Throughout the 80s, Nintendo continued its hold on the video game market by not only releasing quality self-published games, including a continual stream of innovative titles created by Shigeru Miyamoto, but also requiring third-party made titles to go through a strict approval process before allowing a release on the NES. This showed the public Nintendo's commitment to quality over quantity. As their reputation and brand recognition grew Nintendo became so integrated in the minds of the public that they eventually released their own self-published magazine in 1988, Nintendo Power.
In 1989 Nintendo released their first, and most important, portable handheld gaming system. Created by Gunpei Yokoi, the Game Boy took the market by storm. With the Game Boy video games stopped being seen as just for kids as adults started to use the systems to entertain themselves on busses, trains and subways during long commutes to work. Large amounts of the handhelds success was due to Nintendo packaging it with the addictive puzzle game Tetris, plus maintain a balance of titles for both casual and hardcore gamers, even creating styles of games unique to the sytostem. The Game Boy remains the longest running line of video game systems, and their latest model, the Game Boy Advance SP, still plays all the original Game Boy classic titles.
Part of Nintendo's consistent success in beating out the competition was due to some questionable deals allowing for price-fixing, third-party exclusives and retail favoritism. Several lawsuits started flying from consumers (price fixing) and SEGA (their biggest competition) who accused Nintendo of forcing their console, the SEGA Master System, off store shelves via crooked deals with retailers. The courts found Nintendo guilty and required amends to redistribute a large amount back to the consumers and break exclusive deals with third parties and retailers, but Nintendo ended up turning the loss into another victory. They distributed the price-fixing settlement in the form of thousands of $5 rebate checks, so to exercise the settlement consumers had to buy more Nintendo products.
By 1990, the console competition started to rise into a full-blown war. With the growing popularity of affordable PC home computers, the introduction of 16-bit consoles, the SEGA Genesis and the TurboGrafx-16. Nintendo was able to keep the competition at bay with the release of Miyamoto's Super Mario Bros. 3, the best selling NES title in the systems history, selling over 18 million copies and driving additional sales of the NES 8-bit console.
Knowing this was only a temporarily solution, Nintendo had already started designing their own 16-bit system, and in the same year released the Super Famicom in Japan. The new system was a monster success selling out 300,000 units in just a few hours. A year later the Super Famicom was released in the United States as the Super Nintendo (SNES), but its debut was long after the competition had already established themselves in the market. Eventually the SNES would finally overtake the industry again, with SEGA Genesis landing in the #2 slot.
By the mid-90s game consoles were starting integrate PC technology into console development for a new generation of superior game systems, especially the hot new CD-ROM discs. These discs could hold more information in small discs, resulting in superior graphics, deeper gameplay and broader experience. Soon the competition began releasing disc based consoles with 64-bit technology. Although Nintendo researched the possibilities of releasing their own disc-based system, they opted out and choose to stick with game cartridges with the release the Nintendo 64 (N64) in 1996. Although the N64 cartridges were far more costly than CD-ROM discs, the loading times were dramatically reduced as the cartage was capable of delivering the information almost instantly. Discs required the system to move the laser reader around the disk to locate and slowly load the game information. The N64 was also the first home console in Nintendo's line to feature an analog (or thumb) stick on its controller.
The N64's release was a bit of an odd one, while it sold extremely well in North America, with 500,000 units in its first four month, but it was the first Nintendo console to get a cold reception in Japan. Although the N64 exceeded SEGA's disc based console, the Sega Saturn, a pre-video game partner with Nintendo, Sony, had released their own video game system, the Sony PlayStation (aka PSOne). With lower manufacturing costs, lower price tag and a larger library of games, the PSOne outsold the N64 by less than 10 million units, making the PSOne the winner by a nose. For the first time in the company's history Nintendo's console system dropped to #2.
The same year the N64's released in Japan, Nintendo suffered another loss with the Virtual Boy. To try and leverage the Virtual Reality craze, creator Gunpei Yokoi intended the Virtual Boy to be the first gaming system to deliver a true 3-D experience via shutter goggles and a moving mirror system. From its launch the Virtual Boy was plagued with problems. Nintendo forced Yokoi to rush release the system, causing many corner to be cut. While it was marketed as a portable virtual reality experience, it was far from either and causes many players to get headaches. The failure of the Virtual Boy drove a wedge between Yokoi and Nintendo's President Hiroshi Yamauchi, as both blamed the other for the system tanking.
Yokoi stayed with Nintendo through 1996 to see the launch of the Game Boy Pocket, a smaller version of Yokoi's Game Boy system. Once the Game Boy Pocket was completed, the man considered the Thomas Edison of the video games, severed his 30 year relationship with Nintendo.