1983–1984 The
Japanese video game market was still a growing "wide open" market for
video game consoles in 1983. Japan had a relatively small console market, where only 300,000 consoles had been sold up until 1983, compared to the millions that had been sold in the United States up until then. A number of Japanese manufacturers attempted to compete for the "wide open" Japanese console market with their own consoles. The
Epoch Cassette Vision, released in 1981, was the
best-selling console in Japan at the time. It was followed by the
Bandai Arcadia (priced ), a Japanese version of the
Arcadia 2001 released in 1982, and the
Atari 2800 (priced ), a Japanese version of the
Atari 2600 marketed in May 1983. Both companies previously had success as
arcade game companies. Sega, one of Japan's largest arcade companies, was intending to compete in both the console and
personal computer markets, with a
home computer version called the
SC-3000 released at the same time. while at the same time selling it for cheaper than the Cassette Vision, selling the Famicom for (about $150). The Famicom went on to become very popular in Japan, where it quickly beat the Cassette Vision to become Japan's all-time best-selling console. To enter the worldwide market, Nintendo approached the American company
Atari, which had the majority share of the home video game market in North America, with a proposal for Atari to license the Famicom and distribute it. An agreement was concluded, which was to be signed at the
Consumer Electronics Show in July 1983. At the same CES, however,
Coleco exhibited its
Coleco Adam home computer, which featured a version of Nintendo's
Donkey Kong. At that time, Atari had exclusive rights to distribute Nintendo games on home computers, and Coleco had exclusive rights to distribute the game on consoles. However, since Atari understood that Adam was a home computer, they postponed signing the agreement with Nintendo and asked the company to resolve the issue with rights. The problem was resolved, but during this time, the
video game crash of 1983 had occurred and Atari began to lose influence in the market. With this, Nintendo had no competitor left and the company eventually decided to enter the market on its own.
1984–1986 Nintendo were initially discouraged after the crash, with
Nintendo of America's market research being met with warnings to stay away from
home consoles and US retailers refusing to stock game consoles. As a result, Nintendo instead introduced the Famicom to North America in the form of an arcade hardware, the
Nintendo VS. System, in 1984. It became a major success in North American arcades, giving Nintendo the confidence to release the Famicom in North America as a video game console, for which there was growing interest due to Nintendo's positive reputation in the arcades. The
Family Computer (commonly abbreviated the Famicom) became popular in Japan during this era, crowding out the other consoles in this generation. The Famicom's Western counterpart, the Nintendo Entertainment System, dominated the gaming market in North America, thanks in part to its restrictive licensing agreements with developers. This marked a shift in the dominance of home video games from the United States to Japan, to the point that
Computer Gaming World described the "Nintendo craze" as a "non-event" for American
video game designers as "virtually all the work to date has been done in Japan."
1986–2007 The popularity of the Japanese consoles grew so quickly that in 1988
Epyx stated that, in contrast to a video game-hardware industry in 1984 that the company had
described as "dead", the market for Nintendo cartridges was larger than for all home-computer software. Nintendo sold seven million NES systems in 1988, almost as many as the number of units the
Commodore 64 sold in its first five years. In 1988,
The Los Angeles Times reported that the rise of video game consoles had a positive impact on
computer games, sales of which grew 37% during the first quarter of 1988. In 1989, however,
Compute! reported that Nintendo's popularity caused most computer-game companies to have poor sales during Christmas that year, resulting in serious financial problems for some, and after more than a decade making computer games, in 1989 Epyx converted completely to console cartridges. By 1990 30% of American households owned the NES, compared to 23% for all personal computers, and
peer pressure to have a console was so great that even the children of computer-game developers demanded them despite parents' refusal and the presence of state-of-the-art computers and software at home. As
Computer Gaming World reported in 1992, "The kids who don't have access to videogames are as culturally isolated as the kids in our own generation whose parents refused to buy a TV". This era contributed many influential aspects to the history of the development of video games. The third generation saw the release of many of the first console
role-playing video games (RPGs). Editing and
censorship of video games was often used in
localizing Japanese games to North America. It was during this time that many successful video game franchises began, which went onto to becoming mainstays of the video game industry. Some examples are
Super Mario Bros.,
Final Fantasy,
The Legend of Zelda,
Dragon Quest,
Metroid,
Mega Man,
Metal Gear,
Castlevania,
Phantasy Star,
Megami Tensei,
Ninja Gaiden, and
Bomberman. In Europe during the late 1980s, the Master System had a stronger start than the Nintendo Entertainment System in some areas, with NES sales lagging behind the Master System in the United Kingdom. By 1990, the Master System was the biggest-selling console in Europe, though the NES was beginning to have a fast-growing user base in the United Kingdom and this position had reversed by the end of the run of both consoles. The third generation also saw the beginning of the children's
educational console market. Due to their reduced capacities, these systems typically were not labeled by their "bits" and were not marketed in competition with traditional video game consoles. In North America, the Atari 7800 and Master System were discontinued in 1992, while the NES continued to be produced until 1995. In Europe, the Master System was discontinued in the late 1990s. However it has continued to sell in Brazil through to the present day. In Japan, Nintendo continued to repair Famicom systems until October 31, 2007. == Home systems ==