The battle was always between Nintendo and Sega, while they were fighting each other you could see a whole new market being opened up for the more adult players which was taken by Sony Playstation one.
Nintendo was the biggest player and defeated Sega quite easily, mainly because of their strong marketing and very strong characters. Mario beat Sonic in many forms and even had his own large blockbuster movie Super Mario Bros (which flopped unfortunately).
These days Nintendo is under a lot of stress. They are trying to reinvent themselves over and over again but unfortunately the money is where the older gamers are. They have more money to spend and the older generation care less about copying illegal games. They have the money, so why do the trouble.
Ninentdo was smart by providing special cartridges in the beginning, which were copied when one of your friends went to Thailand. A CD is easily copied and a chip to put in your console was not so difficult either.