In the history of computer and video games, the third generation (the latter half of which is sometimes known as the 8 bit era) began in 1983 with the Japanese release of the Famicom (later known as the Nintendo Entertainment System in North America). This generation was the first after the video game crash of 1983 and is considered by some to be the first "modern" era of console gaming (sometimes known as the "silver age" of video game consoles),citation needed and in many countries the video game consoles of this era were the first ones which sold in high volumes. Although the previous generation of consoles had also used 8-bit processors, it was at the end of this generation that home consoles were first labeled by their "bits". This also came into fashion as 16-bit systems like the Mega Drive/Genesis were marketed to differentiate between the generations of consoles. In the United States, this generation in gaming was primarily dominated by the NES/Famicom.
The Famicom (short for Family Computer) became very popular in Japan during this era and ended up crowding out the other consoles in this generation. The Famicom's American counterpart, the Nintendo Entertainment System, dominated the gaming market in North America, thanks in part to its restrictive licensing agreements with developers. Although the NES dominated the market in North America, the Sega Master System made large inroads in Brazil and Europe and the NES was never able to break its grip. The Atari 7800 also had a fairly successful life, and the Sharp X68000 began its niche run in Japan in 1987.
In the later part of the third generation (argued by some as part of the 4th generation), Nintendo also introduced the Game Boy, which almost single-handedly solidified, and then proceeded to dominate, the previously scattered handheld market for 15 years. While the Game Boy product line has been incrementally updated every few years, until the Game Boy Micro and Nintendo DS, and partially the Game Boy Color, all Game Boy products were backwards compatible with the original released in 1989.
This generation is often mislabeled as the "First Generation" as it saw the beginnings of the video game industry as we know it today (although the grouping of generations is arbitrary).
The Nintendo Entertainment System (NES) / Family Computer (Famicom) sold by far the most units of any third generation console in North America and Japan. This fact was partially due to its earlier release, but it mostly resulted from Nintendo's strict licensing rules that forbade developers from releasing their games on other systems if their games were released on the NES. This put a damper on third party support for the other, less popular consoles. However, Sega's Master System was more popular in Brazil, Australia and New Zealand, markets that were first reached by Sega. Many more games for the Master System were released in Europe and Brazil than in North America, and the console had a very long shelf-life in Brazil and New Zealand. In Europe competition was tough since NES failed to build the monopoly that it had in the US and in Japan. By the end of the generation there was no clear winner in Europe. The Master System was finally discontinued in the late 1990s, while Nintendo of Japan continued to repair Famicom systems until October 31, 2007.[1][2][3]