First Generation Systems, 1972-1977

America was introduced to the first home video game system on a Sunday night television broadcast hosted by Frank Sinatra. Released by Magnavox and named "Odyssey" this system was little more than a few logic switches, and not considered a microcomputer by the industry. The Odyssey was the result of years of negotiations between Ralph Baer and various players in the television manufacturing industry. 

This was not, however, the first time that Americans had seen a videogame. Pong, created by Nolan Bushnell and Al Alcorn (founder and first employee of Atari), had been around for nearly a year in the arcades. Thus videogames were not new. However, a system to play video games in the privacy of your own home had never been seen before.

Nolan Bushnell was not to be outdone, and with simplicity as his motto, he reproduced his popular arcade Pong for home use. Atari Pong, the home version, consisted of one simple unit. It had built in paddles, a built in speaker, and preprogrammed with Pong. Unlike Baer's Odyssey, which had twelve games built in, separate controllers, and graphic overlays, Atari Pong was considered concise by the video game consumer. At this time, consumers did not feel a need to spend more on a system simply because it had more games. It was a common complaint among consumers that systems with multiple games only had one or two desirable games. Thus, Atari Pong and the over sixty Pong knock-offs, would dominate the market until 1977 when it would be replaced by the VCS, another Atari system. 

Second Generation Systems, 1977-1981

In the Second Generation we see a dramatic change in the desires of the video game consumer. Previously, systems with only a few games preprogrammed were all that was necessary to surfeit the consumer's cravings. The industry wide implementation of the microprocessor first invented at Fairchild paved the way for more complicated systems. These systems produced graphical and auditory effects unlike any that had ever been experience before. While this would be repeated again and again signaling the move from one generation to another, it has been speculated that this first change had the most dramatic effect on the consumer.4

Continuing their success during the Pong era, and fueled by recent public enthusiasm about video games, Atari's VCS/2600 would dominate the second generation until the gaming market crash of 1982.

Third Generation Systems, 1981-1984

The third Generation is often referred to as "the dark ages" because of the crash of the video game market during these years. At the peak of the previous generation, the video game industry was grossing upwards of $3 billion in America alone. However, in 1985, at the end of the Third Generation, video game sales would only reach $100 million worldwide.

There has been a great deal of speculation as to exactly what caused this dramatic decline in gaming popularity. Cohen suggested that Atari spread themselves too thinly in their attempt to diversify, and flooded the market with too much product. This, however, is not the theory I subscribe to. In all fairness to Cohen, his research was concluded during 1983 and 1984, and was a good year away from witnessing the complete ruin that became of the industry.

The theory I believe to be accurate is based primarily upon my personal experience with the video game industry since 1977, and has been validated by several publications over the years. (The Vidiot's Club, Electronic Gaming Monthly, GameFan, Game Over-by David Sheff.)

During the Second Generation, magnetic mediums were implemented in the data storage used in Arcade machines. These mediums (usually variations on the floppy disk) allowed for a higher memory capacity than conventional ROM cartridges. (At that time, ROM cartridges were averaging around 4-16 kilobytes as opposed to computer disks that could store upwards of 180 kilobytes per side.) In 1982, Atari had the option to include a disk drive built into the 5200 game console. The price difference would have been nominal, but the memory capacity allowed would have been significant. Atari was also in the process of acquiring diskette manufacturing equipment for their upcoming computer line. Thus, the leap to a magnetic medium for video games would not have been a great difficulty for them. Internal pressures from the industry and external pressures from the consumer were in favor of this higher capacity storage, and many speculated that it would be implemented in the Third Generation systems.

Atari, however, had different views. In a 1982 press release Atari stated, "[Magnetic] media is entirely too fragile for the consumer to adequately handle." Because Atari dominated the industry so completely at the time, few companies opposed this decision publicly. Those that did would not survive for long. For example, Coleco would bring out the Coleco Vision with its tape drive, but it would be forced out of the market due to lack of sales.

However Atari's "concern" for the customer backfired on them. In the previous years, there had been a very fine line separating arcade game quality from home game quality. With arcades utilizing storage capacities ten to forty-five times larger than home systems, that fine line became a chasm. Arcade games seemed to be evolving exponentially, while home systems seemed "stuck in a time warp."

The public quickly became uninterested in video game specific consoles, and sales plummeted.

This would mark the end of Atari's reign of the video game market. To this day, Atari has not produced any significantly popular systems apart from their original Pong and the VCS/2600. Since 1985, they have slowly been picked apart by the industry. Splinter companies can be seen everywhere. One of which, known as Tengen, would play a crucial role in the Fourth Generation during some heated legal actions involving Nintendo of America.

