Pressure had been applied to Sega from the minute they entered the home console market in Japan. While the SG-1000 and SG-1000 II were profitable for Sega, selling above their initial expectations (as the Japanese console gaming market was still young), they were trumped by the MSX computer standard and the rise of Nintendo's Family Computer. Faced with marginalization, Sega released the much improved Sega Mark III in the hopes of gaining a bigger share of the market.
But the Sega Mark III failed to sell in the volumes Sega expected. By 1985 Nintendo held an estimated 90% of the market, and a Famicom "culture" had emerged in Japan, something which all new competitors would struggle to challenge.
In a last ditch effort, Sega brought the redesigned Sega Master System seen in North America to the Japanese market in late 1987 as a relaunch of the platform. The Master System performed slightly better than the Sega Mark III, but faced stiff competition with newer systems, particularly with NEC's PC Engine, which launched two weeks later on October 30, 1987.
About 800,000 Mark III and Master System consoles had been sold in Japan by mid-1988 (versus 6 million Famicoms).
While Sega had given itself a presence in the North American arcade scene earlier in the decade, a series of business decisions and changing market conditions had led to sell-offs and step-backs. It lacked a presence in the states - the early 1980s were dominated by the trials and tribulations of Atari (and its descendants) and an ever more saturated video game market. The video game crash of 1983 dented consumer confidence, and it was only with the emergence of Nintendo that the market became profitable again.
Around 1985 saw the return of Sega firm in the form of Sega of America, and a successful holiday season for Nintendo and its newly launched Nintendo Entertainment System (NES) prompted the company to think about the US home video game console market. The logical move was to bring the already-selling Sega Mark III into the country, but having felt the name would fail to attract customers, the console was completely redesigned, becoming the new "Sega Video Game System" (or Sega System for short).
Sega of America's marketing arm was peanuts compared to Nintendo's. Its consumer products division had only opened in April 1986 and consisted of two men, Bruce Lowry and Bob Harris and a couple of administrators working out of a small office next to Sega's local coin-op division. J. Walter Thompson (JWT) was hired to manage Sega's $9 million USD marketing budget, producing the packaging for the console and its initial array of games, and within two months the team at Sega had created a 1,800 square foot booth for Summer CES 1986.
Prior to Summer CES 1986, Sega had sold home video games in the US through third-party publishers and distributors, but the brand was not instantly recognisable - some at the event even mistook the company at the event for Saga Foods, bemused that a food distributor would enter the video game business. Nevertheless Sega were so pleased with JWT's handling of the CES booth that they cancelled a planned marketing review set for the end of the year, and kept the firm in charge for several months to come.
The Sega Video Game System was announced for a September 1986 release, although didn't arrive on store shelves until October. Initially two bundles of the console were sold - the cheaper "Sega Base System" (containing just a Power Base (the console unit) and a control pad) for around $139, and the "Sega Master System" (which also included a second control pad and a Light Phaser) for $149. The latter bundle eventually proved to be more popular, and as future bundles began offering more for less, the "Sega Master System" became synonymous with all home Sega future products, replacing the term "Sega Video Game System" entirely.
Nintendo had control of 90% of the North American video game market as early as 1986, and Sega struggled to get a foothold in the region, not helped by the fact that the NES was retailing for $10 less at the time. Nintendo's distribution chain was also much stronger, with access to the likes of Toys 'R' Us and Sears which Sega lacked, leading to far greater brand recognition, particularly over the holiday period. Nintendo was also popular for other reasons - Donkey Kong was the second biggest arcade game of 1981 (behind Pac-Man), and while Sega would begin to dominate the arcade scene in the months that followed, games like 1983's Mario Bros. were still out-performing milestones such as Hang-On.
Within its first four months of sale, the Sega Master System sold 125,000 consoles to North American consumers. While the figure was bleak compared to Nintendo's, rival Atari 7800 had managed only 100,000 in its first six months of sale.
Winter CES 1987 saw Sega and Nintendo as neighbouring booths, with Sega demonstrating Mark Cerny's 3D Glasses and Nintendo infamously showing their (ultimately cancelled) NES knitting machine. There were a number of small successes when Sega managed to get its console into Macy's, FAO Schwarz and Target, not to mention a favourable review by respected film critics Siskel and Ebert. Still, when Sega hit the 100,000 console sold milestone, 2 million NES consoles had been moved, with Nintendo holding onto 86-93% of the market.
