(Gameplay - 3239) Sega Genesis, Part 2/3 (ONL - 16)
While the Sega Master System was a decent success in Europe and South America (mostly in Brazil), it failed to make any strong dents in the North American and Japanese markets. The hold of the NES/Famicom was too strong, and the Master System wasn't advanced enough to topple the juggernaut. So Sega decided to just top it. Nintendo were complacent with their success and dragging their feet on developing a 16-bit system, which was the arcade standard at the time. They were already being impacted in Japan by the sudden success of NEC's PC Engine (TurboGrafx-16 in the West) which, while not actually 16-bit, was a noticeable technical improvement from the Famicom, which was underpowered even for its time. Thus, Sega decided that they would beat Nintendo to the punch with a console based on their System 16 arcade board (codenamed "Mark V").
Enter the Mega Drive or, as North Americans refer to it, the Sega Genesis,note released in 1988 in Japan, 1989 in North America, and 1990 elsewhere.
For the most part, it worked. Outside of Japan, anyway. It was nursed along by Nintendo's region lock policy, which was viewed by some developers as a violation of anti-trust regulations. Those same developers flocked to Sega due to the latter's apparent laxity; Sega were angling toward the same kind of lockout policy until Electronic Arts broke the mechanism and then, characteristically, threatened to leak the details out to other third parties unless Sega agreed to more favorable terms. At any rate, Nintendo voluntarily dropped a lot of these policies later.
What made this console such a hit in the West was a shift in Sega's target audience early in its lifecycle. During the Master System era, Sega made a grab for the same kiddie demographic as Nintendo. The Genesis/Mega Drive initially did the same, as evidenced by their original mascot platformer Alex Kidd in the Enchanted Castle, a sequel to the Master System's Alex Kidd in Miracle World. However, Enchanted Castle was a severe critical and commercial failure, especially in western countries.
What really captured the public's imagination instead was Altered Beast (1988), a hastily-made but fairly-accurate port of Sega's arcade hit which came bundled with most of the consoles. A few months later, the system had its first standalone hit, Michael Jackson's Moonwalker, adapted from the 1988 film of the same name and driven by the sheer star power of its lead figure at the time. It was obvious to Sega that they weren't going to get anywhere trying to appeal to Nintendo's audience, and that the answer lay in the burgeoning demographic of teens and young adults with disposable income, who largely preferred home computers before the console's launch. Many early titles had complex gameplay and/or nightmarish imagery one wouldn't expect of any other console game. The kerfuffle with EA would also wind up paying dividends, as the Genesis version of John Madden Football attracted sports fans to the system and gave the console another edge over the NES.
Sega gathered the minds behind Alex Kidd and tasked them with coming up with a replacement mascot who could appeal to this older audience. The design process was lengthy and involved extensive market research, on-the-street interviews and polls, some of them conducted in the United States. In the summer of '91, they finally managed to come up with a Killer App known as Sonic the Hedgehog, which was made the Genesis's pack in and truly kickstarted its success. The following year's sequel, Sonic 2, was even more successful and cemented Sega as a force to be reckoned with in the console market. Its biggest breadwinners ended up being their family-friendly fare, namely the Sonic series and Virgin's Aladdin. The Mickey Mouse game Castle of Illusion was another early hit for the console, and there were plenty of other E-rated and below exclusives coming down the pipe, like a Barney the Dinosaur edutainment game and Treasure's McDonald's Treasure Land Adventure (the latter has no business being as good as it is). The Genesis/Mega Drive sold 40 million units, with miniaturized versions and handhelds still on the market today.
Although the Mega Drive flopped in its home country, which was already embroiled in a war between the Famicom and the PC Engine, Sega of America's and Sega of Europe's adept marketing broke Nintendo's stranglehold on the Western market (while the TurboGrafx-16 was squeezed out of the market by both competitors there), redefining the landscape for both companies and consumers and giving the Big N its first real competition in the home console business, the Genesis also got success in Europe thanks to European-heavy IPs at that time. Nintendo eventually deployed their own 16-bit console in the form of the Super NES/Super Famicom.