Fourth Generation Systems, 1985 -1989

Two innovations in the computer electronics industry had to occur before home video games could achieve similar popularity as in the Second Generation. Both transpired in 1984. The first was the reduction in cost of Dynamic RAM (DRAM) chips that allowed programmers more memory than conventional RAM and accessed at much higher transfer rates than magnetic disks. The second was the production of higher power 8-bit processors, which lowered the prices of the pervious chips. This made the two technologies easily accessible to video game companies.

These innovations were ideal for the production of home game consoles that could compete with the ability of arcade machines. Several companies from the previous generations (Atari, Mattel, and Magnavox) tentatively tested the gaming market. However, they simply released updated versions of their older systems. The successes of the Fourth Generation would come from unknown companies with fresh consoles.

Sega was the first of the Japanese companies to try a new system. Created in 1954 in Japan by an American David Rosen, Service Games originally produced coin-operated mechanical games. In 1965, Rosen purchased a Tokyo jukebox and slot-machine maker and adopted a shortened version of Service Games, Sega. During the Pong era, Sega was busy making very popular pinball games. Later, under the direction of Gulf & Western, Sega entered into the video game market with the arcade game "Periscope." They would be an integral player in the industry, eventually suffering during the gaming market crash in the Third Generation. When DRAM chips and inexpensive 8-bit processors became available in 1984, Sega, being headed by Hayao Nakayama at the time, entered the home console market with their Master System. The Sega Master system would sell very well, but its success would be short lived.

Nintendo of Japan, was originally founded in 1889 by Fusajiro Yamauchi, an artist and craftsworker during the Meiji period. Founded as a playing card company, Nintendo virtually meant "leave luck to heaven." Entering into the video game market in the seventies by joining with Coleco, an American video game company, Nintendo would achieve moderate success through such arcade games as Donkey Kong and Mario Brothers. They would also produce a majority of games for the Third Generation system Coleco Vision. But the gaming market crash at that time would destroy several companies, including Coleco, leaving Nintendo's future in video games uncertain. Teaming up with Mitsubishi to produce watches with simple LCD games built in, Nintendo would tread water for a few years, unable to truly achieve any kind of lasting prosperity. Upon learning of the success that other companies, such as Sega, were having in the U.S. Hirosi Yamauchi, a descendant of Fusajiro's, pressed Nintendo engineers to design their own home console. Yamauchi told his engineers to leave out all extraneous frills to save money and speed up production. The system was rushed by the pressures Yamauchi placed on his designers, and was released no more than six months since the release of the Sega Master System. The first shipments were riddled with defects because of the short design period, thus making many retailers very upset. However, using the marketing data already established by competing companies, Nintendo executives channeled nearly all of the company's resources into advertisements. These advertisements hit the American and Japanese consumers at the exact right time, because sales for the Nintendo Entertainment System would skyrocket over the next few months, and Nintendo would not be able to manufacture enough systems to keep the stores stocked.

The Nintendo Entertainment System (NES) would become the highest selling system in history, and also the most notorious. Nintendo would be involved in the intimidation of retailers, competing companies, and even licensed "partners." They would have countless lawsuits brought up against them, and fill the gaming community with inaccurate rumors and "vapor-ware" for the sole purpose of detracting public attention away from competitors. Ultimately, Nintendo would be brought up on charges of monopolizing, price fixing, and anti-trust violations by District Attorneys from all fifty states, and lose. However, most will agree, that the real loser in all of these battles, was the customer.

Fifth Generation Systems, 1989 -1995

Many say that in 1989, the video game industry needed a good, firm, kick in the pants. The NES had been the only system of choice since 1985, remaining unchanged while the arcade machines raced towards increasing sophistication. Faster and more powerful arcade structures were reducing the price of the older arcade technologies, bringing them within the home video game buyer's price range. The industry (which had been decimated eight years previous only to return more stalwart than ever) was buzzing with rumors of 16-bit monster systems on the horizon.

Sega had managed to stay in business despite the poor performance of its Master System due to their massive arcade base. They had been working on converting their arcade architecture into a home console, and were close to completing it. NEC, a Japanese company with $22 billion annual sales in non-video game arenas, spent $3.7 billion in Research and Development on video games in 1988. Both companies should have spurned Nintendo into action to produce their own 16-bit system. Nintendo, however, stayed with their lordly "above-the-fray" stance. "We listen to our players," Bill White, a Nintendo executive, told the press in 1989, "They tell us they are extremely happy with the existing system and are totally involved with the games. We haven't maxed out our 8-bit system yet." This attitude would leave Nintendo in the dust of the coming 16-bit revolution.

The first of the new systems was to be the NEC Turbographix-16. While its initial success would be very impressive (outselling Nintendo's NES 3 to 1 in its first month) it would ultimately fail after the assault on the industry by Sega with their 16-bit Genesis.

