In many video games of the 1980s and 1990s, after a level was beaten and/or when all continues were used, the game would display a password, that when entered would allow the player to either restart from the last level reached or restore the game to the state it was in when the password was received, depending on the game. Though similar in many ways to cheat codes, passwords are distinguished from codes in that they are revealed to the player outright rather than hidden within the game code, and using them is generally not considered cheating. They are rarely used today, having been largely supplanted by saved games.
Passwords were used when storage was either impossible or expensive. On early ROM cartridges, games could not be saved without an additional memory card being integrated into the game, significantly increasing (often doubling) the manufacturing cost. By using passwords, nothing needed to be written on the cartridge, as the password itself contained all the information needed to continue the game, and thus a memory card was not necessary, lowering costs. These costs were particularly a concern on low volume titles by smaller third-party developers.
With the advent of optical based media at the tail end of the 16-bit era, data could not be stored on the game media, and a saved game required the introduction of non-volatile memory to the console either in the form of internal memory or memory cards (both of which were introduced with the Sega CD) which stored game data once the system was powered off; passwords avoided the need for this.
In the fifth generation of video game consoles, passwords retained practical use in conserving memory blocks. Platform and puzzle games often required no data to be preserved other than the level achieved – which was easily encoded in a simple password – and thus using one of the limited blocks for this data was seen as wasteful. More importantly, some consoles of the time, such as the PlayStation and Jaguar CD, had no memory available for saves out of the box, and the need to purchase separately sold memory cards could be a deterrent to purchasing a game.