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Complacency can be deadly. You only have to look at the changeover between the 16-bit and 32/64-bit generations for confirmation of this fact; amazingly, during this period of transition all of the established hardware manufacturers - Nintendo included - were caught with their trousers down while new boy Sony waded in and effortlessly mopped up their precious market share. Poor old Sega stumbled badly, first with the ill-advised 32X and then with the Saturn, and while Nintendo's fall from grace was slightly less pronounced few would have the confidence to declare that the N64 lived up to the lofty expectations established by the tremendous success of its predecessor, the SNES. And who could forget the still-born Virtual Boy, another product of this period and Nintendo's biggest console failure to date?

However, by far the most humiliating collapse was that of NEC and their cohorts Hudson Soft. These two companies had previously worked together on the legendary 8-bit PC Engine, which in Japan had managed to beat Sega's Mega Drive into third place and even went as far as to challenge Nintendo's previously unassailable dominance. Unfortunately, like their fellow rivals they drastically underestimated the challenge posed by creating a successor to such outrageously popular hardware.

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But let's not get ahead of ourselves here; there's a history lesson to brush up on first. As previously mentioned, NEC and Hudson's partnership had proven to be a particularly profitable one and it was almost a given that the dynamic duo would collaborate on new projects together. Work on what would become known as "Tetsujin" (Iron Man in Japanese) commenced almost as soon as the '90s had begun, with an official announcement coming as early as 1992. As had been the case with the PC Engine, Hudson provided the custom chipset (which included five separate co-processors) while NEC would bring its considerable electronics production experience to the table.

Tetsujin boasted fearsome specifications for the time. Not only was it to be CD-ROM based, it also contained a RISC processor clocked at 25MHz and was supported by 2 megabytes of RAM to facilitate speedy CD access. The system also featured highly advanced 2D capabilities as well as support for full-screen 24bit video playback. A prototype was demonstrated to selected parties in the same year, with three games being displayed. Two of these were merely tech demos but the third got delegates really hot under the collar; it was an updated version of Hudson's classic Star Soldier, which ran in what appeared to be full 3D. In reality it was actually displaying 3D objects over a pre-rendered background (the same technique employed by GameArts' Silpheed on the Mega CD and Namco's Starblade in the arcades), but it was more than enough to impress the assembled throng and with a successful demonstration of their new hardware out of the way NEC and Hudson feverishly worked on getting the new machine ready for release.

Initially the two companies were confident of launching Tetsujin in 1992, but lack of finished software forced a rethink and Spring 1993 became the target date. When this was also missed rumours began to circulate that NEC and Hudson were reluctant to usurp the PC Engine while it was still pulling in good business (in Japan, at least). As the months passed Tetsujin became less and less cutting-edge and it seems that during this time little development was undertaken to ensure the new hardware retained parity with newer machines like the 3DO and Atari Jaguar; NEC and Hudson seemed content to rest on their collective laurels, at least while their current hardware was still commercially viable.

Then in early 1994 it was confirmed that the Tetsujin project had been formally cancelled. Sources at the time insisted that development had been abandoned due to NEC and Hudson seeing the proposed specs for Sega and Sony's 32-bit challengers, both of which comfortably out-shined Tetsujin and also promised considerable 3D capability. In the light of such incredible competition the partners were forced to scurry back to the drawing board. Unfortunately it was far too late to come up with an entirely new design and therefore much of the architecture that was present in the (by now) hopelessly underpowered Tetsujin was utilized in the new machine. Although Hudson's 5-piece custom graphics chipset was streamlined to just a single co-processor, Tetsujin's reliance on streamed footage rather than real-time rendering was retained. The working title for this new platform was 'FX', which soon became PC-FX – the 'PC' presumably being added to capitalize on the prominence the PC-Engine brand was enjoying in Japan at the time. Despite this name-checking, it was confirmed early on that this new device would not be backwards compatible with existing PC Engine CD-ROM software.

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The PC-FX made its worldwide début at the 1994 Tokyo Toy Show where it fought with the Saturn, PlayStation, Neo-Geo CD and Bandai Playdia for the attention of the masses. The unconventional casing design immediately caused tongues to waggle, with many commentators unfavourably comparing it to the rather unflattering PC towers that were available at the time. Nevertheless, attendees at the show were left open-mouthed by FX Fighter, a title shrewdly positioned to steal the thunder of Sega's Virtua Fighter arcade conversion, which also happened to be on display. Hudson's game looked nothing short of stunning, boasting highly detailed combatants constructed of smoothly shaded polygons. It certainly put Sega's boxy effort to shame, but there was a significant catch: the PC-FX was in fact spooling pre-rendered footage directly from the CD and not actually generating these images in real time. It wasn't immediately apparent at the time but the system lacked dedicated 3D hardware and this effectively meant that it couldn't hope to compete with the Saturn and PlayStation in this regard. In their defence, neither NEC nor Hudson ever insisted that the footage was real time rendering; it was rather the assumption of those that viewed the demonstration that perpetuated this viewpoint. Nevertheless, magazines picked up on the impressive footage and this contributed to the expectation surrounding the launch of the console.

