Nintendo released the Family Computer, or Famicom, in Japan in 1983. The console was a dramatic upgrade from the previous generation. It boosted far more detailed graphics, much longer games, and even tiled backgrounds. After achieving some success, they brought the system over to America in 1985; however, they renamed it the Nintendo Entertainment system, or NES, and they marketed it as a toy, rather than a console, in the hopes of grabbing the attention of american consumers who had abandoned the video game industry. The NES achieved an astounding victory, blowing away all previous sale records and successfully reviving the industry with smash hits like: Super Mario Bros, the Legend of Zelda, Mega Man, Castlevania, Contra, etc. Nintendo didn't want to repeat the mistakes of the past, so they limited 3rd party developers, which are game developers that don't sell consoles and aren't owned by one that does, to releasing only 3 games a year and preventing them from developing games for any other consoles. This tactic worked out great, since developers were forced to take their time developing games and even then they had to pass Nintendo's quality standard, but this practice was deemed illegal by the end of the 3rd generation.
Sega released the Sega Master System in Japan in 1985 and in America in 1986. The console sold well in other regions, but it failed to gain a signifigant market share in either America or Japan, with it barely turning a profit. Many other consoles were released during the 3rd generation, but none of them managed to break free Nintendo's strangle hold over the industry, they included: a smaller and more affordable Atari 2600, the Atari 7800 (similar in strength to the NES), the Atari XEGS (which was just their 8-bit XE home computer repackaged), the Commodore 64 Games System, and the Amstrad GX4000.