After several months of poor sales, Hayao Nakayama, then CEO of Sega, decided to invest less money into marketing the Master System, inevitably selling a two year distribution contract to Tonka in August 1987. While this meant Tonka was responsible for the bulk of sales and distribution (being seen to have a wider access to retailers), Sega of America would still handle support and its parent company in Japan would continue to produce software.
Retrospectively, the move was considered a very bad one, as Tonka had never marketed a video game console and were clueless how to step up Sega's game. Lowry and Harris, unwilling to move to Tonka's headquarters in Minnesota, resigned shortly afterwards, with Bruce Lowry subsequently taking a job at Nintendo of Europe.
Tonka were generous in their marketing of Sega's console, spending $30 million USD on the Master System cause, but although this led to $90 million's worth of sales between July and December 1987 (a figure 20% higher than expected), the firm failed to sell one million consoles within two years. Tonka's then-ownership of Parker Brothers did allow for more Master System exclusive titles, however.
In early 1988 and continuing for much of the year, Japan was hit with a chip shortage which affected Sega's production of Master System cartridges. The real losers during this period however, were Nintendo, forced to delay big titles like Super Mario Bros. 2 into 1989.
When the contract expired in 1989, Sega reclaimed the rights to the Master System, but prioritised its newly released Sega Mega Drive (Sega Genesis) instead. In the Spring of 1990, the Master System's price dropped to under $70.
Sega soon created the cost-reduced Sega Master System II, a newer, smaller and sleeker console but which, to keep production costs low, lacked several features that had been present on the original. The company did everything in its power to market the system, but nothing came out of it. By 1991, the Master System's sales were virtually nonexistent in North America, and production ceased.
Though the Master System was more technically advanced in some ways than the NES, it did not attain the same level of popularity among consumers in the United States. The licensing agreement that Nintendo had with its third-party game developers may have had an impact as well; the agreement stated, in effect, that developers would produce games for the NES only. However, Sega did have the advantage of being able to pluck titles from their ever-growing arcade game library at the time, and so was able to build up a strong library of exclusive Master System titles.
While the Master System was forced to take a distant second, the console's existence demonstrated, alongside Nintendo, of a massive shift in the American video game industry towards Japanese manufacturers, pushing former industry leaders Atari into third, and wiping out attempts by Intv Corp to revitalise the aging Intellivision. Home computers, dominant in other parts of the world, were also kept at bay.
In Canada, the Master System was distributed by Irwin Toy, though many games were imported from the US.
At the time, Europe was still a divided continent when it came to video games. Most consumers played games through home computers, such as the ZX Spectrum and Commodore 64. American video game consoles had been sold in the region, but were not marketed heavily and were left behind in the early 1980s, leaving a big gap for Sega to fill.
The Master System arrived in Europe at different points, starting with Germany (and the Netherlands?) in October 1986 where it would be distributed by Ariolasoft. The company were at one point set to distribute the system in the UK, but the deal fell through, causing additional delays before Sega found a partner in Mastertronic (although strictly speaking Ariolasoft managed to import at least three Master Systems in the UK for demonstration purposes).
For the United Kingdom, France and Italy, the Master System would not arrive until Autumn 1987. Incidentally Nintendo launched their NES at around the same time - a full four years after it had arrived as the Famicom in Japan.
However, while sales were good on launch (giving Mastertronic about £5 million a year), neither the Sega Master System nor the Nintendo Entertainment System could unseat the dominant forces in UK gaming. Mid-1988 saw the UK continued to be led by the ZX Spectrum line, with the Commodore 64 in second and the Amstrad CPC in third. Similar stories were mirrored in France and Germany, with 16-bit computers taking a more prominent role as time went on, and in Spain, 40% of the market was owned by the MSX - the standard's second biggest home after Japan.
Nintendo predicted 40,000 Master Systems had been sold in the UK by the Summer 1988 (placing themselves on a similar figure), however it is widely thought Nintendo was trailing, with their systems being hard to find and the library of games being less than a third than what was being offered in the US. In comparison, the more expensive 16-bit Atari ST had sold 120,000 units at this point. The estimated figure had been raised to about 45,000 by November 1988, a ratio of 1:625 for residents in the UK (versus the extraordinary 1:10 ratio for Famicom owners in Japan).
Across Europe, it was thought about 155,000 consoles had been sold by mid-1988, alongside 600,000 cartridges. But as Commodore 64 and ZX Spectrum support began to dry out in 1989, consumers on a budget began to look at dedicated consoles once more, with the Master System benefiting the most. The total number of UK consoles had risen to 100,000 by the Autumn of 1989.
