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What would have happened to the gaming world if Sega never challenged Nintendo for dominance during the SNES era?

Gamingtodaynews1f - What would have happened to the gaming world if Sega never challenged Nintendo for dominance during the SNES era?
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As famous and sensational as Nintendo vs Sega was, was it really that big a contributor to how video games turned out today? Please point out how flawed this speculative timeline is (strikethrough = events that no longer happen, italics = new events):

  • Nintendo has taken over the world of video games with the NES
  • Sega puts out the Mega Drive/Genesis to compete with the NES Nintendo remains uncontested, so all third parties are still locked into exclusivity and restricted to a few games a year.
  • Sega releases Sonic as a cooler mascot to challenge Mario.
  • Nintendo releases the SNES. Their monopoly continues.
  • Nintendo approaches Sony to create the SNES-CD.
  • Nintendo ditches and pisses off Sony at the CES. Sony approaches Sega, only to be turned down as well. Sony decides to turn the project into their own console to beat Nintendo at their own game.
  • Mortal Kombat + Night Trap leads to the hearing on violent video games With only the censored Mortal Kombat released, video games remain sanitised at this point.
  • Sega releases the Saturn early, pissing off consumers and developers. $299.
  • Sony’s Playstation is released, marketed to the young adult crowd that Nintendo missed and is the first 3D-capable console, inspired by Sega’s Virtua Fighter (they are still in the arcade business). Developers pissed with Nintendo’s exclusivity contract and restriction to the number of games jump ship to Sony. It quickly takes over the video game market, ending Nintendo’s monopoly and dominance.
  • Sony has released a violent video game for the first time, sparking the hearings about violent video games now, this time with Nintendo and Sony as the participants.
  • Nintendo releases the N64, its decision to stick with cartridges even more justified considering it previously had a monopoly.
  • The low storage and high price of cartridges still pisses off even more developers into developing for the Playstation instead.
  • Sega releases the Dreamcast, the first console with in-built internet connection. But most consumers and developers ignore it because of the Saturn fiasco. There is NO interim console for consumers to skip.
  • Sony releases the Playstation 2. It reduces Nintendo’s market share to a tiny percentage.
  • Sega ends its console business
  • Microsoft releases the Xbox, having recognised the risk Sony poses to its dominance in the living room. It is the first console with in-built internet connection. It gains enough popularity to set up the Microsoft vs Sony console wars, but nowhere near enough to threaten Sony’s near-monopoly.
  • Nintendo releases the Gamecube, still using mini discs. It completely fails to make a dent in the console market.

And from then on, everything proceeds as it does right now, only with no Sonic and with a lot less Sega presence…

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If the above is correct, the Nintendo vs Sega war would only have had a long-term impact on the dominant powers in gaming if Sega somehow remained a console manufacturer to this day… (but then again there is the pop culture which is definitely changed, with no Sonic and no ‘Genesis kid vs SNES kid’)

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