Eh, you SHOULD count the Master System, while it didn't exactly catch on in Japan or the States, it did do reasonably well outside there, thanks to Nintendo pretty much ignoring anything BUT those two markets. You should also count the NeoGeo, the Atari 7600, the Jaguar, the TG16 and whatnot, they DID compete, though they got eliminated early.
3rd gen - 3 competitors(Nintendo, Sega, Atari)
4th gen - 4 competitors(Nintendo, Sega, NEC, NeoGeo)
5th gen - 5 competitors(Sony, Nintendo, Sega, Atari, 3D0)
6th gen - 4 competitors(Sony, Microsoft, Nintendo, Sega)
7th gen - 3 competitors(Nintendo, Microsoft, Sony)
Heck, there were several other niche players such as the Amiga 32cd, the CDi and NEC's PC-FX.
I wouldn't be surprised if some other niche players show up this time around either. Heck, I'm still thinking Apple will eventually throw their hat into the ring(though it's looking like that won't happen until gen 8 hits)
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