The Sega CD plays CD-based games and adds hardware functionality such as a faster CPU and a custom graphics chip for enhanced sprite scaling and rotation.

Released in 1988, the Genesis (known as the Mega Drive in most territories outside of North America) was Sega's entry into the fourth generation of video game consoles.

NEC had been the first to use CD technology in a video game console with their PC Engine CD-ROM² System add-on in October 1988 in Japan (launched in North America as the TurboGrafx-CD the following year), which sold 80,000 units in six months.

Commodore International released their CD-based CDTV multimedia system in early 1991, while the CD-i from Philips arrived later that year.

[6] According to Nick Thorpe of Retro Gamer, Sega would have received criticism from investors and observers had it not developed a CD-ROM game system.

[7] Shortly after the release of the Genesis, Sega's Consumer Products Research and Development Labs, led by manager Tomio Takami, were tasked with creating a CD-ROM add-on.

[8] In addition to relatively short loading times, Takami's team planned to implement hardware scaling and rotation similar to that of Sega's arcade games, which required a dedicated digital signal processor.

[7] According to Kalinske, Sega was ambitious about what CD-ROM technology would do for video games, with its potential for "movie graphics", "rock and roll concert sound" and 3D animation.

[9] The estimated cost of the device rose to US$370, but market research convinced Sega executives that consumers would be willing to pay more for a state-of-the-art machine.

He said the problems were caused by certain games excessively seeking to different tracks on the disc (as opposed to continuously playing / streaming), leading to overheating of the motors which repositioned the laser head assembly.

[18] Though the Mega-CD sold quickly, the small install base of the Mega Drive in Japan meant that sales declined rapidly.

The European version was packaged with Sol-Feace and Cobra Command in a two-disc set, along with a compilation CD of five Mega Drive games.

[26] Brazilian toy company Tectoy released the Sega CD in Brazil in October 1993, retaining the North American name despite the use of the name Mega Drive for the base console there.

[29] It was released in North America several months later at a price of US$229, bundled with one of the bestselling Sega CD games, Sewer Shark.

[20][30] Designed to bring down the manufacturing costs of the Sega CD, the newer model is smaller and does not use a motorized disc tray.

[24] Night Trap had been brought to the attention of United States Senator Joe Lieberman, who said: "It ends with this attack scene on this woman in lingerie, in her bathroom.

[7] Newer CD-based consoles such as the 3DO Interactive Multiplayer rendered the Sega CD technically obsolete, reducing public interest.

[36] According to Thorpe, the Sega CD only reached a more popular price point in 1995, by which time customers were willing to wait for newer consoles.

[7] Audio is supplied through the Ricoh RF5C164, and two RCA pin jacks allow the Sega CD to output stereophonic sound separate from the Genesis.

[7][48] The LaserActive was positioned to compete with the 3DO Interactive Multiplayer, but the combined system and Mega-LD pack retailed at too expensive a price for most consumers.

[52][53] Eternal Champions: Challenge from the Dark Side was noted for its impressive use of the Sega CD hardware as well as its violent content.

[24][56][57][58][59][60] The Sega CD also received enhanced ports of Genesis games including Batman Returns and Ecco the Dolphin.

[15] The Sega CD library includes several FMV games, such as Night Trap, Dragon's Lair and Space Ace.

[23] FMV quality was substandard on the Sega CD due to poor video compression software and limited color palette,[23] and the concept never caught on with the public.

[20] According to Digital Pictures founder Tom Zito, the Sega CD's limited color palette created "a horrible grainy look".

[64] Retrospective reception of the Sega CD has been mixed, praising certain games but criticizing its value for money and limited upgrades over Genesis.

[23][24][65] According to GamePro, the Sega CD is the seventh-lowest-selling console; reviewer Blake Snow wrote: "The problem was threefold: the device was expensive at $299, it arrived late in the 16-bit life cycle, and it didn't do much (if anything) to enhance the gameplay experience."

[65] IGN's Levi Buchanan criticized Sega's implementation of CD technology, arguing that it offered no new gameplay concepts.

[67] Writing for Retro Gamer, Damien McFerran cited various reasons for the Sega CD's limited sales, including its price, lack of significant enhancement to the Genesis, and the fact that it was not a standalone console.

Writing for IGN, Buchanan said the Sega CD, released without a strong library of games, "looked like a strange, desperate move—something designed to nab some ink but without any real, thought-out strategy.