Neo Geo AES / MVS.

SNK also created an innovative accessory that would become quite popular later. The Neo Geo ‘memory card’ could hold 19-27 save game positions, and worked on both the home and arcade systems. So a gamer could save their place in the arcade and take it home, and vice versa.

The Neo Geo was a phenomenal machine, but the high price tag catered to the hardcore arcade lovers only. Nonetheless it was an amazing machine that stood the test of time. The MVS alone managed to last over eight years in the demanding arcade environment, and its hardware has out-lived every other arcade hardware. Walk into any arcade, and you’re bound to see a Neo Geo MVS.


During the era, the Famicom became very popular in Japan. The Famicom’s American counterpart, the Nintendo Entertainment System, highly dominated the gaming market in North America, thanks in part to its restrictive licensing agreements with developers. Though the NES dominated the market, the Sega Master System was popular in Brazil and Europe, and the Atari 7800, were also major players during this era. The Sharp X68000 began its niche run in Japan with its first iteration in 1987.

Famicom game console

Above: Famicom game console

The latter part of the third generation introduced the Game Boy, which single-handedly gelled and proceeded to dominate the previously scattered handheld market for 15 years. While the Game Boy product line has been incrementally updated every few years, until the Game Boy Micro and Nintendo DS, and partially the Game Boy Color, all Game Boy products were backwards compatible with the original released in 1989.

The post-crash 8-bit era saw the first console role-playing video games, and was the birth of the side-scroller. Editing and censorship of video games was often used in localizing Japanese games to North America. It is the era when many famous video game series, and the characters starring in them, originated. Some notable examples include Super Mario Bros., The Legend of Zelda, Dragon Quest, Metroid, Mega Man, Metal Gear, Castlevania, Final Fantasy, Phantasy Star, and Bomberman.

In the later 8-bit era, the NES came out on top in North America and Japan, partially due to its earlier release, but mostly because of Nintendo’s strict licensing rules that forbade developers from releasing their games on other systems if their games were released on the NES. This put a damper on third party support for the Master System and the rest of Nintendo’s competition. However, the Master System was far more popular in Europe and Brazil, which were markets first covered by Sega. Many more games were released in Europe and Brazil than in North America, and the Master System had a very long shelf-life in Brazil, finally being discontinued in the late 1990s.

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