In the early 1990s, Sega had success with the Genesis (known as the Mega Drive in most countries outside of North America),[4] backed by aggressive advertising campaigns and the popularity of its Sonic the Hedgehog series.

[16] In 1993, Sega and the Japanese electronics company Hitachi formed a joint venture to develop a new CPU for the Saturn, which resulted in the creation of the "SuperH RISC Engine" (or SH-2) later that year.

"[17][19] Although the Saturn's design was largely finished before the end of 1993, reports in early 1994 of the technical capabilities of Sony's upcoming PlayStation console prompted Sega to include another video display processor (VDP) to improve 2D performance and 3D texture mapping.

[17][19][20] Sega considered making CD-ROM-based and cartridge-only versions of the Saturn, but discarded the idea due to concerns over the lower quality and higher price of cartridge games.

[35] Virtua Fighter, a faithful port of the popular arcade game, sold at a nearly one-to-one ratio with the Saturn console at launch and was crucial to the system's early success in Japan.

[51] At the first Electronic Entertainment Expo (E3) in Los Angeles on May 11, 1995, Kalinske gave a keynote presentation in which he revealed the release price of $399 (including a copy of Virtua Fighter[52]), and described the features of the console.

[48] The announcement upset retailers who were not informed of the surprise release, including Best Buy and Walmart;[23][54][50][55] KB Toys, which was not part of the early launch, responded by refusing to carry the Saturn and its games.

[52][68][69] Virtua Fighter's relative lack of popularity in the West, combined with a release schedule of only two games between the surprise launch and September 1995, prevented Sega from capitalizing on the Saturn's early timing.

[21][38][70] Within two days of its September 9, 1995, launch in North America, the PlayStation (backed by a large marketing campaign[46][71]) had more units sold than the Saturn had in the five months following its surprise launch, with almost all of the initial shipment of 100,000 units being sold in advance, and the rest selling out across the U.S.[45][72] A high-quality port of the Namco arcade game Ridge Racer contributed to the PlayStation's early success,[40][73] and garnered favorable media in comparison to the Saturn version of Sega's Daytona USA, which was considered inferior to its arcade counterpart.

[102][103] Stolar, who had arranged a six-month PlayStation exclusivity deal for Mortal Kombat 3[109] and helped build close relations with Electronic Arts[38] while at Sony, was perceived as a major asset by Sega officials.

[108] At Sony, Stolar had opposed the localization of Japanese games that he decided would not represent PlayStation well in North America, and advocated a similar policy for the Saturn, although he later sought to distance himself from his actions.

[113] Initially conceived as an obscure prototype, "The Old Man and the Peach Tree", and intended to address the flaws of contemporary Japanese RPGs (such as poor non-player character artificial intelligence routines), Virtua Fighter RPG evolved into a planned 11-part, 45-hour "revenge epic in the tradition of Chinese cinema", which Suzuki hoped would become the Saturn's killer app.

After Nakayama ordered the game be reworked around the engine created for its boss battles, the developers were forced to work between 16 and 20 hours a day to meet their December 1996 deadline.

[141] Sega suffered an additional ¥42.881 billion consolidated net loss in the fiscal year ending March 1999 and announced plans to eliminate 1,000 jobs, nearly a quarter of its workforce.

[54] Conversely, Nintendo's long delay in releasing a 3D console and damage to Sega's reputation caused by poorly supported Genesis add-ons are considered major factors allowing Sony's establishment in the video game market.

It was packaged with an instruction manual, control pad, stereo AV cable, and 100 V AC power supply consuming approximately 15 W.[158] One very fast central processor would be preferable.

Developers quoted by Next Generation in December 1995 described the Saturn as "a real coder's machine [for] those who love to get their teeth into assembly and really hack the hardware [with] more flexibility [and] more calculating power than the PlayStation".

[167] Traveller's Tales founder Jon Burton said that though the PlayStation was easier "to get started on [...] you quickly reach [its] limits", whereas the Saturn's "complicated [hardware could] improve the speed and look of a game when all used together correctly".

[31][17][169] For example, Steven L. Kent stated: "Although Nintendo and Sony had true 3D game machines, Sega had a 2D console that did a good job with 3D objects but wasn't optimized for 3D environments.

[206] The first-person shooter PowerSlave featured some of the most impressive 3D graphics on the system, leading Sega to contract its developers, Lobotomy Software, to produce Saturn ports of Duke Nukem 3D and Quake.

Although it lacked the fully 3D environments of Nintendo's Super Mario 64, the emphasis by Nights on unfettered movement and graceful acrobatic techniques showcased the intuitive potential of analog control.

[21] According to the review aggregator GameRankings, Panzer Dragoon Saga is the most acclaimed Saturn game;[234] it was praised for its cinematic presentation, evocative plot, and unique battle system.

[21][137][237] Later ports of Saturn games including Guardian Heroes,[238] Nights,[225] and Shin Megami Tensei: Devil Summoner: Soul Hackers[239] continued to garner positive reviews.

Due to the system's commercial failure and hardware limitations, Saturn projects such as Resident Evil 2,[243] Shenmue, Sonic Adventure, and Virtua Fighter 3[244][245] were cancelled and moved to the Dreamcast.

According to the reviewers, "While the Saturn ended up losing the popularity contest to both Sony and Nintendo [...] Nights into Dreams, the Virtua Fighter and Panzer Dragoon series are all examples of exclusive titles that made the console a fan favorite.

"[207] Edge noted that "hardened loyalists continue to reminisce about the console that brought forth games like Burning Rangers, Guardian Heroes, Dragon Force and Panzer Dragoon Saga".

[253] Retro Gamer's Damien McFerran wrote: "Even today, despite the widespread availability of sequels and re-releases on other formats, the Sega Saturn is still a worthwhile investment for those who appreciate the unique gameplay styles of the companies that supported it.

[21] IGN's Travis Fahs was critical of the Saturn library's lack of "fresh ideas" and "precious few high-profile franchises", in contrast to what he described as Sega's more creative Dreamcast output.

[21][137][256] Sheffield portrayed Sega's mistakes with the Saturn as emblematic of the broader then-decline of the Japanese gaming industry: "They thought they were invincible, and that structure and hierarchy were necessary for their survival, but more flexibility, and a greater participation with the West could have saved them.

"[137] According to Stuart, Sega "didn't see [...] the roots of a prevailing trend, away from arcade conversions and traditional role-playing adventures and toward a much wider console development community with fresh ideas about gameplay and structure".