However, when the PC-FX eventually hit Japanese store shelves in December of '94 the mystique surrounding its 3D muscle swiftly evaporated. FX Fighter was nowhere to be seen, although leading launch title Battle Heat proved to be a very similar proposition. It was essentially a Dragon's Lair-style anime fighting game where animated sequences were spooled off the disc in time with the player's button commands. To be fair, it was (and still is) an awesomely impressive trick; there is practically no delay between the player's input and on-screen action and the quality of the FMV is tremendous. This is thanks to the fact that NEC and Hudson had decided to shun traditional MPEG video playback - which resulted in low quality compressed footage with lots of pixilation and a generally low frame rate - in favour of the much more memory-intensive JPEG system, which essentially displayed a different high-quality still image for each frame of animation, and all at a silky-smooth rate of 30 frames a second. Because it was built on the foundations of Project Tetsujin, the console was therefore constructed from the outset to make use of this unique method. Tetsuya Iguchi, a member of NEC's Electronic Products planning department, proudly told EDGE magazine at the time that the PC-FX was a "Direct Memory Access" machine; instead of pushing data from the CD through the CPU bus, the PC-FX channelled the information directly to the video-out port via a sequencer, rendering chip and video encoding processor. This process allowed the machine to produce blisteringly fast video footage, and it should come as no surprise to learn that the console eventually became a hotbed of anime-style games.

However, for all this FMV-related trickery, it was hard to ignore that the Saturn and PlayStation were bringing cutting-edge 3D visuals to home for the same retail price, making the PC-FX look massively underpowered as a result. But it wasn't just technical issues that PC-FX owners had to deal with; software support was equally disappointing. The much-hyped FX Fighter was quietly cancelled and in a move that with the benefit of hindsight appears particularly foolhardy, Hudson established publishing guidelines that stipulated that famous franchises such as Bomberman and Adventure Island would not to be developed for the system. Perhaps the company was attempting to prove that the PC-FX was too advanced to host these seemingly simplistic games; whatever the reason for this puzzling stance, it meant that the console was fighting without the aid of Hudson's most potent weaponry – its best-selling franchises.

However, even in the darkness a few faint glimmers of light could be seen. Games such as Chip Chan Kick, Der Langrisser FX and Kishin Doji Zenki: Vajura Fight managed to ignite the interest of gamers the world over, with Zenki's exhilarating mixture of gorgeous 2D visuals and addictive gameplay almost providing enough justification for numerous enthusiasts to purchase a PC-FX purely to play it. Many of the anime FMV games were actually remarkably entertaining and very nearly succeeded in making what was previously a laughable genre appear almost worthwhile. For all its faults, NEC's machine was certainly adept at creating attractive 2D video games and could handle FMV with remarkable proficiency, but sadly NEC and Hudson had simply backed the wrong horse – 3D was the next big thing, as the runaway success of the PlayStation would attest.

Like so many machines of the era, the PC-FX was billed as "multimedia" device as well as a gaming platform. The PC tower casing – so at odds with conventional console design, which favoured machines that spread themselves horizontally rather than vertically – may not have been to everyone's tastes, but it arguably gave the PC-FX a mature, almost professional look. The ability to receive (but not send) faxes was an innovative attempt to introduce the kind of online connectivity we now take for granted; indeed, prior to the console's release Iguchi spoke of forging a link between different electronic products, such personal computers and telecommunications systems. The machine featured ports for future expandability and although the only peripheral to make use of this was the FX-BMP game save memory module, there were rumours that a fully-fledged 3D graphics card was in the works that would have allowed the PC-FX to compete toe-to-toe with Sony and Sega's machines. Music CD and Photo CD playback was also supported and in a rather novel move the console could be connected to a PC-98 personal computer via a special SCSI adapter and function as a CD-ROM drive.

However, as innovative as these features may have been, they counted for little in the face of more technically potent rivals. Bolstered by impressive capability and sterling support from publishers, the PlayStation quickly ran away with the majority of the market leaving rivals in its wake. The PC-FX hardly figured in the scheme of things; sales were pitiful, with less than 100,000 units sold after a year - compare this to the performance of the PlayStation, which had shifted over a million units in Japan by this stage. Amazingly, these figures might not have come as much of a surprise to NEC as it would appear the company's aspirations were low from the beginning, with Iguchi telling EDGE that he expected the PC-FX to sell "around 50,000" units in '94 and another 50,000 in the following year.

As things became increasing fraught, NEC opened the floodgates on what many would consider to be the console's lasting legacy – dubious "Hentai" dating simulations featuring wide-eyed schoolgirls in provocative poses. But even before this occurred, the acutely Japanese nature of the software had effectively spelt an end to what little chance there had been of a Western release. It could be argued that after the dismal performance of the TurboGrafx-16 (the American version of the PC Engine), NEC wasn't going to make the same mistake twice, but had the PC-FX been a success in its homeland, the probability of it reaching Western shores would have been much greater.

Nevertheless, the PC-FX did manage to carve out a niche for itself in Japan and hung onto a tiny market share for over three years. The final release (called First Kiss Story – you guessed it, a dating simulator) limped onto Japanese shelves in April 1998, by which point the 32/64-bit generation was coming to an end. Rumours circulated that other games (including a highly-anticipated update of Hudson's classic Far East of Eden series) were awaiting development "dependant on market performance", but they predictably never appeared. The PC-FX was arguably a console that was outdated from the moment it went on sale, and a far cry from the triumphant legacy left by the PC Engine; it also spelt the end of NEC and Hudson's previously fruitful relationship.

Thanks to PCEngineFX.com's Aaron Nanto for providing exclusive hardware and software photography. The feature has been republished with the kind permission of Retro Gamer magazine, where it was previously printed in its entirety. You can subscribe to the magazine by visiting the Imagine Publishing online store.