A Brief History of Video Games [PART 2] The Great Crash of 1983

In 1983 the North America video game industry crashed. Revenues had peaked at around $3.2 billion in 1983, (Liedholm et al) then fell to around $100 million by 1985 (a drop of almost 97 percent). The crash was a serious event that brought an abrupt end to what is considered the second generation of console video gaming in North America, and lead to the bankruptcy of the fastest growing U.S game company at that point. Atari.There were several reasons for this crash:

1. Poorly made games:
Atari made more games than consoles on several occasions, publishing game prototypes and rushed ideas in time for the holiday season. For example in 1982 Atari ported Pac- man, which was a insanely popular arcade game at the time, (and a iconic game today) onto their Atari 2600 console. Atari manufactured 12 million copies when there were only 10 million of the Atari 2600 consoles sold. Atari was confident that consumers would pay $200  to play a game that was originally available in arcades for a 25 cents. 

The released game also barely resembled its arcade version.

While the port is the best selling Atari 2600 game of all time, selling 7 million copies, and was the best-selling home video game of all time when it was released, customers returning the game in large quantities. In short this move was a complete disaster and put a dent in consumers confidence in games.

Another blow to Atari was the release of the game E.T, which is considered the worst video game in history. The game was made six weeks after Atari spent $20 to $25 million on the property rights. Atari skipped quality testing and released a Prototype instead so the game could make it to market in time for the 1982 Christmas season. The result was of course a terrible game. The game play consists mainly of falling down holes to find random bits of a telephone. About four million copies of the E.T. video game were shipped, and according to Atari's then-CEO Ray Kassar, about 3.5 million of those copies were returned to Atari. (Bruck 1995). When I heard that this game is cited as one of the causes of the video game crash I thought that this was exaggerated and the it couldn't have been that bad....

Oh my God.

2. Too many  games/consoles

Nowadays we have 3 main companies competing in the home console market,  Nintendo, Microsoft and Sony. But in the early 1980s you had dozens of consoles all by different companies that wanted a piece of the action. Around the 1981 through 1983 mark, the number of consoles that came to market was astounding. Another reason for the '83-'84 console crash: System saturation. Too many game consoles,without enough decent games to sustain them. Though Three machines, the Atari 2600, The Intellivision and The ColecoVision, dominated this generation of consoles in terms of sales,  there were still many consoles on the market. With the increase in poor quality games from the smaller consoles and the big companies (looking at you Atari) consumers lost interest in video games. This led to overcrowded shops trying to get rid of their stock, games that were $30-$40 at release were dumped in $2 bargain buckets.

3. Loss of Programmers

Atari also struggled with its game programmers, who felt they were underpaid (they were), and were frustrated about being denied the option to sign their names to their work, as Atari feared they'd be snapped  away by competitors. This was a big deal back in the day as programmers were responsible for all aspects of the game. 

"In those old far-off days, each game for the 2600 was done entirely by one person, the programmer, who conceived the game concept, wrote the program, did the graphics—drawn first on graph paper and converted by hand to hexadecimal—and did the sounds."Warren Robinett, programmer for the game "Adventure" (2009)

This  treatment led to the formation of one of the first third party video game developers Activision. 

Programmers and developers saw what the ex Atari workers did and decided to also leave their companies and make there own games, The industry was at its breaking point.

4. The rise of the PC
The nail in the coffin for the game industry was the introduction of affordable home computers like the Commodore Vic-20, the commodore 64 and the Apple II.Computers provided better graphics than home consoles and could be used professionally. Overall they were of better value. While the three home consoles companies were taking the brunt of the failing market, computers thrived. The move towards computer gaming was the same in Britain, where the ZX Spectrum reigned for much of the '80s. The home computer market also began a generation of amateur coders. So even while the console market was sputtering, its future game builders were learning the tricks of the trade. Out of the Crash, came the next generation of game developers. (Oxford 2011)

With all this in mind the crash wasn't that disastrous to consumers. As consoles and game prices became heavily discounted, families he previously couldn't have afforded the $200 consoles before could now buy them. This kept some interest in video games alive and primed the market for the well know NES which experience a popularity boom in 1985 two years after the crash, and would kick start interest in games again.

1. Liedholm, Marcus and Mattias. "The Famicom rules the world! – (1983–89)". Nintendo Land. (2010) 

2. Connie Bruck, Master of the Game: Steve Ross and the Creation of Time Warner, (1995) pp 179-180

3.Agger, Michael (March 9, 2009). Slate.com.

4. Nadia Oxford "Ten Facts about the Great Video Game Crash of '83" (2011)