You don't get it because you don't understand how the system works internally. It is far easier to use a single port to do multiplayer, because you are polling a single port on a timer rather than polling one port and then a second port on a timer. It keeps code size and complexity down.
I would contend that there are other ways to have included more than one port and still have used the single timer polling setup. One would be to put all 5 ports on the system. This would have made the PC engine larger, true, but not a lot larger. The tap is mostly air and cables inside, but inside the system they could have used a different wiring scheme. Another solution would have been to use a different type of controller connector. Maybe one where the 1P port has only a couple pin holes but the 2P port is the same shape with more pins. Controllers have only a few pins and can connect to either port, but you can buy a 4 player tap that only works plugged into port 2 that gives you the full 5 controller array. Even better, have two ports and a mediating chip that can run the ports in two different modes. If a controller is connected it polls the port one way and if a tap is connected to one or both it polls them a different way. The chip then passes up the data to the system in a standardized fashion regardless of whether it is getting the input from a controller connected directly or via a tap. Remove the need of the programmer to have to interpret controller input. There are just off the top of my head and not very elegant. I'm sure a dedicated hardware engineer could do a lot better.
I do still think the single controller port looked cool on the PCE due to the size. On the TG it just looked stupid. The whole "multiplayer by design" thing seems like a misread of the readiness of the market, especially given how many games were released that didn't even have 2 player play. Sure, it might have been easier to program, but having to buy another peripheral means you're programming to a smaller audience, and especially in Japan, you're not likely to have more than two people in front of a TV at any given time, anyway. The 5-player thing would definitely have been more of an advantage in the US. If only NEC/TTI had managed to attract some kind of critical sports support ('cause TV Sports just didn't do it). A good sports series tie-up and 5 controller ports on the front of the system could have been something of a marketing coup. What if they'd struck a deal with EA?
I never thought it was that bad, especially considering the low price of the TG16 when I bought it. When you add everything up, it comes out to about the same as other consoles of the era for the basics.
The price for the TG was only lower once the market for the TG was already on the decline. Not major decline yet, but decline all the same. I bought my system when the price dropped to $99 (but didn't yet have Bonk as the pack-in) and the other systems were still $149, but at that time only Toys R Us still had a great selection. EB and Software Etc had acceptable shelf space devoted to the system (a single, square patch of wall), but I never saw TG stuff at Sears, very little at KB, and never at the big box stores. The only games I remember being released new once I'd bought my system came from TTI or WD. Every NEC game was already pretty much on the market by the time the price dropped, IIRC.
