The PlayStation Portable, released in 2005 by Sony, was the first serious competitor to Nintendo's handheld video game consoles and is by far the best-selling non-Nintendo handheld. Nintendo continued to dominate the handheld console market with the release of the dual-screen Nintendo DS in 2004. It was generally successful as the PlayStation 3 steadily increased in popularity, resulting in lifetime sales to be nearly equal to that of the Xbox 360.
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The high price of the PS3 had initially caused slow sales, but numerous price cuts and efforts to bring feature-parity between it and Xbox 360 were made in the years following. The Wii's motion sensitive controls and focus on family-friendly games, while alienating some hardcore gamers, helped the Wii to become the best-selling console of the seventh-generation.
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In response, the PS3 introduced tilt-sensitive functionality with its controllers.
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The Wii implemented an innovative game controller that features full motion sensitivity and is wielded like a remote, with limited button interaction. The PS3 also has Blu-ray Disc compatibility. The seventh-generation featured widespread implementation of HD-ready graphics, media centers, and wireless game controllers, as well as online services for all consoles. This was followed by the Wii and the PlayStation 3 in 2006. The seventh generation of consoles began with the release of the Xbox 360 in 2005. It featured a broadband connection and downloadable content and was a success. Internet play on consoles, pioneered by the Dreamcast, became commercially viable with the Xbox Live system, which was launched in November 2002, one year after the console's release. Some of the new features in the consoles included built-in DVD players and hard drives. The sixth generation improved on the 3D graphics of the fifth generation consoles. The GameCube, launched in 2001 alongside the Xbox, fell into third place, a first for Nintendo.
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Although initially expected to struggle, it managed to reach second place in sales behind the PS2 on the strength of the launch title Halo: Combat Evolved. Microsoft entered the home console market with the Xbox. The PlayStation 2 was released in 2000 and became the best-selling video game console of all time. Sega announced that they would no longer produce video game consoles after two straight underperforming consoles and became a third-party developer. The sixth generation of video games officially began in 1998 with the introduction of the short-lived Dreamcast, which was discontinued in 2001.