Nintendo shot itself in the foot by making the N64 cartridge based. The big clincher for Sony came on January 12, 1996 when Square made the big announcement that they were making Final Fantasy VII for PS1. Up until then the Saturn was actually selling better in Japan than the PS1, and most people were operating under the assumption that the two big RPG series were going to be on N64. Nintendo's stock on the Nikkei took a huge swan dive that day. But Nintendo damn near caught up with the PS1 at the beginning... until the day FF7 was released in Japan. Virtual Boy didn't help Nintendo's situation either. Good thing Pocket Monsters suddenly took off for them.
With Sega, I'd almost argue that the Genesis/MD's success in the West was an aberration. The MD came in third in Japan behind the SNES and PC-Engine. Even in the West they dampened their success with the way the CD and 32X were handled. The Saturn's design was picked over the objections of Tom Kalinske and Sega of America. The brass in Japan didn't want to hear it.
Nintendo went on to shoot itself in the foot with GameCube's tiny disks too. :P
Saturn was doing well in Japan, but E3 1995 screwed them in the west. They surprised announced the Saturn, before any retailers had time to make shelf room for it. Saturn launched in the States on May 11th, the very first day of E3 95. None of the big retailers were given any notice about this at all. They were completely in the dark. Many retailers were so pissed that they simply didn't carry the Saturn, or had a tiny little spot for it.
It's been a long, long time. I was just a kid back then, and news came out slowly. Gaming news was still mostly magazine format. But yeah, you're right FFVII was the turning point. At least when it was Nintendo vs Sony. "$299", along with a surprise May 11th launch doomed Saturn in the west though. It also doomed the Dreamcast, because even though Dreamcast was an awesome system, many people saw the 32X, Sega CD, and Saturn as three separate failed systems. So they were skiddish about buying a Dreamcast.
Had Sega launched in winter 95, with a good Football, Racing and Basketball game they would have been fine. Eventually Sega wised up, and got the 2K games on Dreamcast, but they needed their own exclusive sports franchises on the Saturn.
Yeah the American leaders of Sega were the real power behind the Genesis. They were the ones that demanded to pack in Sonic with the Genesis. They were the ones that courted all those epic sports franchises. Some of which are still a blast to play today, like Joe Montana. The actual leadership in Japan screwed up a lot of what they touched. There's a really good article on the rise and fall of Sega somewhere on IGN. It's all the way from back when IGN was a good website with good articles and good writers.
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