The following is the story of how the SNES came into being, and some of the background which influenced it. It covers the initial stages, as well as the first two years of its life.
In 1985, Nintendo released the now legendary NES, which was an immediate success. It bought the US video game market out of the crash of 1984, and sparked a new and revitalized interest in video gaming. It also marked a new advent in video games; no longer were games played to simply achieve a high score. The NES bought to players deep, involved, complex games, in which they often had a goal for the player to achieve. The games were also more technically complex, with more colors and much improved graphics over the old systems like the Atari 2600 and Intellivision. The NES changed what players expected from a game forever.
Because of the overwhelming success of the NES, Nintendo dominated the video game market, both in the US and Japan. Sega decided to release its own 8-bit console system, the Sega Master System, in the US and Japan. It did not catch on, and could not compete with Nintendo's well-established NES, though it was a successful competitor to the NES in Europe.
Nintendo's virtually uncontested four year dominance of the video game market was about to be challenged. Sega came back with a vengeance. They released the revolutionary Sega Genesis, the world's first 16 bit video game system, in 1989. The Genesis did not win over gamers immediately, because of the large installed base of 50 million NES units, and because that the first generation of 16 bit titles from Sega failed to really impress players. Oh, yeah, the $189 price tag didn't help either. But, after a while, the NES really started to look primitive compared to the Genesis. Sega created a very successful ad campaign, to convince gamers that their system was better, and that the NES was an antique. One of their campaigns used the tagline, "Genesis does what Nintendon't", which was, for Nintendo, painfully true. The reduction in price of the Genesis over time, and second geeneration 16 bit games, like Sonic the Hedgehog, begain to win over many gamers. More than a few NES units and games were sold off by gamers, in order to obtain money to buy a Genesis. Between the years of 1989 and 1991, Nintendo lost their virtual monopoly over the US gaming buisness, which remains to this day. It should be noted, however, in Japan, the MegaDrive (Japanese Genesis) was not nearly as successful, and Nintendo was able to keep the definitive #1 status there.
The executives at Nintendo saw the writing on the wall, and announced they, too, would release a 16 bit system; this system was to be the Super NES. Nintendo took a long time in finally releasing the new 16 bit system; the Super Famicom, the Japanese Super NES, was released in mid to late 1990, and the Super NES was released in the US in August 1991. Nintendo wanted to make sure that the SNES would be suffictiently advanced compared to the Genesis, and put the prospective unit thru extensive design, redesign and testing which took a great deal of time. However, it was too long for Nintendo's own good, and ended up costing them. Sega was able to push ahead, and the Genesis became the top console with gamers. Nintendo was hardly out of the game, by any means, but Sega grew to be a serious threat to the Big N, of which they had never had before.
The Super NES hit the US, and the launch was plagued with three problems; lack of available software, a $200 price tag, and limited availability. The SNES did not win gamers back to Nintendo overnight. However, the problems it had were only temporary. The SNES, within a year, had a decent amount of impressive software, wide availablity, and a lower $150 price. Players were impressed with the overall better graphics, sound, and, something the Genesis lacked big time, more color. To also help give the SNES a shot in the arm, NES licensees begain releasing sequels to legendary NES hits, such as Castlevania, Mega Man, etc.
Over time, it was now the Genesis that looked primitive, compared to the SNES, especially when it came to number of colors. The wars between the SNES and Genesis raged on for about two years, with Nintendo going neck and neck with Sega for the top spot. Some argued sticking with the Genesis, because it had an established library of great games. Others argued the SNES was the future in 16 bit gaming, with its enhanced graphics, 8 button controller, and backing from Nintendo licensees.
In 1993, Sega fired back with the Sega CD. This device, which attached to the bottom of the Genesis, gave Sega players access to CD-ROM gaming. This device struggled to survive from the beginning, similar to the troubles the SNES had at launch; a lack of software and a high price tag ($300!). The Sega CD managed to steal the headlines in the gaming world from the SNES for a few months, but it did not stop the SNES from winning over many gamers and becoming the leading console, and putting Nintendo at the #1 spot again. The Sega CD, for the most part, failed, and delievered a damaging blow to Sega. The one bright spot for Sega was that, in 1992, former exclusive Nintendo licensee signed on to be Sega licensees, too, ending a long standing tradition of producing video games only for the Big N. The SNES finally edged its way back into the top spot with gamers, and Nintendo was proud to have their system be the best overall home console system. However, that #1 status was no longer a sure thing as it once was, as Sega proved to be a worthy, albeit a damaged, opponent.