What you said.
And my below post is more a response to other things (mainly because I’m ancient and actually lived through this period and was a pretty active member of gaming culture as a kid).
The console video gaming industry was in its infancy at the time and manufacturers didn’t know how to keep their brand alive long term. What happened with the Atari 2600 is many crappy games were released for it - and I don’t mean games that fat nerds take tantrums over because “therrr casual and I’m hardcore!” - these were shitty games that weren’t playable.
The Vic20 and C64 were seen as video game systems in Europe, not PCs. PCs were something pretty much specifically tied to Microsoft Windows and stuff like that. These consoles had better games on them, as did the SMS, and the NES, where it was available (you literally could only get it in certain cities in Europe until around the launch of the SNES) were what you wanted to play. No one thought of them as “next generation consoles” so much as just “consoles with better games.”
The first time we were introduced to new consoles as a “new generation” was the move from 8-bit to 16-bit: and Atari, C64, and NES weren’t two or three different generations, they were all just one: The 8-bit generation. Splitting all this stuff into different generations is just inaccurate to how things were marketed and understood back then; and it makes no sense to alter it, because all that does is make these so-called video game historians writing up story that didn’t happen.
The Mega Drive (Or Genesis/Exodus/Torah, whatever you want to call it in the US) as a new generation of video game systems was an effective strategy, and people saw it as a much more valuable console than the NES, and SNES followed with its own 16-bit console. What this achieved was Nintendo and Sega were both able to extend interest in their brand. I think the SNES was also the one that more or less opened up the notion that the Nintendo and Sega were mainly Japanese things, because I don’t think people really saw it that way before (I assumed the NES was Scandinavian). But the SNES was where the importing of Japanese games became a major thing - but anyway, I’m rambling WAY off topic now.
The video game industry grew a lot with the 16-bit generation, and while on paper the NES did better overall, the popularity of the 16-bit generation far exceeded it. The NES was supported and sold from 1983 to 1994, while the SNES sold from 1992 to 1996. The years of the SNES were way more profitable for Nintendo, worldwide, than the NES-only years. Of course, the NES continuing to sell, helped, and so did the Gameboy; but the SNES annual sales were always higher than most NES years. What Nintendo and Sega did, was not only extend the life of their brand, but expand it.
So the concept of generations, introduced by Sega, is IMO the marketing/hardware strategy that “saved” the video game industry. The Mega Drive showed that Sega could both extend and expand their brand in a way no one had ever done before (except Commodore, but that was more or less then building another console that happened to catch fire too, not really seen as a “new generation of video games!” thing).
Another way of looking at it is that it was what really established and defined it, while the early years was a lot of experimentation until someone discovered a way to make it work as a long term business.
(just silly extra off-topic but related rambling)
Back on generations topic, the Saturn and N64 weren’t the 8th or 11th or 37th generation, they were the third generation of Nintendo and Sega hardware: in fact, there was a bit of confusion about the 32-bit generation thing Sega was marketing and the 64-bit console Nintendo had: did Nintendo jump ahead to the generation AFTER the Saturn? Short lived as it became the 32/64 bit gen.
But then Sony came along with the PlayStation 1, PlayStation 2, etc... they just did generations better. It’s why Nintendo is really on a totally different generational track than Sony at this point.
Nintendo saw the failure of the N64, and they were like “We can’t be arrogant anymore, let’s just do what Sony did next gen, except Nintendoish” The GameCube was Nintendo’s attempt at making a PS2 clonebox, and everyone laughed because it was ridiculous and kiddy, they failed because Sony actually knew what they were doing and Nintendo was trying to copy. So Nintendo comes back and they’re like “ALRIGHT! We’ll start doing our own thing again!” The Wii was the revolution that disrupted Sony, and they did so BIG time. But then Nintendo went crazy and made the Wii U, which was Nintendo saying “now that we’re King again, try OUR take on High definition gaming!” and everyone laughed again! “OK! OK! The Switch, this is what we really meant!” And now everything is right in the world again =P
I think you are confusing use of the term generations with the Bit Wars of the early 90's. Console manufacturers and video game writers of the day very definitely did use the term "generation" in their marketing and articles in the early 80's. The Colecovision and the Atari 5200 were both lauded as "Third Generation Systems" when they released in 1982 with near as you could get to arcade quality graphics on your living room TV at the time. They were a clear advancement from the Magnavox Odyssey (1972), Atari 2600 (1977) and Intellivision (1979) systems that preceded them. It's true that historians did later alter the generations by retroactively lumping both the Colecovision and 5200 back into the 2nd Generation many years after the fact. But, that doesn't mean that the term "Video Game Generation" was something that got invented in the PlayStation era. Take this 1982 article from Electronic Games Magazine, whose title reads, "Third Wave Video Gaming Comes to Market":
Also, see this review of the Colecovision and its games from the December 1982 issue of "Electronic Fun with Computers & Games" which literally breaks down home consoles by generation as viewed at the time:
"I’ve had a chance to carefully evaluate the ColecoVision versions of Donkey Kong, Venture, Cosmic Avenger, Lady Bug, and Smurf at press time and enjoyed them all immensely. Because of the ever-changing game screens, the high-quality graphics and the imaginative music and sound effects, I found the games to be always entertaining and rarely boring—no easy feat, with my limited attention span. If anything. my only complaint is that some people might find a few of the ColecoVision games to be too difficult—something that you don’t usually hear about a standard game. This can be good or bad, depending on how competitive you are.
The ColecoVision games put other versions to shame. The VCS Donkey Kong, for example, gives you a simplistic “bare bones” display, without any of the subtleties or the arcade-like background music of the ColecoVision game.
The VCS omits the last. most difficult level, the infamous “elevator level.” By comparison, the ColecoVision version was a near-perfect duplication of the arcade classic, with all of the sound effects and most of the visuals left virtually intact.
The ColecoVision execs are extremely proud of their system, which they consider to be the first Third-generation programmable on the market, right after the original Atari VCS and Odyssey² (first-generation) and the Mattel Intellivision (second-generation). As one spokesman told me: “The coin-op designers are always worried about keeping the home versions of their games as accurate as possible and so far we’ve had nothing but praise for our ColecoVision designs.” I’d have to agree with his assessment.
The only question that remains is whether or not Coleco will be able to get their system and games on the market fast enough. So far, dealers have been clamoring for the ColecoVision consoles, which have been in extremely short supply since their introduction this fall. My bet is that those consumers who are lucky enough to be first on the block with a ColecoVision will find the wait well worth it. The system is great, but there’s one thing Coleco has to fix. Before any game you have to stare at the words “ColecoVision” for 12 seconds. And when your game is over, you have to stare at it for another 12 seconds. Maybe Coleco wants to let us run to the refrigerator between hours of Cosmic Avenger, but when I play, I just want to play."