An important point could be added: Nintendo and Sega saw their consoles first and foremost as ways to promote their own games, which is where they profited the

An important point could be added: Nintendo and Sega saw their consoles first and foremost as ways to promote their own games, which is where they profited the most. Their business model was centered on their own software. Third party publishers were seen as a necessary evil to be tightly controlled, which is why Nintendo restricted them to just 5 titles a year. The story goes that when Namco first approached Nintendo about publishing on the Famicom, Nintendo was so surprised they didn't even know what kind of terms to offer. Sony changed all of that by giving publishers a platform where they were welcomed with open arms. Third party publishers no longer had to worry (for the time being) about competing against the platform holder from a disadvantaged position. Furthermore, they didn't have to financially support their rival via licensing royalties.