The TurboGrafx-16 or PC Engine was a collaborative effort between Hudson Soft, who created video game software, and NEC, a major company which was dominant in the Japanese personal computer market with their PC-88 and PC-98 platforms. NEC's interest in entering the lucrative video game market coincided with Hudson's failed attempt to sell designs for then-advanced graphics chips to Nintendo. NEC lacked the vital experience in the video gaming industry so approached numerous video game studios for support. They eventually found that, by coincidence, Hudson Soft was also interested in creating their own system but needed a partner for additional cash. The two companies successfully joined together to then develop the new system.
The PC Engine finally made its debut in the Japanese market on October 30, 1987, and it was a tremendous success. By 1988 it outsold the Famicom year-on-year, putting NEC and Hudson Soft ahead of Nintendo in the market, and far ahead of Sega. The console had an elegant, "eye-catching" design, and it was very small compared to its rivals. This, coupled with a strong software lineup and strong third-party support from high-profile developers such as Namco and Konami gave NEC the lead in the Japanese market.
In 1988 NEC wanted to sell the system to the American market, and directed its U.S. operations to do so. NEC Technologies boss Keith Schaefer formed a team to test the system out. One criticism they found was the lack of enthusiasm in its name 'PC Engine'. The team also felt its small size was not very suitable to American consumers who would generally prefer a larger and "futuristic" design. As a result they came up with the name 'TurboGrafx-16', a name representing its graphical speed and strength, and its 16-bit GPU. They also completely redesigned the hardware into a large, black casing. However the redesign process was lengthy, and NEC in Japan was still cautious about the system's viability in the U.S., both of which delayed the system's debut in the American market.
The TurboGrafx-16 was eventually released in the New York City and Los Angeles test market in late August 1989. This came just two weeks after Sega's Genesis test-market launch on August 14, which was distastrous timing for NEC as Sega of America didn't waste time redesigning the original Japanese Mega Drive system. The Genesis launch was accompanied by an ad campaign mocking NEC's claim that the TurboGrafx-16 was the first 16-bit console. Initially, the TurboGrafx-16 was marketed as a direct competitor to the NES and early television ads touted the TG-16's superior graphics and sound. These ads featured a brief montage of the TG-16's launch titles: Blazing Lazers, China Warrior, Vigilante, Alien Crush, etc.
Sega quickly eclipsed the TurboGrafx-16 after its American debut. NEC's decision to pack-in Keith Courage in Alpha Zones, a Hudson Soft game unknown to western gamers, proved costly as Sega packed-in a port of the hit arcade title Altered Beast with the Genesis. NEC's American operations in Chicago were also overhyped about its potential and quickly produced 750,000 units, far above actual demand. Hudson Soft earned a lot from this as NEC paid Hudson Soft royalties for every console produced, whether sold or not. By 1990 it was clear that the system was performing very poorly and was severely edged out by Nintendo and Sega's marketing.
After seeing the TurboGrafx-16 suffer in America, NEC decided to cancel their European releases. Units for the European markets were already produced, which were essentially US models modified to run on PAL television sets, and branded as simply TurboGrafx. NEC sold this stock to distributors - in the United Kingdom Telegames released the TurboGrafx in 1990 in extremely limited quantities. This model was also released in Spain and Portugal through selected retailers. No PAL HuCards were made, and instead the European system can play all American games without modifications, albeit with the necessary slowdown to 50 Hz.
PC Engine consoles (as well as some of its add-ons) were imported from Japan by French licensed importer Sodipeng (Société de Distribution de la PC Engine, a subsidiary of Guillemot International), from November 1989 to 1993. This came after considerable enthusiasm in the French press. This PC Engine was largely available in France and Benelux through major retailers. It came with French language instructions and also an AV cable to enable its input to a SECAM television set. Its launch price was 1,790 French francs (about 416 € as of 2013).
The TurboGrafx-16/PC Engine was the first video game console capable of playing CD-ROM games with an optional add-on.
NEC claimed that it had sold 750,000 TG-16 consoles in the United States, and 500,000 CD-ROM units worldwide, by March 1991. That year NEC released the PC Engine Duo in Japan, a model which could play HuCards and CD-ROM² discs, making it the first game console with an integrated CD-ROM drive. The console was licensed to Turbo Technologies Incorporated, who released it in North America in 1992 as the TurboDuo. In addition to standard CD-ROM² format discs, the Duo could also play games in the newly introduced Super CD-ROM² format due to its greater RAM size (the TurboGrafx-16 and its CD player could support this new format only through the use of a separately available upgrade, the Super System Card, which TTI sold via mail order). The unit came into competition with the Sega CD, which was released almost immediately after. Turbo Technologies ran comic book ads featuring Johnny Turbo. The ads mocked Sega, and emphasized that though the TurboDuo and Sega CD had the same retail price, the TurboDuo was a standalone platform and included five pack-in games, whereas Sega CD buyers needed to purchase separately sold games and a Genesis console before they could use the system.
However, the North American console gaming market continued to be dominated by the Super NES and Genesis rather than the new CD-based consoles. In May 1994 Turbo Technologies announced that it was dropping support for the Duo, though it would continue to offer repairs for existing units and provide ongoing software releases through independent companies in the U.S. and Canada.
The TurboGrafx-series was the first video game console ever to have a contemporaneous fully self-contained portable counterpart, the PC Engine GT, known as TurboExpress in North America. It contained identical hardware and played identical game software (utilizing HuCard format game software).
The final commercialized release for the PC Engine was Dead of the Brain Part 1 & 2 on June 3, 1999, on the Super CD-ROM² format. The last game on HuCard format was 21 Emon: Mezase! Hotel Ō on December 16, 1994.