History of the Sega Mega Drive

Background

The 1980s was an experimental period for the video game industry, but also one of great importance. At the beginning of the decade dozens of companies were getting in on the video game craze, but by the end, video gaming was often associated with just one name - Nintendo.

With very little competition on the home console front, Nintendo and their Nintendo Entertainment System (or NES for short; the North American version of Japan's Family Computer) had dominated the video game market. In the US they had tied up developers and regulated the industry on their own, and it seemed that nothing could unseat the Japanese powerhouse. But as time moved on, many began to question what the future of Nintendo's system held - arcades were entering their golden age, and a once-revolutionary system was starting to look dated.

A frustrated Sega had had two major attempts at unseating the NES. Once with the noticably inferior SG-1000, and again with the Sega Master System, which despite having built a following in Europe, had failed to resonate with the Japanese or North American public. But as arcade hardware manufacturers began to create games with more complex visuals and soundscapes than the NES could provide, Sega saw an opportunity for success — using scaled down versions of commonplace arcade components that would fit more easily in a consumer's budget, the plan was to create a console capable of providing a closer arcade experience at home.

Development

Sega began its one and a half year "Mark V" development process shortly after the release of the Master System (a.k.a. Mark IV) in mid-1986. As was now tradition, the Mega Drive was built on Sega's existing Sega Master System hardware to keep manufacturing costs down and make hardware and software backwards compatible; however, there was also a push this time to get the system to succeed Sega's System 1 and System 2 arcade boards. The project was spearheadded by Masami Ishikawa, who had also been a key player in the production of the Master System, and also the Sega Mark III.

As was the custom at the time, the Mark V was designed with very little input from the software developers within Sega, meaning design was focused more on efficiency - decreasing the workload of the main CPU by delegating tasks to other processors, while maximising graphics performance. For much of its development lifespan, the Mark V was set to be an 8-bit machine, led by features such as Texas Instruments' advances in its "Dual-Port Memory" RAM architecture (which had yet to be implemented in a video game environment). It was also the first video game system to use several new complex circuit designs, including FIFO memory, read/write of one line buffer method for drawing, and interlace display.

After rumours of Nintendo's Super Famicom emerged, a decision was made by Sega's then CEO, Hayao Nakayama to adopt something akin to the company's successful Sega System 16 arcade architecture. While the console was not able to match arcade hardware, Masami Ishikawa was asked by his manager to double the graphic memory capacity to improve the console's performance, so he redesigned the way the timing worked with the memory access 
cycle while minimizing the additional 
circuit size and number of IC pins needed.

It is thought Hideki Sato made the casting decision to use a 16-bit processor, as it became apparent that this was the future for Sega's arcade business. By using the Motorola 68000, the most suitable 16-bit processor on the market at the time, Sega was able to recycle designs from its 16-bit arcade boards, as well as use pre-existing knowledge of 16-bit games found elsewhere in the company (although this had its downsides - nobody in Sega's CS Team had worked with a 68000, so they had to be retrained). The Z80, being present for Master System compatibility, would be used to process sound while in Mega Drive mode.

Nakayama claims to have officially named the console "Mega Drive", with "Mega" representing superiority over rival machines, and "Drive" representing the speed of the chosen Motorola 68000 processor - the heart of the console. Unfortunately for Sega, the "Mega Drive" trademark could not be registered in North America and had to be replaced with the name "Sega Genesis". The trademark was held by a company known as "Mega Drive Systems", who specialised in creating storage devices for home computers.

While the console managed to have its graphics performance marginally improved on request from Sato, the delay caused by choosing a CPU meant Ishikawa hit a brick wall with his console design. The architecture was not as flexible as desired - the Mega Drive could not easily be expanded, and this presented problems when Sega began development on the Sega Mega-CD a few months down the line. Scaling and rotations of sprites were once planned for the system's "Video Display Processor", but were cut from the specification due to higher production costs. The colour palette was also limited by this turn of events - the VDP was getting too big, making it harder to manufacture and fit on the motherboard.

