In the history of computer and video games, the third generation (sometimes referred to as the 8-bit era) began on July 15, 1983, with the Japanese release of both the Family Computer (referred to in Japan in the abbreviated form "Famicom", and later known as the Nintendo Entertainment System, or NES, in the rest of the world) and SG-1000. This generation marked the end of the North American video game crash, a shift in the dominance of home video games from the United States to Japan, and the transition from block-based graphics to smooth hardware scrolling tile and sprite based graphics, which was a pivotal leap in game design.
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The best-selling console of this generation was the NES/Famicom, followed by the Master System and then the Atari 7800. Although the previous generation of consoles had also used 8-bit processors, it was at the end of this generation that home consoles were first labeled by their "bits". This also came into fashion as 16-bit systems like the Mega Drive/Genesis were marketed to differentiate between the generations of consoles. In Japan and North America, this generation of gaming was primarily dominated by the Famicom/NES, while the Master System dominated the European and Brazilian markets. The end of the 3rd generation of video games comes as 8-bit consoles become obsolete in graphics and processing power compared to 16-bit consoles.
Some features that distinguished third generation consoles from most second generation consoles include:
History
The Family Computer (commonly abbreviated the Famicom) became very 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." The company had an estimated 65% of 1987 hardware sales in the console market; Atari Corporation had 24%, Sega had 8%, and other companies had 3%.
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 Commodore 64s sold in its first five years. 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, "No matter how fast your 486 is, you still can't play Super Mario XVII on it. 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".
Nintendo's market domination, while overwhelming in sheer number of units sold, was not global. Although the NES dominated the market in Japan and North America, Sega's Master System made large inroads in Europe, Oceania and Brazil, where the NES was never able to break its grip. The Atari 7800 also had a fairly successful life in the United States.
Sega was Nintendo's main competitor during the era in terms of market share for console units sold. Unlike the NES, Sega's SG-1000 (which preceded Sega's more commercially successful Master System) initially had very little to differentiate itself from earlier consoles such as the ColecoVision and contemporary computers such as the MSX, although, despite the lack of hardware scrolling, the SG-1000 was able to pull off advanced scrolling effects, including parallax scrolling in Orguss and sprite-scaling in Zoom 909. In 1985, Sega's Master System incorporated hardware scrolling, alongside an increased colour palette, greater memory, pseudo-3D effects, and stereoscopic 3-D, gaining a clear hardware advantage over the NES. However, the NES would still continue to dominate the important North American and Japanese markets, while the Master System would gain more dominance in the emerging European and South American markets.
In the following generation, Nintendo would also introduce the Game Boy, which almost single-handedly solidified and then proceeded to dominate the previously scattered handheld market for 15 years. While the Game Boy product line was incrementally updated every few years, until the Game Boy Micro and Nintendo DS, and partially the Game Boy Color, all Game Boy products were backwards compatible with the original released in 1989. Since the Game Boy's release, Nintendo had dominated the handheld market. Additionally two popular 8-bit computers, the Commodore 64 and Amstrad CPC, were repackaged as the Commodore 64 Games System and Amstrad GX4000 respectively, for entry into the console market.
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. During this era, many of the most famous video game franchises of all time were founded that outlived the third generation and continued through releases on later consoles. 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.
The third generation also saw the dawn of the children's educational console market. Although consoles such as the VideoSmarts and ComputerSmarts systems were stripped down to very primitive input systems designed for children, their use of ROM cartridges would establish this as the standard for later such consoles. 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.
Nintendo versus Sega
The Nintendo Entertainment System (NES)/Family Computer (Famicom) sold by far the most units of any third generation console in North America and Asia. This was due to its earlier release, its strong lineup of first-party titles (such as Super Mario Bros. and Super Mario Bros. 3, The Legend of Zelda, and Metroid), and Nintendo's strict licensing rules that required NES titles to be exclusive to the console for two years after release. This put a damper on third party support for the other, less popular consoles. However, Sega's Master System was more popular than the NES in Europe, South America, and Oceania, with the latter two markets being first reached by Sega. Many more games for the Master System were released in Europe and Brazil than in North America, and the console had a very long shelf-life in Brazil and New Zealand. In Europe, competition was tough for the NES, which was not as successful as the Master System in those other regions despite the hegemony that it had in the North American and Japanese markets. The industry also started to grow in places west of the Soviet Union, such as Lithuania, via new programmers trained in that area. The Master System was finally discontinued in the late 1990s but has continued to sell in Brazil through to the present day, while Nintendo Co., Ltd. continued to repair Famicom systems until October 31, 2007.