The first use of QSound was on master studio music recordings where powerful computers ran the algorithms during the recording process. One of the first notable uses was Madonna’s The Immaculate Collection and michael jackson for the first printings of his CD Album "Dangerous" in 1991 (it is unknown if the Qsound effect was recorded onto the main masters and used again on the 2001 "special edition" printings" Most would say yes because they sound almost the same with out drastic changes unlike Qsound versions of Madonna’s songs mix in Qsound.)
Sega with the Sega CD was amongst the first video game companies to adopt QSound due to its relative success in the music industry at the time however The introduction of hardware-based real multichannel Matrix decoding algorithms like Dolby Pro Logic 1 and 2 rendered it almost obsolete in most cases in the late 90s.
Because QSound is implanted onto the audio at the time of recording (Most of the time in Redbook Audio CD format 2 channel 16bit liner PCM at 44,100 Hz), CD based consoles without the requisite hardware processing power (such as the Sega CD, PlayStation, and the Dreamcast) could still use the algorithm as a pre recorded music track if it meets Redbook audio CD format specifications (this also works in analog audio recordings). Notable examples of games that use Pre-Recorded QSound include Sonic CD, Sonic Adventure, Ecco the Dolphin (Sega CD version) and Darkstalkers (disc versions).
Note that music done by video game hardwares sound chip in real time cannot be mixed in QSound without dedicated hardware or software and cpu power to process the sound in real time. This includes Midi sound, and other sound types that are performed in real-time by sound hardware or software. As an example In Sonic CD all past stages are not Redbook CD Audio and are done by the SEGA CD and Genesis Ricoh RF5C164 and Yamaha YM2612 sound chips in real time so they are not in Qsound format and can not be listened to in a standard CD player. In modern time this is what is known as a "Chiptune" format.
Most Q-sound on consoles it appears on was pre-recorded just like pre-rendered full motion Video any other console with enough power to decode and mix in real time in software or hardware often would use a newer all digital multi channel format like Dolby digital or DTS. No sega console or any other mainstream popular console Decoded or encoded Qsound in real time or had Qsound hardware though sega often used it in pre-recorded formats more than most game publishers.
As sound processing and DSP's eventually became more powerful, Qsound labs partnered with other companies to include this technology in many types of devices; this includes TVs, CD players, PCs, and arcades (notably in many Capcom hardware builds). A software decoder method is also used and can be run by a CPU.
Some Capcom Arcade Machine feature analog DSP Matrix_decoders these work much like Dolby Pro logic Matrix_decoders The left and right Analog sound channels from the Stereo feed from the CPS1 and CPS2 arcade boards are processed through the Add on board where it is separated and the Qsound 3d effect is added based on phase-shiftis from the Stereo track before being sent to the speakers. This is the method most commonly used for hardware based Qsound.