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Fourth Generation: 1985–1989

Following the crash of 1982–1984, the home video game industry experienced a rebirth with the introduction of a new generation of game units driven by two technological innovations: lower-cost memory chips and higher-power 8-bit microprocessors. These developments enabled game designers to produce home video game consoles that could successfully compete at a quality level equal to that of arcade machines.

Nintendo Entertainment System

In 1983, Nintendo had released the Famicon ("family computer") video game system to the Japanese market. The console was a hit, selling 2.5 million units in its first year, and Nintendo began negotiations with Atari to distribute the system in the United States. Those talks fell through, however, and Nintendo decided to distribute the system itself in the United States, under the name Nintendo Entertainment System (NES).

The $199 NES was based on an 8-bit Motorola 6502 microprocessor and shipped with a version of the hit arcade game Super Mario Bros. Quantities of the NES were shipped into the New York market in time for Christmas 1985, and national distribution followed early in 1986. Nintendo sold more than 3 million NES units in its first two years of release; it is estimated that, over its entire product life, more than 65 million NES consoles were sold worldwide, along with 500 million cartridges.

Atari 7800

Atari attempted to reverse its sliding fortunes by releasing the long-awaited Atari 7800 ProSystem in 1986. Unfortunately, the 7800 featured outdated technology (the unit was originally set for release in 1984 but was shelved when Warner Communications sold the company to Commodore founder Jack Tramiel) and did not compete effectively against newer fourth-generation game systems.

Sega Master System

In 1989, Sega released its first game system in the United States, the Sega Master System (SMS). The SMS had two cartridge ports: one in a standard cartridge configuration, and a second port that accepted small credit card–shape cartridges. The system was capable of utilizing both ports at any given time, and Sega used this feature to produce plug-in 3D glasses for use with certain games.

Nintendo GameBoy

Also released in 1989 was the first programmable handheld game system, Nintendo's GameBoy. Priced at $100, the GameBoy featured a black-and-white LCD screen and came prepackaged with a Tetris cartridge. With more than 100 million units shipped in various configurations, the GameBoy holds the honor of being the world's all-time best-selling video game system.

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