They did the demo behind closed doors, and the actual demo itself was not rendered with the Sega CD, though they made it seem that way by placing a CD in the machine and starting it up.

The actual demo was full-motion full-screen video about a time travelling kid from the future going back in time to get a Sega CD because it was so advanced.

It was amusing, but when the device actually hit with much inferior video quality all of us who saw it realized it was fake.

Sad really - I wanted that system to succeed at the time.

Could have just been a laser disc replaying rendered footage, or a Sega with a custom made cartridge playing back a demo "video"

CES demos were often being played off a Laserdisc player hidden under the table.