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twintail said:

I've accepted the notion that the PSP announcement is what caused Nintendo to push ahead with the DS, and nothing else. But just to get this straight, you are basically saying that the GBA decline was caused because Sony announced the PSP?

The Megadrive had potential. It has support especially in sports games.

It lacked legacy, established IP`s and major 3rd party support. SNES had all of this but on a larger level. 

SNES launched 2 years after the Genesis. N64 launched 2 years after the PS1.  

SNES triumphed quite easily over the Genesis. N64 failed.

If we use your logic, SEGA should have beaten Nintendo because Nintendo were 2 years too late to the market.

The PS1 also lacked legacy. It also lacked established IP's. What it did not lack, at least eventually, was 3rd party support, which mainly came after the N64 had been released. This 3rd party support did not come from being 2 years early on the market. It came because Sony made parterships with developers easier and cheaper. It came, because they offered a medium that was cheaper to produce and held more space.

in 1995, after the PS1 launched the SNES was getting games such as MMX2, MM7, Cpt Commando, NG Trilogy, CV, Chrono Trigger, Fatal Fury,  super bomberman, among others. 1996 still saw some strong SNES titles such as super mario rpg but with the N64 due in the same year SNES software naturally slowed down to make way for the next Nintendo console.

Devs were waiting for the N64.

When you have devs like Square actively say they switched to PS1 because of its storage medium, it is easy to understand why games like MGS (which had an N64 version in development at one stage) only released on PS1.  This is the fundemental problem the N64 had and what held it back.

No I said the GBA decline happened because of the PSP in general.

Mega Drive sold around 40m units, a full 30m more units then its predecessor, it wasn't just potential it was Sega gearing up to eventually become market leader in the long run. The SNES sold about 50m, when you factor in the sales of Master System to NES was 10m to 60m they closed the gap heavily and it highlights the was another viable platform, Mega Drive also ended its run in 94 as opposed the SNES ending its run in 96 the latter was active for an extra two years.

Again storage is a fundamental problem yes but it's not the sole source of the PS1's triumph, the cause of it was simply that it got what other platforms didn't a clear shot at success due to both Sega and Nintendo cocking up. Sony began making those deals because they were taking note of the situation, they saw the Saturn sink like a stone leaving them the only platform for 3D games, those deals highlight the format alone was not the main factor in moving developers early on even with its advantages as the Saturn also used CDs.

They were smart enough to realize that developers may still opt for the N64 regardless because of their legacy so began doing those deals, when the PS1 achieved mainstream success it was easier for developers to move over to PS1 after all 30m at the launch of the N64 is over half of what the SNES had sold.