While not the first home machine to contain a 16-bit processor, the the Mega Drive was the first to print the words "16-BIT" in big, gold lettering onto the console itself, thus starting what is often named as the "bit wars", something featured heavily in advertising campaigns up until the Nintendo 64 in the mid-1990s.

The revised Sega Mega Drive 2 and all future consoles (bar the Teradrive) were produced by different teams under Hideki Sato. Masami Ishikawa moved back to the company's arcade operations in the early 1990s.

Release

Japan

The Sega Mega Drive was first released in Japan on October 29, 1988 with two launch titles, Space Harrier II and Super Thunder Blade, and retailing at ¥21,000. Life was difficult for Sega - Nintendo's Famicom held a monopoly on the market, while NEC's PC Engine had already established the groundwork for a new "16-bit" generation a year prior, growing ever more popular by the day. From a home computer perspective, the MSX2 was continuing its dominance similar to its predecessor (also still supported at this point), the MSX1. The PC-9801 and the still relatively new Sharp X68000 were also fighting for the "professional" computer market, though these were out of reach of many Japanese consumers at the time.

File:16 bit console war map.png

Map of the winners of the 16-bit console war. Green means Nintendo won, Orange means Sega won.

Nevertheless the console sold out within two days of launch, shifting 50,000 consoles onto Japanese consumers.

Most major Japanese developers and publishers of the day were in the pockets of Nintendo, NEC and Microsoft/ASCII, with Sega fighting an up-hill battle from day one. The Mega Drive found itself following the trends of arcade games at the time — shoot-'em-ups — and Sega also tried to woo over home computer developers (especially Sharp X68000 developers), establishing strong links with the likes of Toaplan and Telenet Japan, as well as initially gathering interest from Namco and Capcom.

Sega's catelogue of arcade ports kept the system alive, but the talk and subsequent launch of the Super Famicom in late 1990 kept Sega in third place (behind the PC Engine) for most of the generation. The release of SNK's Neo Geo AES may have also had an impact in the console's runnings. However, the situation could have been bleaker, as releases like the Shining games, Langrisser, Puyo Puyo, and the Sega Mega-CD kept the console from fully dropping out early.

1993 saw the redesigned Mega Drive 2 release priced at ¥12,800.

The Mega Drive was axed in Japan by the end of 1995, with Sega releasing its last first-party game in December and Compile releasing the last game for the region the following year. Sega were very much keen on backing their Sega Saturn console instead, a move which saw it achieve much greater success than the Mega Drive in the years that followed.

In total, only about 2 million Mega Drives were sold in Japan.

North America

The Master System had not sold well in North America, leading to the company's US division, Sega of America, taking a back-seat role as the inexperienced Tonka handled console distribution in the States. But the relationship wasn't working - Tonka were performing even less well than Sega, so for the Mega Drive, Sega sought out a new distributor - Atari Corporation.

Having lost its chance to distribute the NES in the US, David Rosen met with Atari Corp's CEO Jack Tramiel and president of Atari's Entertainment Electronics division, Michael Katz in 1989. Tramiel declined the distribution offer, citing the Mega Drive as being too expensive, and the company instead focused on its 16-bit Atari ST computer. Katz, however, would later join Sega of America as its CEO and oversee the console's launch in the region.

The system was released to test markets in New York and Los Angeles on the 14th August 1989, seeing a national rollout later in the month. Although Sega had struggled against the PC Engine in Japan, the Genesis quickly eclipsed the US-variant, the TurboGrafx-16 and became the number one 16-bit console. About 500,000 consoles had been sold in the US by late 1989.

The early Genesis game library and marketing campaigns in North America focused on the arcade-at-home stance, although Sega also took the decision to create celebrity-sponsored sports titles (as well as the famed Michael Jackson's Moonwalker), a tactic which proved reasonably successful. Sega also partnered with Disney to create platformers such as Castle of Illusion Starring Mickey Mouse and QuackShot, the relationship running for several years into the mid-90s.

