Above is an ad from Sonic Times. Sonic Times was a promotional newsletter sent to Sega retailers during the Genesis era. It contained information like marketing schedules, lists of top games sold and upcoming releases. This ad highlights the upgradability of the Sega Genesis.
It's true that the Genesis had a few different upgrade paths. The basic Sega Genesis could play 99% or more of all the games released for that system. However, the Sega CD add-on added the ability to play CD games. Unfortunately, relatively few games were made for CD and even fewer were very good. Sega also released the 32X which plugged into the cartridge port and acted as a pass through. It added some 32-bit hardware to the Genesis enabling better graphics and theoretically better games. However, once again, few games supported it and fewer were particularly good.
Some games even required both the 32X and the Sega CD but as you could probably guess, those games were even fewer in number. It's not so much that the hardware was bad, it's just that it was not well supported by third parties and Sega themselves just couldn't provide enough software to really justify their purchase price.
Pictured above is a fully expanded Genesis with the newer model Sega CD and 32X. What's not shown is the mess of cables and power supplies needed.
Sega's strategy to hardware expansion was quite different than Nintendo's. What Nintendo hardware expansions you might ask? Well, they certainly weren't as visible. A CD system was long planned for the Super Nintendo but it never materialized. There were also disk systems for both the NES and N64 that appeared in Japan but never elsewhere. However, Nintendo and other 3rd parties did a lot of hardware expansion in the cartridges themselves. A variety of "memory mappers" appeared in NES cartridges that added more RAM and other hardware. For the Super Nintendo, the Super FX chip is probably the most well known expansion though it was only used in a couple of games. Of course, Nintendo screwing over Sony in their partnership to create a CD expansion for the SNES is what led to the PlayStation but that is another story.
Hardware expansion happened in other systems as well. A couple of games for the Atari 7800 added a Pokey sound chip to enhance the sound. The Nintendo 64 and Sega Saturn had memory expansions and of course in more modern systems external storage can often be added or upgraded. However, I think Sega had everyone beat with the amount and extent of upgrade options with the Genesis.
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