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It happened somewhere between 1995 and 1996.

I remember it because when I first read that Project: Reality was going to be cartridge-only, I remember I nearly dropped the magazine I was reading because I was stunned.

This back before I even had internet, and even then I knew that was a huge, huge, huge, huge mistake.

From there it's never recovered or been the same.

The NES and SNES had no problem selling third party content though, many of the best selling games were third party titles whether it was Teenage Mutant Ninja Turtles and Contra and Final Fantasy on the NES or Street Fighter II, NBA Jam, Mortal Kombat 2, or Final Fantasy VI on the SNES.