Most notably was Sega's strong ties with Electronic Arts, which saw rapid growth on the Mega Drive not least due to John Madden Football. EA stemmed from their history as computer game publishers during this period and turned in to a major player of the video game landscape, eventually becoming the world's largest video game publisher.

The Genesis made huge gains over Nintendo during the console's first couple of years, although for many it was assumed that the successor, the Super Nintendo Entertainment System (or Super NES, as it is officially abbreviated by Nintendo), would reclaim its crown upon release. Though this eventually did occur, Nintendo's plans were set back dramatically by the release of Sonic the Hedgehog on that day, June 23, 1991, as well as a wealth of high quality titles and strong advertising campaigns depicting the Super NES, much like the original NES, as the weaker system.

1991 saw the Genesis outsell the Super NES at a rate of 2:1. First-party Genesis games were more frequent and Sega's advertising campaign helped paint a picture of a cheaper, "cool" system aimed at older players, as opposed to the younger audience commonly associated with the Super NES. This came out in focus groups conducted by Sony, where many teenage boys didn't like admitting they owned a Super NES.

Though damaged, Nintendo never truly went away - a number of strange Sega marketing blunders during 1994-1995 and the strong support coming from Japan helped the Super NES almost close the distance.

When Nintendo dropped the price of the Super NES from $179 to $149, Sega responded on April 29, 1992, when the price of a Genesis (with Sonic the Hedgehog) was lowered to $129.99. At Summer CES 1992 they went one step further - announcing a bundle-less system at $99.99. There were many price drops over the Summer - the Super NES also went down to $99 and the TurboGrafx-16 to $69, but the aging NES stubbornly stuck with a $79 price point.

The Genesis was the best selling "toy" of Christmas 1992 and Sonic the Hedgehog 2 was the best-selling video game. In regards to the whole year, the figures vary - Nintendo claimed 6.6 million Super NES consoles were sold, bringing the total up to 8.7 million consoles and a 69% share of the market. Sega, however, claimed 4.5 Genesis consoles sold in 1992 with a total of 7.5 million. Both claimed first place. Another metric suggested 10% more Super NES consoles were sold in 1992 than the Genesis, at 5.6 million.

5,900,000 Genesis consoles were sold during 1993, 3,000,000 of those in the last four months of the year.

1994 saw the launch of the Sega Channel service, allowing customers to download Genesis games through a unique cable television service. It was quite successful, lasting until the summer of 1998.

According to the February 1995 edition of Game Players NPD figures suggested the Super NES outsold the Genesis for most of the last six months of 1994 (primarily due to Donkey Kong Country), pushing Sega's market share back to 35%. Sega suggested these figures were due to it traditionally spending less money on marketing during the summer months, and lower-than-expected sales figures for Sonic & Knuckles and NFL '95. They later sent the publication their own figures compiled by TRSTS, suggesting a 55% hardware share for Sega versus 45% for Nintendo, and a 53% versus 47% software share.

Sega became disinterested in the Genesis by the mid-90s, focusing instead on the Sega Saturn. It did, however contract Majesco to continue manufacturing Mega Drives in the US through 1997 and 1998, and the few third party developers and first party studios that stayed on board produced games like Vectorman 2 and Sonic 3D: Flickies' Island and many compilations. In an ironic twist of fate, a straight port of Frogger would be the last officially released Mega Drive game released in the country - Frogger had been a series Sega held a license over for much of the 1980s, and coincidentally was one of the last Super NES releases in the region too.

However, while Sega expected a sharp decline in 16-bit sales from 1995-onwards, its $99.99 price point and continued support from developers led to more than 2 million consoles being sold in 1995 (demand exceeding supply once again), 300,000 of which were sold in the November/December timeframe.

In the first quarter of 1997, the software-to-hardware ratio of the Genesis was reported at 16:1 (versus the 8:1 for the Super NES). Two weeks before E3 1997 the price of a Genesis was reduced to $79.99 (with a number of possible pack-ins).

