In 1991, Philips, the parent company of Magnavox (manufacturers of the Odyssey system), released the CD-i, (Compact Disc-interactive) console. The 16-bit CD-ROM based system was not promoted as a gaming platform. In advertising, Philips highlighted the multimedia applications that the CD-i would be able to perform. The initial retail price for the system was $400, software ranged from $49.99 to $59.99.
The CD-i player was not limited to running CD-i software. It could play CD-DA (Compact Disc-Digital Audio), Photo CDs, CD+G (Compact Disc + Graphics) and Karaoke CDs. With an additional Digital Video cartridge, the Philips CD-i was capable of playing full-frame videos at a rate of 30 frames-per-second. The Digital Video cartridge could play movies or music videos with the MPEG-1 compression technology that Video CDs utilized. Several CD-i game titles like Mad Dog McCree featured full motion video when played with the Digital Video Cartridge.
Philips followed NEC with its TurboGrafx-16 in employing CD-ROM technology for use in a game console. With its gigantic storage capacity, CD- ROMs could provide enhancement in different areas of gaming like number of levels, difficulty of play and amount of options.
Philips featured a slate of various software applications for the CD-i system. Among the selection were interactive educational titles (Treasures of the Smithsonian), children's titles (A Visit to Sesame Street) and reference titles (Compton's Interactive Encyclopedia). Philips did develop games for the system as well but did not solely focus advertising on them. This became critical decision in the ultimate failure of the Philips CD-i as a console. Potential buyers who were looking strictly for a gaming system chose other platforms.
By 1994, with low sales, Philips decided to alter its approach to advertising the CD-i. It was finally marketed as videogame platform. The console was redesigned to more resemble a standard gaming system. The price was lowered to $299 and a pack-in game named Burn:Cycle was included.
Philips' decision had been made too late. By this time there was heavy anticipation centered on the upcoming release of the Sega Saturn and Sony PlayStation systems. Sales for the revamped CD-i were poor. In the summer of 1995, Philips began to release versions of CD-i software for play on the Sega Saturn and PC. Also in the summer of 1995, Philips announced plans to release a modem add-on for the CD-I, though there was no set date.
In the summer of 1996, Philips announced that they would be discontinuing the CD-i system. Reportedly, Philips had lost close to one billion dollars on the console since its introduction to the US.
In early fall 1996; Philips did eventually release an Internet terminal designed for use with television sets. It retailed for $329 but was not connected to the CD-i or game playing. ~ Dave Beuscher, All Game Guide