I remember this launch well so I can fill you in, but it's a long story!
Okay so to understand the PS1 launch we have to talk about the 16-bit era and the arcades at the time. In the 16-bit era the bit consoles were the SNES and the Sega Genesis (MegaDrive for our friends outside of the USA). The Genesis came out first (1989) and a lot of people got it because everyone had a NES and it was a big jump in graphics/gameplay, plus it ran ports of Sega arcade games. Also, everyone wanted to play Sonic 1 and Sonic 2, those games were just awesome platformers and played so much faster than Mario games on the NES.
In 1991 the SNES launched and it had the new Mario game, and it was frankly beautiful then a bunch of really good RPGs got released for it. Graphically the games looked better on the SNES (well most games) but a lot of games had better gameplay on the Genesis and many had better looking graphics (imo). Both consoles had exclusive titles of course but many couldn't afford both and this obviously led to console wars.
While all this was going on the Arcades were huge. There were a ton of awesome games coming out: Street Fighter 2, Mortal Kombat (1-3), Metal Slug, early 3D racing games, and early 3D fighting games. Fighting games were by far the most popular so arguments would break out about which console had the best port of those games. For example Mortal Kombat 1 had a horrible SNES port because Nintendo censored the blood, changed the fatalities to really tame versions, and basically nerfed everything about the game they could. The graphics for the SNES version looked better than the Genesis port but it didn't matter due to the censorship.
The Genesis port included everything the arcade version had assuming you knew the "Blood Code" (ABACABB at intro screen) or the debug cheat menu code (DULLARD). So when it came to MK1 you wanted the Genesis version. The SNES redeemed itself with MK2 and MK3 by not censoring anything and the graphics were better than the Genesis version. However, the game play on the SNES port for MK3 wasn't as good as the Genesis version so most wanted that one.
Now the arcade games were making large leaps in graphics all throughout the early-late 90s. This meant that the 16-bit consoles were having a hard time keeping up with the advancement in graphics only a few years after begin on the market. To solve these issues both Nintendo and Sega started working on solutions and both had their own strategies. Sega decided to make a CD add-on for their console so they could store more data, produce games cheaper, and improve the graphics/music in their games. The problem was it was an add-on that you had to buy, and most of the games for it were interactive movies which looked terrible because the video had to be compressed so much. It also split the user base because most people didn't own the add-on. Some amazing games were produced for the Sega CD though, Lunar and Sonic CD are gems.
Nintendo had the same idea and contracted Sony to build a "SNES CD" unit but at some point Nintendo decided to not go forward with the project. Sony continued to work on it anyway. Nintendo's strategy was to stick to cartridges and add in extra chips (like the Super FX chip) that could interact with the SNES's on-board CPU. This allowed them to make games like Star Fox. Lots of later SNES games have custom chips in them, the Mega Man X series is a good example since Capcom developed their own custom chip for that series so they could do certain effects that were not possible with the console itself.
Sega tried to employ this strategy as well, they ported Virtua Racing (one of their popular arcade games) to the Genesis. This required the use of a custom chip in the cartridge which was called the "Sega Virtua Processor". The issue was this chip drove the cost up of the game up $100-$120 (in 1994 money) so it was decided that it couldn't be used in other games because people would be unwilling to pay so much money for games. 2D games were still popular at the time and 3D was just taking off, so even though that chip allowed the Genesis to render polygons most wouldn't be willing to spend all that money every time they bought a 3D game. Sega's solution to this problem was to sell yet another add-on call the "Sega 32x". The idea was you could by the add-on at a one time cost then buy 32X games at the usual price you'd pay for a Genesis game. There were also Sega CD games that required you had the 32X. This split the user base further....
If you're keeping up that's two add-ons on a 16-bit console...well guess what each required an AC adapter. The old brick looking ones so it was a pain in the ass to hook everything up correctly. You also had to run wires between the 32X and Genesis so they could mix their video outputs together before sending them to the TV. Since the user base was so split up not many games got produced for the 32X, it was really only on the market for 6 months to a year. Sega kept promising software support but no one wanted to develop games for the console. 6 months after the 32X came out I bought a new one at the local video store for $10, they were trying to move the stock because the 32-bit consoles were coming out soon.
Ok I know this is a novel but stick with me!
Sega of Japan and Sega of America didn't really communicate back then like they do now. Japan let the America division manage their own country, as a result the 32X was begin pushed in the states while the Sega Saturn was selling 5:1 against the Playstation in Japan. Sega of America was hardly mentioning the Saturn, and when they did the ads for it were confusing and horrible. Plus a lot of people that were loyal to Sega had just dumped a ton of money into add-ons that didn't get the software support that was promised. They felt like they had gotten burned.
Meanwhile Sony is advertising the Playstation 1 like crazy, they had tons of third party support. They had snagged a lot of third party support from Nintendo because no one knew what their plans were at the time (they were begin really quiet about the 64). They got exclusive console rights to Mortal Kombat 3 (huge in the Arcades at the time). They had a Tekken port that looked arcade perfect. They had 2D games that put 16-bit counter parts to shame (graphics wise) coming out at launch. They were pouring all the money they had into securing the market in the states.
When the Saturn launched in the states it not only cost more that the Playstation but you could only buy it from select retailers. The retailers that were left out (like Wal-Mart) were obviously pissed about this and refused to carry the console even after it had been out for awhile. The Playstation was not only cheaper but you could buy it anywhere!
Last but not least the Saturn was harder to develop games for than the Playstation. I won't go into all the details but basically the Saturn was designed to be a 2D work horse while the Playstation was designed to run 3D games. 3D games on the Saturn was a bit of an after thought, and to get acceptable results on it for those types of games required more work. With Nintendo begin a year late to the party and sticking to cartridges due to concern about piracy it's no wonder so many people bought Playstations.
Oh, one last thing. The Saturn was very popular in Japan and there are many awesome games for it that were never ported to English/USA/EU versions of the console. If you decide to buy a Saturn I suggest getting a modchip and playing some of those gems. Since the Saturn pretty much dropped off the map in the USA for all those years there was really no reason to port such games.
It's too bad Sega flopped with the Saturn because their next console (the Dreamcast) was the best console ever released imho. If Sega could have had more money to put into the console business after the release of the Dreamcast they'd probably still be making consoles today. Sega was the first to have online gaming on console and SegaNet was awesome. Even on a dial-up connection you never had more than 200ms of lag. They pioneered a lot of things gamers today take for granted.
Hopefully that answers you question.
