1988-1989: NEC TurboGrafx-16, Sega Genesis
As the 1980s drew to a close, so did the era of the 8-bit game console.
1988: NEC TurboGrafx-16
NEC decided to capitalize on the success of its Japanese PC Engine console by launching it in the United States as the $200 TurboGrafx-16. This 8-bit system used a custom 16-bit graphics chip to deliver graphics that were clearly superior to those on the NES, and early commercials (like the one below) took pains to point that out. But the TurboGrafx-16 also had to compete against the Sega Genesis, which in the United States, at least, eventually proved more popular.
Back in Japan, the PC Engine had been the first console to boast a CD-ROM add-on; and many games were beginning to take advantage of the extra capacity. But when the TurboGrafx-CD add-on arrived in America, it was expensive and hard to find.
1989: Sega Genesis
The $200 Sega Genesis (known as the Mega Drive outside North America) debuted in the United States in 1989. The first true 16-bit console, it pushed the NEC TurboGrafx-16 into obscurity and quickly began eating into Nintendo's NES sales.
It would take Nintendo two years to compete on a technical level with the Genesis, via the 16-bit Super NES, which appeared in 1991.
Yet even in 1992, Sega had firm control of the North American market, thanks to a combination of aggressive promotions, solid conversions of arcade hits like Golden Axe and After Burner, marquee games like Sonic the Hedgehog, and strong third-party software support (including sports titles from Electronic Arts).
"Genesis does! You can't do this on Nintendo!"
At the 1992 Consumer Electronics Show (CES) in Chicago, Sega announced its Sega CD, a CD-ROM add-on for the Genesis. Unfortunately, the prohibitive cost of Sega CD and subsequent public confusion regarding it and 1994's Sega 32X (a 32-bit processor add-on) hurt both concepts and signaled the beginning of the end for Sega.