Video Game Crash of 1983

The early 1980s were tough times for the video game industry. Fast growth and new tech led to the Video Game Crash of 1983. This crash was caused by too many games, low quality, and lost trust from players.

In Alamogordo, New Mexico, a town once buzzing with gaming activity, now lies a landfill. It’s where thousands of Atari 2600 consoles and games, like the awful E.T. the Extraterrestrial, were thrown away. This event showed the end of one gaming era and the start of a new, uncertain one.

Cover image: E.T. and Centipede games packaging from the excavation of the landfill site of the 1983 Atari video game burial. By taylorhatmaker - Atari E.T. Dig: Alamogordo, New Mexico, CC BY 2.0.

Key Takeaways

• The Video Game Crash of 1983 led to the collapse of multiple console manufacturers and the disposal of thousands of unsold games.
• The market was oversaturated with a wide variety of consoles, leading to fierce competition for consumer attention.
• Many of the games released during this period were of poor quality, further eroding consumer confidence.
• The E.T. the Extraterrestrial game for the Atari 2600 was a notable failure, contributing to the industry’s decline.
• The crash paved the way for the rise of the Nintendo Entertainment System (NES) and the revitalisation of the gaming industry.

Introduction to the 1983 Video Game Crash

The 1983 video game crash, also known as the Atari shock in Japan, was a major event. It changed the gaming industry for the better. The crash was a big recession that lasted about two years, affecting the video game market a lot.

Market saturation, poor-quality games, and less interest from consumers were key reasons for the crisis. The overview of the 1983 video game crash shows these factors were behind it.

Overview and Significance of the Crash

In the early 1980s, the video game industry grew fast. By 1983, it made about $3.2 billion (around $9.79 billion today). But then, the industry suddenly declined, making only about $100 million by 1985 (around $283 million today). This drop was almost 97 percent.

This significant impact of the 1983 video game crash changed the industry. It led to Japanese companies like Nintendo and SEGA becoming leaders in console gaming.

Key Players Involved

The key players in the 1983 video game crash were big names like Atari, founded by Nolan Bushnell, and many new developers. In 1982, ColecoVision had about 17% of the market, while Atari had 58%. But Atari faced big problems, like having too much inventory after many 1982 orders were returned.

Too many games and poor quality ones added to the industry’s problems. This led to the market’s collapse in 1983.

“The demand for video games was up 100% from the previous year, but the manufacturing output had increased by 175%, creating a significant surplus.”

This surplus, along with the industry’s fast growth and poor quality control, caused the video game market to crash in 1983.

Causes of the Video Game Crash of 1983

The video game crash of 1983 was a major event in the industry’s history. It was caused by too many games and poor quality ones. Before the crash, the Atari Video Computer System (Atari 2600) was the top console. But, its success led to many other consoles and numerous new games from Atari and others.

This led to a market full of choices, confusing customers by 1983. Many new games were made quickly and were not good. This made the industry decline.

The Role of Atari in the Market’s Decline

Atari was a big part of the market’s fall. The company’s E.T. the Extra-Terrestrial game and other mistakes hurt the industry. Atari had tried to stop others from making games for their consoles, leading to many bad games.

Atari’s plan to make many games for Christmas 1982 didn’t work out. It made customers lose trust in the industry. Games like E.T. and Pac-Man were not well received, showing the poor quality of games before the crash.

Statistic	Value
Video game industry contraction between 1983 and 1985	97%
North American video game industry’s worth drop by the first quarter of 1984	From $1 billion to $10 million
Video game consoles sold at a loss during the early 1980s	Companies assumed profits would be gained through game sales

The 1983 video game crash showed how important quality and trust are in the industry. Too many games, bad ones, and Atari’s mistakes led to the crash. This made way for a new era of gaming with the Nintendo Entertainment System (NES) in 1985.

Impact of the 1983 Video Game Crash

The 1983 video game crash had a massive effect on the gaming world. It led to many companies going bankrupt. Analysts doubted if video games could survive long.

This crash ended the second era of console gaming in North America. It also weakened the arcade game market, ending its golden age.

Effects on Gaming Companies and the Industry

The 1983 crash hit gaming companies and the industry hard. Here are some of the effects:

• Many companies making video game consoles and home computers went bankrupt.
• Consumers lost trust due to poor game quality during the crash.
• People started spending more on home computers than traditional consoles and arcade games.
• The second generation of American console gaming came to an end, lasting only two years.

Several factors caused the crash, like the US economic recession, too many low-quality games, and the rise of home computers as a cheaper entertainment option.

Impact	Description
Bankruptcy of Gaming Companies	Several companies producing video game consoles and home computers in North America went bankrupt during the crash.
Decline in Consumer Trust	The lack of quality control in games released during the crash period led to a decline in consumer trust in the video game industry.
Shift in Consumer Spending	Consumer spending shifted from traditional home consoles and arcade games towards more affordable home computers.
End of the Second Generation of American Console Gaming	The 1983 video game crash brought an end to the second generation of American console video gaming, which lasted for two years.

