Nintendo was not as restrictive as Sega, which did not permit third-party publishing until Mediagenic in late summer 1988. Nintendo's intention, however, was to reserve a large part of NES game revenue for itself. Nintendo required that they be the sole manufacturer of all cartridges, and that the publisher had to pay in full before the cartridges for that game be produced. Cartridges could not be returned to Nintendo, so publishers assumed all the risk. As a result, some publishers lost more money due to distress sales of remaining inventory at the end of the NES era than they ever earned in profits from sales of the games. Because Nintendo controlled the production of all cartridges, it was able to enforce strict rules on its third-party developers, which were required to sign a contract by Nintendo that would obligate these parties to develop exclusively for the system, order at least 10,000 cartridges, and only make five games per year. A 1988 shortage of DRAM and ROM chips also reportedly caused Nintendo to only permit 25% of publishers' requests for cartridges. This was an average figure, with some publishers receiving much higher amounts and others almost none. GameSpy noted that Nintendo's "iron-clad terms" made the company many enemies during the 1980s. Some developers tried to circumvent the five game limit by creating additional company brands like Konami's Ultra Games label; others tried circumventing the 10NES chip.

When did Sega finally permit third-party publishing?