Dreamcast
Released in 1988, the Sega Genesis (known as the Sega Mega Drive in Japan, Europe and Brazil) was Sega's entry into the fourth generation of video game consoles. Selling 30.75 million units worldwide, the Genesis was the most successful console Sega ever released. The successor to the Genesis, the Sega Saturn, was released in Japan in 1994. The Saturn was a CD-ROM-based console that displayed both 2D and 3D computer graphics, but its complex dual-CPU architecture made it more difficult to program for than its chief competitor, the Sony PlayStation. Although the Saturn debuted before the PlayStation in both Japan and the United States, its surprise U.S. launch—which came four months earlier than originally scheduled—was marred by a lack of distribution, which remained a continuing problem for the system. Moreover, Sega's early release was undermined by Sony's simultaneous announcement that the PlayStation would retail for US$299—compared to the Saturn's initial price of $399. Nintendo's long delay in releasing a competing 3D console and the damage done to Sega's reputation by poorly supported add-ons for the Genesis (particularly the Sega 32X) allowed Sony to establish a foothold in the market. The PlayStation was immediately successful in the U.S., in part due to a massive advertising campaign and strong third-party support engendered by Sony's excellent development tools and liberal $10 licensing fee. Sony's success was further aided by a price war in which Sega lowered the price of the Saturn from $399 to $299 and then from $299 to $199 in order to match the price of the PlayStation–even though Saturn hardware was more expensive to manufacture and the PlayStation enjoyed a larger software library. Losses on the Saturn hardware contributed to Sega's financial problems, which saw the company's revenue decline between 1992 and 1995 as part of an industry-wide slowdown. Furthermore, Sega's focus on the Saturn over the Genesis prevented it from fully capitalizing on the continued strength of the 16-bit market.
Video game console
Sega scaled down and adapted their Sega System 16 (used to power arcade hits like Altered Beast and Shinobi) into the Mega Drive (sold as the Genesis in North America) and released it with a near arcade-perfect port of Altered Beast. Sega's console met lukewarm sales in Japan, but skyrocketed to first place in PAL markets, and made major inroads in North America. Propelled by its effective "Genesis does what Nintendon't" marketing campaign, Sega capitalized on the Genesis's technological superiority over the NES, faithful ports of popular arcade games, and competitive pricing. The arcade gaming company SNK developed the high end Neo Geo MVS arcade system which used interchangeable cartridges similar to home consoles. Building on the success of the MVS, SNK repackaged the NeoGeo as the Neo Geo AES home console. Though technologically superior to the other fourth-generation consoles, the AES and its games were prohibitively expensive, which kept sales low and prevented it from expanding outside its niche market and into serious competition with Nintendo and Sega. The AES did, however, amass a dedicated cult following, allowing it to see new releases into the 2000s. Fourth generation graphics chips allowed these consoles to reproduce the art styles that were becoming popular in arcades and on home computers. These games often featured lavish background scenery, huge characters, broader color palettes, and increased emphasis on dithering and texture. Games written specifically for the NES, like "Megaman", "Shatterhand", and "Super Mario Bros. 3" were able to work cleverly within its limitations. Ports of the increasingly detailed arcade and home computer games came up with various solutions. For example, when Capcom released "Strider" in the arcade they created an entirely separate Strider game for the NES that only incorporated themes and characters from the arcade.