There are a long line of disputes as to who won the console wars in North America, with most claiming Nintendo won.

Europe

Sega did not form any direct distribution channels in Europe until the mid-1990s, so the Mega Drive's launch in Europe was somewhat disorganised. For one, the PAL Mega Drive was delayed - originally set to be released in 1989, it was pushed back to March 1990 due to manufacturing issues, and did not reach consumers until later in the year. By the time the Mega Drive hit places like Spain, for example, it was almost on its last leg in Japan. The late release saw a handful of games, primarily those released in 1990 in Japan or North America (most notably games released by Renovation Products), skip the European Mega Drive altogether, although this would be made up for in later years by more local releases.

"Europe" itself was not treated as one region until the late 1990s, so each country received games and hardware at different points in time (although only weeks and months separated launches, as opposed to years). Virgin Mastertronic distributed the console in the UK, as they had with the Master System though also extended their reach to France and Germany. Sega bought the Mastertronic side of the company in August 1991 and began distributing consoles and software themselves, thus establishing Sega Europe.

In the United Kingdom, the Mega Drive launched on September 14, 1990 during the European Consumer Electronics Show (ECES) for the price of £189.99 (complete with Altered Beast). 30,000 units had been pre-ordered prior to this date, with Virgin Mastertronic expecting to sell around 40,000 in total by the end of the year.

Success of the Mega Drive was initially somewhat hard to measure, not least because in much of Europe, there was initially very little interest in the console market. Whereas Japan and North America had opted for dedicated video game consoles during the 1980s, most of Europe was content with home computers, of which 16-bit varieties (the Commodore Amiga and Atari ST) had been launched around 1985-1987 and were becoming ever more affordable with each passing month.

Sega's Master System had outperformed its continental rivals by unseating Nintendo's console throne, but the device was not driving the European market, just offering an alternative to customers on a tighter budget. For many, there was initially no need for the Mega Drive to exist, being viewed as less functional than a 16-bit computer, and so was not considered a major player for the months leading up to its official release.

Another factor affecting the figures is that many who were interested in purchasing a Mega Drive had already done so, well in advance of the official UK launch. So called "grey market" machines had been available since early 1989 - Japanese Mega Drive stock modified to work on PAL televisions and power standards (with 50Hz/60Hz switches being common even back then). While a cumbersome solution, importing would cost £200-£250 for the console and another £30-£50 per game - pricing very close to the real thing. The only problem was that when the time came, official UK Mega Drive games would not run on these consoles without adaptors.

Nevertheless, there were an estimated 140,000 of these machines already in the UK at launch, and there was a lot of media coverage concerning import games.

Though Nintendo had had a similar problem selling their NES to the general public (and would continue to do so with the Super NES, released very late in 1992), Sega reversed their fortunes with the release of Sonic the Hedgehog, on the same date as the US, June 23, 1991 (though some magazines thought it had a July release). This attracted numerous big software houses (such as Virgin Games, Acclaim Entertainment, and Ocean Software) into building a strong portfolio of games.

Aside from computers, the Mega Drive lacked competition for the first two years of its life. NEC spent most of 1989 and 1990 debating with itself in regards to launching the PC Engine in the region, and the much-hyped Konix Multisystem never made it to production.

Mid-1991 saw the Mega Drive be reduced to £129.99 in the UK, and like North America, Sonic the Hedgehog became the pack-in game of choice. Similar price reductions occured across the continent - for a complete list of bundles see Mega Drive consoles in Europe]. The year saw the beginnings of a major cultural shift in the European market - the Amiga struggled to match Sonic and its peers, and yet was three or four times the price. Soon Sega's console was the gaming product of choice, and dedicated gaming systems were the new standard bearers.

When the Super NES arrived late in April 1992, it was unable to unseat Sega as the dominant video game force in the UK.

920,000 and 880,000 Mega Drive units were sold in the UK during 1992 and 1993, respectively (versus 680,000 and 720,000 for the Super NES). By the end of 1992 there were 1,050,000 Mega Drive consoles in the country.

