An established leader in the arcade, Sega entered the home market right on the heels of Nintendo. Renamed the Sega Master System, the system known as the Mark III in Japan debuted in the United States in 1986. The Sega Master System used an 8-bit CPU, 128K ROM-based operating system and had a 128K of RAM. Games came on two types of cartridges: a large cartridge that could hold a megabit of game code, and a smaller cartridge that held 256 kilobits of game code.

In 1989, Sega introduced the world's first 16-bit home video game system, the Genesis. Based on Motorola's 68000 processor, the system was technically superior to anything else on the market. But the sheer dominance of Nintendo overshadowed the Genesis, when the rival company debuted the Super Nintendo Entertainment System later that same year.

But Sega beat Sony and Nintendo to the punch with a 32-bit system. The Saturn was officially launched on May 11, 1995. Not only was it the first 32-bit system, but it had two 28.8 MHz 32-bit Hitachi SH-2 processors working in parallel! Sega's Saturn was an amazing system with an incredible architecture, but quickly fell behind the other 32-bit system released that year, Sony's PlayStation.

Dreamcast was the first video game system to have a built-in modem and 128-bit graphics.

Code-named Katana, the Dreamcast was released in the fall of 1999, the first system to provide a built-in modem and 128-bit graphics.