In the '90s, it seemed like video games were everywhere, and almost every single game was exclusive to one console or company. What are the factors that led to such fierce competition, aggressive placement in stores, fierce console loyalty, etc?
Ah, one I may be of help with!
First and foremost, we must consider that video games were on the rebound after the crash of 1983, and at the forefront were Sega (particularly starting with the Genesis) and Nintendo as early as the NES, which absolutely dominated the market against competitors like Atari. For example, the NES in its lifetime sold about 65 million units whereas the 2600, arguably its closest rival, only sold 25 million despite outliving the NES
Video games had also permeated pop culture at the time and became a phenomenon, with items ranging from Saturday morning cartoons such as Captain N and The Super Mario Bros. Super Show to breakfast cereals. This pop culture phenomenon even peaked with full Hollywood productions such as The Wizard, a film about competitive video gaming, a new concept at the time that was not too different from the Nintendo World Championships that had happened in the early 1990s.
Because characters like Mario and Link had been so successful for Nintendo but almost always kept primarily to them, other companies decided to make mascot characters that would follow suit. These included Sonic (and, in Japan, Alex Kidd) to the unfortunate rise and fall of Blinx.
Furthermore, if you look at advertisements from the time of a console such as the Magnavox Odyssey and the time of a console such as the Super Nintendo, you can see a clear change in demographics. Whereas a console like the Odyssey was meant as a family activity that everyone could play, by the time of 16-bit consoles it was clear that the target demographic were kids and teens, especially boys. Both Nintendo and Sega were fully marketing towards them, and were trying to promote themselves as the cooler console, hence why Sega does what Nintendon’t.
Essentially, the Console Wars were the product of video games being heavily marketed to children rather than just families as well as the rise of video games in pop culture and the rebound from the infamous crash of ‘83.
I hope this was helpful!
I previously answered a question which will serve as a lead-up to this. The main thrust of this is that Japan dominated the mass market, home console video game scene. Primarily this was Nintendo, using innovative sales and marketing tactics, to solidify their brand mainly with retailers.
Something Nintendo did not generally do is promote the brand of "Nintendo" in and of itself. Their marketing strategy was all about the individual games, which stood for a quality all their own (though mileage may vary on this for each individual player). Being such a dominant force in the market through both deep pockets and outwardly forceful sales tactics, the only way a company could compete with Nintendo is to find a new angle of attack.
This is where Sega of America enters the picture. People tend to talk solely about their competitive advertising, but Sega needed to take several different steps to actually make their product anything but an alsoran (which the Master System was during its lifetime). The major way this manifested was by making Sega a name to be trusted with the Genesis, not to simply let the games build their following. This marketing tactic has the advantage of propping up games which may not be up to par. If a consumer trusts Sega as a brand, they will be more likely to give games affiliated with Sega a chance. It's the same thing as believing Capcom stands for quality in the 8 and 16 bit era, then finding a subpar game by them. The name recognition, whether it's an outside license or a company, is a different tactic to build a base of customers.
Sega's other big hurdle was to fight for shelf space. Some retailers - who were directly intimidated by Nintendo's restrictive sales tactics - were hesitant to give Sega the time of day at first. Walmart especially held out until Sega had already proven the Genesis to be highly successful before deigning to sell the console in their stores for fears of angering Nintendo. They broke through gradually through smaller retailers, alternative sales tactics (such as agreements with rental stores), and through the appointment of Tom Kalinske as President who had a stronger retail background than the original President Michael Katz.
Finally, whether the Sega Genesis was a better product on the whole than the Super Nintendo, Sega felt the need to compensate for any perceived deficiency by comparing their product to Nintendo. This initially took the form of comparisons to game selection (the Genesis having a two year headstart in the US to build up a library) and then to the appeal of the product to certain demographics. It's probably not necessary to go into the whole teenager v. young age group via a vis Sega and Nintendo, but suffice it to say that Sega directly targeted the "MTV Generation" very deliberately. They wanted their consumers to have fights about how the Sega Genesis would outpace the SNES, in many different manners. Even in Japan, where Sega never reached even a 20% marketshare, there were two books titled "Sega v Nintendo" written in this time period which speaks to the direct competitiveness of the brand even outside of North America.
Once Sega managed to show that there was a way to force their way into Nintendo's market, the other competitors followed suit. They managed their brands around their consoles and their companies to a large degree as a way to build brand loyalty without having the backlog of a Nintendo or Sega. There's more to be said about the way advertising evolved from there but I think it's fair to say that the needs of Sega to break into the Nintendo dominated market was the primary driver.
Sources:
Game Over (1992) by David Sheff. History of Nintendo that delves deep into their marketing and sales practices, for both good and ill. Essentially for understanding how Nintendo had a stranglehold on retail.
Console Wars (2014) by Blake Harris. While overly focused on attempting to pin all of Sega's success onto Tom Kalinske, it does a good job at explaining the environment in which Sega and Nintendo were competing in. Just take the specific tales - or at least their motivations - with a bit of skepticism.
Playing at the Next Level (2016) by Ken Horotwitz. A more nuanced deep dive into Sega's development and marketing tactics during the Genesis, Saturn, and Dreamcast eras. It shows the importance of product development in this equation.