Electronic Arts was one of the biggest third party companies releasing games for the Sega Genesis. From the first few titles they released - Budokan: The Martial Spirit, Zany Golf and Populous, to later releases like Starflight, Desert Strike: Return To The Gulf, Risky Woods, Shadow Of The Beast and the entire EA Sports line, Electronic Arts dabbled in just about every genre. For the most part, their games were ports of popular PC games. Their RPG line was no exception - Might And Magic, The Faery Tale Adventure, and King's Bounty were all PC games originally.
Somewhere along the line, someone got a great idea: create a brand new RPG (as if Electronic Arts didn't have enough of them already). To do this, Electronic Arts turned to fledgling game company Naughty Dog - the very same Naughty Dog that would go on to produce the Crash Bandicoot series during the heyday of the Sony PlayStation. Electronic Arts had worked with them before, on an obscure game entitled Keef The Thief that was released sometime in 1989.
In 1991 this new RPG was completed and unveiled to the public. It was entitled Rings Of Power, and Naughty Dog claims it's the largest RPG on a cartridge. It was a pretty good seller for EA, and it helped further establish Naughty Dog.
Then the rumors started about a code in the game that would give you access to something that was definitely not supposed to be there. You see, the game opened with a short Naughty Dog title sequence. A blonde woman in a T-shirt would flash across the screen, followed by the Naughty Dog himself, along with the company logo. Here's a picture of the woman as she appears during the opening:
Now, about the code. Rumor had it that this code would let you see the blonde woman topless. One issue of Game Players magazine had this supposed screen shot in it... that issue was yanked off Toys-R-Us store shelves when it came out. If it wasn't the real thing, it was a clever mockup. To this day, Naughty Dog will not confirm or deny that this code exists. Here's a quote from their site, Naughty Dog.com: Naughty Dog neither confirms nor denies these rumors.
The code has been printed numerous times online. The code in question is as follows: press A + B + C + DOWN-RIGHT + START on Controller 2 as you turn on the Genesis. The Naughty Dog will then come up, followed by the topless woman.
The question, of course, is does this code really work?
There's your answer. This is a screenshot of that alternate title sequence. This is an unmodified, unaltered picture. As you can tell by looking at it, it's nothing spectacular, but at the time that was big news. You can download the ROM for Rings Of Power (you will find it online if you look hard enough) and try the code out yourself, and you'll see that it works just fine. So yes, it does appear that Naughty Dog did create the world's first video game nude code. If there were any before that, I haven't heard of them - most nudity in games up until that point was pretty blatant (Custer's Revenge for the Atari 2600) or was just a complete surprise that happened during the course of the game (Mystic Defender for the Sega Genesis). Of course, there was the rumored "Smurfette striptease" in the game Smurf Rescue (Atari 2600, Colecovision), but I have yet to see any proof that that even exists...