By the end of 1994, 2,500,000 Mega Drive consoles were estimated to have been sold in the UK, versus 1,500,000 Super NES consoles and 2,215,000 Amiga computers.

Like North America, the Mega Drive was replaced, perhaps prematurely, by the Sega Saturn and discontinued in 1998 after 8 years in the European market. However, during its half-decade of service had become not only the most successful console of all time, but had began to change opinions on gaming as a whole. The IBM PC was putting traditional 16-bit computers out of action, with mice and keyboards being favoured over joysticks - games built for joysticks, which had once thrived on machines by Atari, Sinclair, Amstrad and Commodore found themselves on consoles instead. The Mega Drive also helped launch the hugely popular FIFA series, which continues to exist to this day.

The Mega Drive was the system of choice in the United Kingdom (there, it was known as the #1 retro games console of all time), and extended its dominance to France, Spain, and Portugal. It was also big in Germany, Italy, Greece and Scandinavian countries, although the SNES was bigger in those countries. Australia, though not in Europe, relied much on European stock, with the Mega Drive being a successful console there, like the Master System was before it but lost to the Super Nintendo, just like it's predecessor did to the NES.

Brazil

In Brazil, the Mega Drive handled by TecToy, who was also responsible for the Master System's distribution in the country, where, similar to the Master System, it became the system of choice throughout much of the 1990s. TecToy tried to produce a number of original titles in 1996 and following, presumably ending at Show do Milhao 2 (2001?), part of a partnership with a popular regional game show.

South Korea

In South Korea, the console was distributed by Samsung.

Asia

Main article: Mega Drive consoles in Asia

From Sega's perspective, everything east of Europe and west of Japan/South Korea is classed as "Asia". This is a very large region and covers dozens of countries, but the markets are generally considered to be quite small as we're dealing with second world and potentially even third world countries. The company made more of an effort to localise for specific countries with the Sega Master System, but generally targeted fewer countries and was not tremendously successful.

Legacy

Despite successes in North America and being the console of choice for Europe, Brazil and many smaller markets, the Sega Mega Drive ultimately failed to woo its homeland of Japan, which was the deciding factor when developing the console's successor, the Sega Saturn, which ironically flopped in most regions aside of Japan. Despite this, the Mega Drive is often used to represent Sega's "glory years", with numerous compilations and emulators released by the company since the late 1990s.

The Mega Drive also saw Sega play the console add-on game with the Sega Mega-CD, which impressed gamers in Japan with a rich variety of games released on the new compact disc technology, however overseas, marketing focused on "full motion video" games that continuously failed to impress. Sega also tried various forms of online gaming several times — the first-party Sega Meganet and Sega Channel and third-party XB∀ND. Various other add-ons would be made over the years.

Finally, in a combination of poor communication between Sega of America and Sega of Japan and the desire to keep the Mega Drive afloat, Sega of America released the Sega 32X, an add-on which added its own additional capabilities to the Mega Drive, such as a larger color palette and a two fast CPUs to facilitate higher quality 3D rendering than what was seen on the Mega Drive (which went as advanced as F1 unaided). The 32X was released too late, had manufacturing errors at launch, and was too expensive to impress, and promptly fell flat on its face.

Since 2005, AtGames has held a license to reproduce legacy Sega hardware and has released a number of Mega Drive "consoles on a chip", some even containing cartridge slots.

Selected Mega Drive games are available through the Wii's Virtual Console service, Xbox Live Arcade and the PlayStation Network. In addition, many PC compilations have been released. The Sega Mega Drive is also a top choice of platform for emulation, with a number of free Mega Drive emulators available to the public. Some, such as KGen are known to have been used by Sega themselves.

In the wake of the 25th anniversary of the Mega Drive's November 1990 UK release, the AtGames Mega Drive (which features built-in games and a cartridge slot) experienced a 400% UK sales surge in November 2015, in the run up to Christmas 2015.