Atari is one of the few game console manufacturers to survive the video game crash. However, despite having developed the next generation console in 1983, Atari delayed the release of the console until 1986. As a result, instead of being on top of the market and capitalising from their success with the Atari 2600, Atari continue to lose market share: the Atari 7800 was a lesser device compared to the competition.
Nintendo was the surprise entry to the market in 1984 with the Nintendo Entertainment system, otherwise known as the NES. Nintendo took a large risk in developing the game console as it was a departure from its main business of selling toys.
Nintendo's gamble paid off as there were few competitors still in the market. Nintendo also learned from Atari, using restrictive licensing to prevented game developers from releasing games to other consoles if they were released for the NES. Nintendo gamble paid off as they quickly became the top selling game console for the third generation.
The Sega Master System was also a popular console, but a distant second to NES. While more advanced in it's capabilities, the Sega Master System had trouble attracting popular games due to Nintendo's restrictive licensing agreements.
However, while Sega sales were low in North America, it performed extremely well in the UK and Brazil, which gave Sega time to develop popular game franchises.
Name:
Atari 7800
Console Type:
GameConsole
Generation:
3
In 1986, Atari released the Atari 7800, three years after it was designed. With the video game crash of 1983/84, Atari cancelled plans for the 7800. Had it been released in 1984, it would have become a great success.
However, compared to the Nintendo NES and the Sega Master System, the Atari 7800 was outdated, and despite its compatibility to the 2600, the Atari 7800 was cancelled in 1989. Gamers wanted the latest and greatest. There was no retro gaming market back in the 1980s.
Name:
Atari Lynx
Console Type:
GameConsole
Generation:
3
In 1989, Atari released the Atari Lynx, the first hand-held colour game device. The unit was actually developed by Epyx, which had trouble funding the project. The machine could display an incredible 4096 colours on a 160 x 120 pixel screen.
However, Atari once again stole defeat from the jaws of victory. There was high demand for the device, but Atari could not meet demand, leaving people to purchase the colourless Game Boy instead. When Sega released the GameGear in 1991, it ended Atari's dominance in the colour hand-held market. Moreover, Sega had more titles and began to outsell the Lynx. Atari pulled the Lynx from the market in 1993.
Name:
NES
Console Type:
GameConsole
Generation:
3
In 1984, Nintendo released the Nintendo Entertainment System,, which is widely known as the NES. Some consider Nintendo?s entry into this market to be a gamble due to the video game crash and Commodore? C64 harsh marketing and price cutting. However, there were very few console still in the market and Nintendo very quickly became the top selling game console.
This was a dramatic change for a company was previously a simple toy company. Nintendo also learned from Atari?s earlier successes by porting important arcade games while also developing their own games such as the popular Zelda series.
Nintendo always seemed to balance the market needs for a competitive while providing a depth in games and still manage to make a buck or two. In fact, Nintendo still has one of the popular modern consoles in production, the Wii.
Name:
Sega Master System
Console Type:
GameConsole
Generation:
3
In 1986, Sega released the Sega Master System three months after the NES. However, Sega went to Tonka Toys for distribution and marketing. Sega also encounter Nintendo software restrictions that prevent game developers from making games for any other console makers. As a result, the Sega Master System did not reach the same level of success as the NES.
Nintendo was proving once again that gaining market dominance in this market was not all about price and features, it was locking in software restrictions that prevented its companies like Sega from accessing top selling games.
While Sega was not that successful in North America, it was extremely popular in the UK and Brazil mainly due to currency premiums that made the NES much more expensive.
By the time the second generation games came out, Sega started to show off its superior technical ability, which insured them a spot in the market for several generations.
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In 1986, Atari released the Atari 7800, three years after it was designed. With the video game crash of 1983/84, Atari cancelled plans for the 7800. Had it been released in 1984, it would have become a great success.
In 1989, Atari released the Atari Lynx, the first hand-held colour game device. The unit was actually developed by Epyx, which had trouble funding the project. The machine could display an incredible 4096 colours on a 160 x 120 pixel screen.
In 1984, Nintendo released the Nintendo Entertainment System,, which is widely known as the NES. Some consider Nintendo?s entry into this market to be a gamble due to the video game crash and Commodore? C64 harsh marketing and price cutting. However, there were very few console still in the market and Nintendo very quickly became the top selling game console. 
In 1986, Sega released the Sega Master System three months after the NES. However, Sega went to Tonka Toys for distribution and marketing. Sega also encounter Nintendo software restrictions that prevent game developers from making games for any other console makers. As a result, the Sega Master System did not reach the same level of success as the NES.