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The Mega CD was released on the 12th December 1991 in Japan for the whopping price of 49800yen !!  That's an awful lot of money !!  It's no wonder it sold like crap.  The Sega Saturn was cheaper at 45000 yen 3 years later and even that was considered to be expensive even with inflation.  Gaming in Japan certainly was expensive back in the mid 80's to mid 90's.

The Mega CD is compatible with both the Mega Drive 2 and of course the Mega Drive 1.  As you can see from the shots below the Mega Drive 2 looks pretty stupid sitting on top of a Mega CD 1.  There's also another problem with using a Mega Drive 2 with a Mega CD 1.  You can't output stereo game audio through the Mega CD because there's no audio out on the Mega Drive 2 to connect to the Mega CD's mixing port.  So all you'll get is the audio produced by the Mega CD, not the Mega Drive.  This can lead to missing music, sound effect and so on in various Mega CD games.  However there is a special cable made by Sega that will take a stereo audio signal from the mega Drive 2's video out and allow you to plus it in to the Mega CD's mixing jack.

Around the back of the Mega CD there's a few sockets.  Of course there's the power in and two audio out sockets but what is interesting is the mix in socket.  This is used for connecting the Mega Drive's audio to the Mega CD allowing them both to be out putted via the Mega CD's audio out sockets that you can see to the right.
The Mega CD comes complete with a metal shield that fits between the Mega Drive and Mega CD to stop any interference.  To be honest you don't really need to fit this since the two systems when together never seem to produce any interference or at least not that I've noticed.