Katz was not there at the launch, he joined a month or so later, and it was a bit later still that his efforts became visible to the outside world. (he probably had a minor effect on their management during the 1989 Crhistmas season, but it wouldn't have been until early 1990 that he really would have made an impact -and probably not until mid 1990 that his efforts hit full-force)
Katz left Atari in February of 1989 with the intention of taking an extended vacation from the industry, but Sega managed to compel him to join late that year (I believe in October or November) and head up Sega of America. (note, he'd already had dealings with Dave Rosen the previous fall when Sega was negotiating for Atari Corp to distribute/manage/market the Mega Drive in North America)
Probably more an issue of genre preference. (and I meant 1st and 2nd party games -anything primarily published/commissioned by Sega/Nintendo, but possibly outsourced for programming/development)
Also, there's the issue of some of the better games being messed up by technical issues. (several of the Sonic games play great in 256x192, but not so much in 160x144 -probably should have taken the SMS full-screen mode option for those . . . Castle of Illusion probably wouldn't have been nearly as good if it had been cropped -plus, the artifacts from downsampling to the limited LCD screen are surprisingly limited -even text is often legible . . . perhaps in part due to the assumption of RF output on the SMS)
The GB also had a 2 year head start for software development (and userbase), albeit the GG had the SMS library to work with too.


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