The Genesis was not only more powerful than the Turbographix, it had the arcade hits of Sega to back it. By Christmas of 1989, the Genesis and its games were outselling every other system on the market. By the following summer, Sega had wrestled 20% of the gaming market and 55% of new system sales from Nintendo's iron grasp. This sent Nintendo reeling, and caused many of Nintendo's exclusive licensees to cease NES game production in favor of producing Genesis titles. Electronic Arts, who had achieved marginal success under Nintendo's reign, was one of the initial companies to strike a deal with Sega. These games produced by EA for the Genesis would propel the system's popularity even higher.

Nintendo, in an attempt to reclaim the industry, would join forces with NEC to battle Sega. A tentative agreement was made where the Turbographix would be Nintendo's new flagship system. However, when even Nintendo's software aid could not save the Turbographix from destruction, Nintendo would abandon the system and its parent company, leaving them to flounder.

Wary of the fate that felled Atari, Hiroshi Yamauchi set one of his top engineers, Masayuki Uemura, in charge of a top-secret 16-bit system project. In a stark contrast to his insistent pressure during the design of the 8-bit NES, Yamauchi now left the technical specifications of the new system to the designers. Two years later, a completed 16-bit Nintendo system, called the Super NES, would be released with a tremendous amount of fanfare.

The new system seemed poised to dethrone the Genesis, and regain Nintendo's dominance of the video game market. It sported a better graphic processor, offering nearly 63 times more on-screen colors than the Genesis and hardware scaling and rotation of sprites. It had an increased range of audio output with more channels. Furthermore, it had a 6-button controller as opposed to the Genesis' 3-button.

However, the SNES had a very weak main CPU, running at 3.58 MHz. The Genesis at 7.6 MHz ran at more than twice that speed. Sega took this advantage and ran with it, producing Sonic the Hedgehog, a game designed specifically for a fast system.

The SNES initially could not compete. Tremendous slowdown and games riddled with sprite flicker and tear would hinder the SNES and allow the Genesis to continue to be a powerful force in the market. While the SNES would emerge victorious the Christmas of 1991, it was a very narrow victory, and one that instead of forcing Sega from its throne, would simply make them scoot over.

Over the next five years Sega and Nintendo would battle for supremacy, neither really pulling out ahead of the other and dominating the market exclusively. The end of year sales reports were indicative of the Pong match between the two Goliaths: 1991- Nintendo, 1992 - Sega, 1993 - Sega, 1994 - Nintendo, 1995 - Sega, etcetera.

This heated battle between the two companies would greatly benefit the consumer, as both companies would try to best the other in their games. Jobs would also be created by the fiasco, and the industry boomed with many new concepts and ideas seeing light that might have been shunned traditionally. Alternative mediums gained popularity as Sega produced a fairly popular CD system called the Sega CD. Supposed system limitations were continuously toppled. The Genesis was able to display more colors through software techniques such as anti-aliasing and screen flipping. In addition to this, sophisticated scaling and rotation routines were created and refined until the Genesis could match those of the SNES. Nintendo designers shortened code and made software more concise until the SNES could seemingly operate at the same speed as the Genesis.

Ultimately, neither system would beat the other. At the end of the 16-bit era, both systems had comparable sales, number of games, and, most importantly, respect.

6th Generation (1995 - 1999)

This is the 32-bit/64-bit(Nintendo64) generation where Sony ventured into the video games industry. Many criticized that Sony will not last long in the video game industry. While Sony had its Playstation the people of Sega were first releasing the Sega Saturn which had 2 processors during the end of 1995. But when the the Sony Playstation was released during the fourth quarter of 1995 it was the signs of a new contender in video games. Nintendo was still garnering hype for its cartridge only Nintendo 64 which was first named Ultra 64. The Nintendo 64 was released in the year 1996 it was also criticized for its use of cartridges than the faster and more capacity CD-Rom format. For the next few years the best system would be the Sony's playstation which had more support and more games than the 2 consoles. This generation also witnessed the release of an upgrade for the longest running portable game console the Gameboy which is aptly named the Gameboy Color which was more powerful than the old one and having a color lcd screen to boot and compatible with old gameboy games making this the longest running gaming portable in the world.

7th Generation & Beyond (1999 - Beyond)

This is the Next generation of consoles for Sony, Sega, Nintendo. With the tradition that Sega has started they are the first with the new 128-bit console system during the end 1999 called the Sega Dreamcast which based on the Naomi Arcade board. 

Sony on the other hand released their new 128-bit console the Sony Playstation2 which is more powerful than that of Sega's Dreamcast, as they claim.

Nintendo is still in the works for its 128-Bit Console system Dubbed the Dolphin in collaboration with major companies such as panasonic and others.

This is the time when  Microsoft is venturing with their own console system. Which is doubly know as the X-box.