1989 also saw Virgin Mastertronic reduce the prices of older Master System games considerably, to the point where some where retailing for as little as £9.99 in the UK. Nintendo never chose to match this pricing structure.
Over the course of its first three years, the console was stocked in branches of Comet, Menzies, Dixons, Toys 'R' Us, Woolworths, Hamleys and Virgin Megastores, with Rumbelows joining in late 1989. Virgin Mastertronic also struck a deal with RCA/Columbia Video UK around this period, allowing console rentals from 1,200 outlets.
Between 1988 and 1991 a number of competitors were announced - the PC Engine (and TurboGrafx) which took very cautious steps to the point where it was largely ignored as a product, the much-hyped but ultimately cancelled Konix Multisystem project, and "consolised" machines in the form of the Amstrad GX4000 and the Commodore 64GS, based on the Amstrad CPC and Commodore 64, respectively, all of which were eclipsed by Master System sales.
By 1993 sales were still strong, and there were now 1,100,000 Master Systems in the UK.
The redesigned Sega Master System II was also released in Europe (several months after the US), however the colouring is slightly different; European SMS IIs are black, while their North American counterparts are grey.
The Master System was supported until 1996 in Europe, but was finally discontinued so Sega could concentrate on the Sega Saturn. Many Master System games were exclusive to Europe, and the console established a large user base to market the even more successful Sega Mega Drive to.
Due to the continued dominance of home computers, it is difficult to judge the Master System's success in Europe, however it is known to have outsold the NES in key markets, mainly due to the numerous poor marketing decisions and delays from Nintendo's European distributors (which arguably still continue to this day). Precise figures vary considerably between countries - Germany houses Nintendo's European headquarters, and has historically achieved more in that region than the UK, France and Spain.
Brazil was one of the Master System's most successful markets, where it was marketed by Tec Toy. As there was limited (official) competition, it soon became the console of choice and remained this way for many years. Further re-releases of the console such as the Sega Master System III were released, and several games were translated into Portuguese or localised for a Brazilian audience (for example, Wonder Boy in Monster Land featured characters from a popular children's comic-book in Brazil named Turma da Mônica, known as Monica's Gang internationally).
Later in its life, Sega Game Gear games had been ported to the Master System, and several original Brazilian titles were made for the console. Tec Toy also produced a licensed version of the wildly popular fighting game Street Fighter II in 1997, one of the most technically impressive titles for the system.
The Sega Master System is still being produced in Brazil, though systems with cartridge slots faded away by the mid-2000s. For more information see Tectoy Master System.
At the time, tensions between Japan and other Asian countries meant that Sega could not easily market the Sega Master System themselves. Instead, Samsung were put in charge, renaming the system as the Gam*Boy and repackaging/translating software and hardware in 1989. There are several Master System games exclusive to South Korea, but rampant piracy and relaxed copyright laws means many of these games are also unlicensed. Many of these games are MSX ports, and so use the SG-1000 video modes as opposed to the Master System's more sophisticated video modes.
The version of the system released in South Korea is identical to the Japanese Master System, albeit without FM audio. It was advertised to retail at ₩119,000 and included two controllers and a "2MB Compatibility Pack".
South Korean cartridges are of the same form factor and pinout as Japanese cartridges, and so both regions are interchangeable with one another. South Korean control pads however have a more rounded look, and employ a different type of D-pad, similar to Nintendo's. Like its western counterparts, the console was redesigned and sold as the Gam*Boy II / Aladdin Boy, but it employed a completely different color scheme.
The Master System also saw a release in other parts of Asia, with the console being very similar to the redesigned Japanese model. The only major difference is that some regions required a PAL signal, while others an NTSC one. It is otherwise fully compatible with the Japanese game library.
|Sega Master System Hardware|
|Master System Variations||Asia | North America | Europe | South America|
|Add-ons||Demo Unit II | Telecon Pack | FM Sound Unit | 3-D Glasses|
|Game Controllers||SJ-152 | Control Pad | 3-D Glasses | Control Stick | Handle Controller | Light Phaser | Paddle Control | Rapid Fire Unit | Sports Pad | SG Commander|
|Misc. Hardware||Action Replay | Card Catcher | Action Case | Freedom Connection | Playkit|
|Unreleased Accessories||Floppy Disk Drive|
|Consoles on a Chip||Arcade Gamer Portable | Coby TF-DVD560 | DVD Karaoke Game DVT-G100 | Fun Play 20-in-1 | Master System 3 | Master System Evolution | Master System Handy | PlayPal Plug & Play | Poga|