Nintendo's decision to use a cartridge based system sparked a debate in the video game magazines as to which was better. The chief advantages of the CD-ROM format were (1) larger storage capacity, allowing for a much greater amount of game content; (2) considerably lower manufacturing costs, making them much less risky for game publishers; (3) lower retail prices due to the reduced need to compensate for manufacturing costs; and (4) shorter production times, which greatly reduced the need for publishers to predict the demand for a game. Its disadvantages compared to cartridge were (1) considerable load times; (2) their inability to load data "on the fly", making them reliant on the console RAM; and (3) the greater manufacturing costs of CD-ROM drives compared to cartridge slots, resulting in generally higher retail prices for CD-based consoles. A Nintendo Power ad placed a Space Shuttle (representing cartridges) next to a snail (representing a CD), as an analogy for their respective speeds, stating that "the future doesn't belong to snails".
Almost every other contemporary system used the new CD-ROM technology. Consequent to the storage and cost advantages of the CD-ROM format, many game developers shifted their support away from the Nintendo 64 to the PlayStation. One of the most influential game franchises to change consoles during this era was the Final Fantasy series, beginning with Final Fantasy VII, which was developed for the PlayStation instead of the N64 due to storage capacity issues; prior Final Fantasy games had all been published on Nintendo consoles – either the NES or Super NES, with the only other entries being on the Wonderswan, or computers like the MSX.
The fifth generation was characterized by an unusually high number of console formats. More competing consoles comprised this generation than any other since the video game crash of 1983, leading video game magazines of the time to frequently predict a second crash.
1996 saw the fifth generation consoles' fortunes finally turn around. With the Saturn, PlayStation, and Nintendo 64 all showing dramatic increases in sales over the previous year, they claimed a combined 40% of the retail market for hardware and software, putting them in position to finally overtake the fourth generation consoles in 1997.
The Sega Saturn suffered from poor marketing and comparatively limited third-party support outside Japan. Sega's decision to use dual processors was roundly criticized, as this made it difficult to efficiently develop for the console. Sega was also hurt by the Saturn's surprise four-month-early U.S. launch of their console; third-party developers, who had been planning for the originally scheduled launch, could not provide many launch titles and were angered by the move. Retailers were caught unprepared, resulting in distribution problems; some retailers, such as the now defunct KB Toys, were so furious that they refused to stock the Saturn thereafter.
Due to numerous delays, the Nintendo 64 was released one year later than its competitors. By the time it was finally launched in 1996, Sony had already established its dominance, the Saturn was starting to struggle, and the 3DO and Jaguar had been discontinued. Its use of cartridge media rather than compact discs alienated some developers and publishers due to the space limits, the relatively high cost involved, and a considerably longer production time. In addition, the initially high suggested retail price of the console may have driven potential customers away, and some early adopters of the system who had paid the initial price may have been angered by Nintendo's decision to cut the price of the system by $50 six months after its release. However, the Nintendo 64 turned out to be a commercial success, particularly in the United States, where it sold 20.63 million units, nearly two thirds of its worldwide sales of 32.93 million units. It was also home to highly successful games such as Star Fox 64, Mario Kart 64, The Legend of Zelda: Ocarina of Time, The Legend of Zelda: Majora's Mask, Super Mario 64, GoldenEye 007, Banjo-Kazooie, and Super Smash Bros. While Nintendo 64 sold far more units than the Sega Saturn, Atari Jaguar, and 3DO combined, it posed no challenge to the PlayStation's lead in the market.
By 1997, 40% to 60% of American homes played on video game consoles. 30% to 40% of these homes owned a console, while an additional 10% to 20% rented or shared a console.
After the fifth generation console wars came to a stop, several companies saw their outlooks change drastically.
On May 14, 1999, Hasbro Interactive announced that all rights to the Atari Jaguar were released into the public domain, thus declaring the platform open; this allowed anyone to freely create and publish games for the Jaguar without endorsement or licensing from Hasbro Interactive. Since then, homebrew developers began to release uncompleted Jaguar games as well as several brand new titles to satisfy the system's cult following.
Sega's loss of consumer confidence (coupled with its previous console failures), along with their financial difficulties, set the company up for a similar fate in the next round of console wars.
These consoles are either less notable, never saw a worldwide release, and/or sold particularly poorly, and are therefore listed as 'Other'.
From 1996 to 1999 (when the PlayStation, N64 and Saturn were the major 5th-generation consoles still on the market) Sony managed a 47% market share of the worldwide market, followed by Nintendo with 28% (with a percentage of that figure from the 16‑bit Super NES), while Sega was third with 23% (with a percentage of that from the Dreamcast).
Production of the Sega Saturn was discontinued in 1998. Its demise was accelerated by rumors that work on its successor was underway; these rumors hurt the systems' sales in the west as early as 1997. The N64 was succeeded by the GameCube in 2001, but continued its production until 2004; however, PlayStation production was not ceased as it was redesigned as the PSone, further extending the life of the console around the release of the follow-up PlayStation 2. The PlayStation console production was discontinued in 2006, the same year that the PlayStation 3 was released in Japan and North America.
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