The NES dominated Japanese and North American markets, but initially underperformed in Europe, where it faced strong competition from the Sega Master System and microcomputers.

Since Nintendo's operation was not yet sophisticated enough to design its own hardware, Yamauchi forged an alliance with Mitsubishi Electric and hired several Sharp Electronics employees to assist in developing the Color TV-Game 6 in Japan.

[30] The project's chief manager Takao Sawano brought a ColecoVision home to his family, impressed by its smooth graphics,[31] which contrasts with the flicker and slowdown commonly seen on Atari 2600 games.

It was privately demonstrated as a repackaged Famicom console featuring a keyboard, cassette data recorder, wireless joystick controller, and a special BASIC cartridge.

[33]: 287  By the beginning of 1985, more than 2.5 million Famicom units had been sold in Japan, and Nintendo soon announced plans to release it in North America as the Advanced Video Entertainment System (AVS) that year.

[38] At the 1985 Consumer Electronics Show (CES), Nintendo unveiled the American version of the Famicom: a stripped-down and cost-reduced redesign of the Advanced Video System (AVS), having abandoned the home computer approach.

Marketing manager Gail Tilden chose the term Game Pak for cartridges, Control Deck for the console, and Entertainment System for the whole platform.

Renamed the Nintendo Entertainment System (NES), the new and cost-reduced version lacked most of the upscale features added in the AVS but retained many of its audiophile-inspired design elements, such as the grey colour scheme and boxy form factor.

Disappointed with the cosmetically raw prototype part they received from Japan, which they nicknamed the lunchbox, Nintendo of America designers Lance Barr and Don James added the two-tone gray, the black stripe, and the red lettering.

At June 1985's Consumer Electronics Show (CES), Nintendo unveiled the American version of its Famicom, with a new case redesigned by Lance Barr and featuring a zero insertion force cartridge slot.

In contrast, Nintendo's marketing strategy aimed to regain consumer and retailer confidence by delivering a singular platform whose graphics could be represented truthfully and whose qualities were clearly defined.

[52] Unlike with the Famicom, Nintendo of America marketed the console primarily to children, instituting a strict policy of censoring profanity, sexual, religious, or political content.

[61] In other European countries, distribution was taken over by smaller companies like Bienengräber in Germany, ASD in France, Concentra in Portugal,[62] Itochu in Greece and Cyprus,[63] Stadlbauer in Austria, Switzerland and the former Eastern Bloc.

The Deluxe Set was launched in the 1985 test markets, retailing at US$179.99 (equivalent to $550 in 2023),[4] including R.O.B., a light gun called the NES Zapper, two controllers, and the two Game Paks Gyromite and Duck Hunt.

The original Famicom's design is predominantly white plastic, with dark red trim; it featured a top-loading cartridge slot, grooves on both sides of the deck in which the hardwired game controllers could be placed when not in use, and a 15-pin expansion port located on the unit's front panel for accessories.

[91] Sharp Corporation produced three licensed variants of the Famicom in Japan, all of which prominently display the shortened moniker rather than the official name, Family Computer.

In particular, the Dendy (Russian: Де́нди), an unlicensed hardware clone produced in Taiwan and sold in the former Soviet Union by Steepler, emerged as the most popular video game console of its time in that setting and it enjoyed a degree of fame roughly equivalent to that experienced by the NES/Famicom in North America and Japan, eventually selling 6 million units.

[72][100][73]It happened that these clones reached countries with very good copyright law and high awareness of the Nintendo brand such as Power Player Super Joy III in US.

Frequent insertion and removal of cartridges wears out the pins, and the ZIF design proved more prone to interference by dirt and dust than an industry-standard card edge connector.

The original Famicom features only radio frequency (RF) modulator output, and the NES additionally supports composite video via RCA connectors.

[152][153] Nintendo also demanded half of the copyright ownership for each game it selected for release on the Disk System, resulting in developers electing to remain on cartridge instead as the latter gained functionality previously considered unique to the former.

Developers disliked the lower profit margin of the Disk Writer kiosks, and retailers complained of their use of valuable space as demand for the format waned.

[11]: 78 [147] Usage of a floppy disk-based medium brought about further complications; Disk Cards were more fragile than cartridges and were prone to data corruption from magnetic exposure.

[147][152] Nintendo alluded to a Western release for the Disk System, going so far as to successfully file a U.S. patent for it and having the Famicom's cartridge pins used by its RAM Adapter for enhanced audio rerouted to the NES's little-used bottom expansion port.

To reduce costs and inventory, some early games released in North America are simply Famicom cartridges attached to an adapter to fit inside the NES hardware.

Acclaim Entertainment, a fledgling game publisher founded by former Activision employees, was the first major third-party licensee in the United States to sign on with Nintendo in late 1987.

[11]: 214–215  The global 1988 shortage of DRAM and ROM chips reportedly caused Nintendo to only permit an average of 25% of publishers' requests for cartridges, with some receiving much higher amounts and others almost none.

GameSpy remarked that Nintendo's punishment was particularly weak given the case's findings, although it has been speculated that the FTC did not want to damage the video game industry in the United States.

In compliance with the ruling, Blockbuster produced original short instructions—usually in the form of a small booklet, card, or label stuck on the back of the rental box—that explained the game's basic premise and controls.

[168] "Computer game makers [are] scared stiff", the magazine said, stating that Nintendo's popularity caused most competitors to have poor sales during the previous Christmas and resulted in serious financial problems for some.