1996-1999: Nintendo 64, Sega Dreamcast
In the latter half of the 1990s, Nintendo raised the curtain on 64-bit gaming, and Sega had its last hurrah as a console maker.
1996: Nintendo 64
This is the point at which Nintendo started bucking trends. Rather than launching its own 32-bit/CD-ROM-based console (as Sega and Sony had), Nintendo surprised gamers by introducing a cartridge-based system that featured the first true 64-bit processor.
Priced competitively at $150, the N64 accommodated a huge array of popular games--among them, Super Mario 64, Mario Kart 64, GoldenEye 007, Perfect Dark, Resident Evil 2, and (of course) the Legend of Zelda: Ocarina of Time.
Though it couldn't match the PlayStation, the N64 became far more successful than the Sega Saturn.
1999: Sega Dreamcast
Still reeling from the mistakes it had made with the Saturn, Sega made sure that its $200 Dreamcast would be a trailblazer. Launched on 9/9/99 to great fanfare, it was the first 128-bit game console, and the first to have a built-in modem. This permitted Internet browsing (with mouse and keyboard accessories in place) and online gaming through SegaNet.
The Dreamcast did fantastically well during its first year on the market, and games such as Soul Calibur and Sonic Adventure helped it shine. Other highlights over the console's lifespan included Shenmue II, Quake 3, and Crazy Taxi.
But Sony had already announced the impending arrival of its 128-bit PlayStation 2, so gamers and software developers who had been burned by the short-lived Sega Saturn remained wary of the Dreamcast's ability to compete.
Sega still hadn't made enough inroads when the PlayStation 2 appeared a year later, and the public had new consoles from Nintendo and Microsoft to look forward to as well. So Sega dropped the Dreamcast's price to less than $100 in early 2001, and shortly thereafter announced its exit from the hardware business.