After Nintendo had essentially saved the console gaming industry in the United States with the release of its Nintendo Entertainment System in 1985, they owned nearly the entire home gaming market in the US. There were other consoles available in the US at the time, but none of them were as popular or as well-known as the NES. Nearly every kid in the neighborhood had an NES, and it did not look like any company would ever be able to compete with them. Then, in 1989, Sega released its 16 bit Genesis system, which boasted better graphics, sound, and games than the NES could offer. This release by Sega, which had been popular in Europe with its earlier Master System but not in the United States, gave them a significant market share in the United States and allowed them to compete with Nintendo like no other company before them had.
The Genesis was far superior to the NES, but that was not the only reason that they were able to compete with Nintendo. The Master System had been available in the United States, and it, too, was a slightly superior system than the NES, but it never came anywhere near the popularity of Nintendo’s system. This was partially due to the fact that they simply did not market it all that aggressively in the United States, and because of the fact that they did not have licenses with as many third-party developers. With the advancement in technology, and because Nintendo’s licensing procedures were far more strict than Sega’s, Sega was able to change both of these things by taking on more third-party developers and also forming an aggressive marketing campaign that targeted the inferior technology of the NES.
This became the beginning of what is now known as the “console wars.”