It was originally a remodeled export version of the Sega Mark III, the third iteration of the SG-1000 series of consoles, which was released in Japan in 1985 with improved graphical capabilities compared to its predecessors.

A Japanese version of the Master System was also launched in 1987, which features a few enhancements over the export models (and by proxy the original Mark III): a built-in FM audio chip, a rapid-fire switch, and a dedicated port for the 3D glasses.

Its library is smaller and with fewer well-reviewed games than the NES, due in part to Nintendo licensing policies requiring platform exclusivity.

Though the Master System had newer, improved hardware, it failed to overturn Nintendo's significant market share advantage in Japan and North America.

[24] It was engineered by the same team,[25] including Hideki Sato and Masami Ishikawa, who had worked on the SG-1000 II and later led development of the Sega Genesis.

[26] According to Sato, the console was redesigned because of the limitations of the Texas Instruments TMS9918A graphics chip in the SG-1000, which did not have the power for the kinds of games Sega wanted to make.

[20] Though the SG-1000 had not been released in the United States,[27] Sega hoped that their video game console business would fare better in North America than it had in Japan.

[30] Okawa approved of the name after being told it was a reference to the competitive nature of both the video game industry and martial arts, in which only one competitor can be the "Master".

[31] The Master System was first revealed in North America at the Summer Consumer Electronics Show (CES) in Chicago in June 1986.

It was initially sold in a package with the "Power Base" console, a light gun, two controllers, and a pack-in multicart.

[37] During this time, much of Sega of America's infrastructure shifted from marketing and distribution to focus on customer service, and Lowry departed the company.

They also became less willing to invest in video games after taking massive loans in purchasing Kenner Toys in 1987, followed by poor holiday season sales and financial losses.

As a result of this marketing and of Nintendo's less effective early approaches in Europe, the Master System began to attract European developers.

The United Kingdom also hosted a Sega video games national championship, with the winner competing against Japanese and American champions on the British television show Motormouth.

By 1990, the Master System was the best-selling console in Europe, though the NES was beginning to have a fast-growing user base in the UK.

[15] Although the Master System was a success in Europe, and later in Brazil, it failed to ignite significant interest in the Japanese or North American markets, which, by the mid-to-late 1980s, were both dominated by Nintendo.

[58][59] Another competitor arose in Japan in 1987 when Japanese computer giant NEC released the PC Engine (TurboGrafx-16 in North America) amid great publicity.

[48] A 2012 article on UOL wrote that Tectoy re-releases of the Master System and Mega Drive combined sold around 150,000 units per year in Brazil.

The Master System II, released in 1990, removed a number of components to reduce cost: the Sega Card slot, reset button, power light, expansion port, and startup music and logo.

[74] A pair of 3D glasses, the SegaScope 3-D, were created for games such as Space Harrier 3-D, although Mark III users need an additional converter to use them.

Because of hardware similarities, including the landscape screen orientation, Master System games are easily portable to the handheld.

[2][4] However, educational and programming cartridges for the SC-3000 require the SK-1100 keyboard peripheral, which is compatible with the Mark III but not the Japanese Master System.

[80] The more extensive PAL region library includes 8-bit entries in Genesis franchises such as Streets of Rage,[74] a number of additional Sonic the Hedgehog games,[64] and dozens of PAL exclusives such as The Lucky Dime Caper Starring Donald Duck, Asterix, Ninja Gaiden, Master of Darkness, and Power Strike II.

[20] After the Master System was discontinued in other markets, additional games were released in Brazil by Tectoy, including ports of Street Fighter II: Champion Edition and Dynamite Headdy.

[91] In 2005, Sega reached a deal with the company AtGames to release emulated Master System software in Taiwan, Hong Kong, and China.

[92] Several Master System games were released for download on Nintendo's Wii Virtual Console, beginning with Hokuto no Ken in 2008 in Japan and Wonder Boy in North America.

[20] In 1989, the Master System was listed in the top 20 products of NPD Group's Toy Retail Sales Tracking Service.

[103][104] Retrospective feedback of the Master System praises its support toward development of the Sega Genesis, but has been critical of its small game library.

Writing for AllGame, Dave Beuscher noted that the Master System "was doomed by the lack of third-party software support and all but disappeared from the American market by 1992.

The Master System allowed Sega to experiment with arcade conversions, original IP and even create a mascot in the form of the lovable monkey-boy Alex Kidd.