The 1983 crash was a big blow to the gaming industry, causing many companies to fail and changing what consumers wanted. But, the arrival of the Nintendo Entertainment System (NES) in 1985 helped revive the industry. It started a new era of growth and innovation.

The Role of the Atari 2600 and E.T. Game

The Atari 2600 was a top console before the 1983 video game crash. But, the E.T. game, rushed to market and considered a failure, was a big factor in its decline.

Analysis of the E.T. Atari Game and Its Impact

The E.T. game for the Atari 2600 was a big flop, causing considerable losses for Atari. Just three people worked on it, with only 5 weeks to finish. They spent $22 million on the E.T. licence, but the game’s poor technology made it difficult to play.

At first, 1.5 million copies of E.T. were sold in December 1982 and January 1983. By the end of 1982, this number reached 2.6 million. But, around 670,000 copies were returned in 1983, leaving 2-3 million unsold. This oversupply, along with the game’s poor quality, was a big part of the role of the Atari 2600 in the 1983 video game crash and the E.T. Atari game and its impact on the 1983 crash.

Missteps in Atari’s Strategy

Atari made mistakes in game development and strategy, like not keeping quality control over third-party developers. In 1982, Atari sold about 1.5 million E.T. games, but made around five million units. This meant there was too much of the game in the market, leading to big financial losses for Atari. These losses hurt the company’s Atari’s mistakes in the 1983 video game crash.

The E.T. game for the Atari 2600 is now considered one of the most famous and debated games ever made. It’s even in the Museum of Failure. The story of unsold E.T. cartridges buried in a New Mexico landfill was proven true in 2014 by a documentary film crew, making it a part of gaming history.

Nintendo’s Role in Video Game Industry Recovery

After the 1983 video game crash, the North American console industry was in trouble. But Nintendo’s Famicom, later known as the NES, changed everything. It helped bring back the gaming market and set the stage for growth.

The NES came out in October 1985. It was made to learn from the past mistakes that caused the crash. Nintendo’s smart planning and new design helped make people trust games again and get the industry growing.

How Nintendo Revived the Gaming Market

The NES was key to making the industry recover. It had great games, was easy to use, and was well marketed. This made people forget the bad times after the crash. The NES sold about 62 million units worldwide, showing how popular it was.

Nintendo also introduced characters like Mario and Zelda. These characters were a big hit with gamers. They helped Nintendo become a top name in games.

The NES and Nintendo’s smart moves were crucial for the industry’s future. Their focus on quality, new ideas, and making players happy helped the industry bounce back. This set the stage for the gaming world to keep growing and changing.

Timeline of the 1983 Video Game Market Crash

The 1983 video game crash was a major turning point for the industry. It changed the way games were made and sold. This timeline looks at the events before, during, and after the crash.

Key Events in the 1983 Video Game Crash

In the early 1980s, the video game industry grew fast. Many new game developers joined, leading to a flood of games. Sadly, many of these games were not good quality. This led to the crash.

• Atari was a big name but made some big mistakes. They bought the E.T. the Extra-Terrestrial game licence and made too many cartridges. There were more cartridges than consoles.
• The E.T. game was rushed and got bad reviews. It didn’t sell well, leaving many cartridges unsold.
• By mid-1985, only three game systems were still getting new games. Six consoles had vanished from the market in just a year.

Milestones in the Recovery from the 1983 Video Game Crash

The industry slowly started to get better after the crash. Some big events helped bring back the love for gaming:

1. Nintendo launched the NES in 1983. It made people excited about gaming again.
2. Nintendo sets high standards for games. They only allowed certain games to be made. This improved game quality.
3. New consoles like the Sega Genesis and Sony PlayStation brought new ideas and competition.

The story of the 1983 video game crash and recovery shows how the industry bounced back. It learned from its mistakes. These events helped the industry grow and change over the years.

Economic Factors in the Video Game Crash of 1983

The 1983 video game crash was not just about the gaming world. It was also deeply affected by the economic state of the early 1980s. High inflation, rising interest rates, and a recession were key factors that hurt the gaming industry.

Overview of the Economic Environment in the Early 1980s

The US economy in the early 1980s faced high inflation, hitting double digits in 1979. This made people’s money worth less, and they spent less on fun things like video games. High-interest rates also made buying things more costly, which lowered demand for games and consoles.

How Economic Conditions Influenced the Gaming Industry

The economic downturn hit the gaming world hard. With less money to spend, people bought fewer games. The rise of personal computers also drew attention away from game consoles. In 1983, Atari lost £180 million in the third quarter, ending the year with a £500 million loss. This led to around 9,000 jobs being lost in the video game industry.

These economic issues, along with problems within the industry like too many games and poor quality, caused the 1983 crash. This crash had a big effect on the gaming world.

Lessons Learned from the 1983 Video Game Crash

The 1983 video game crash was a major wake-up call for the gaming world. It led to significant changes and new strategies to avoid future crashes. These hard lessons helped make the industry stronger and more resilient.

Industry Changes and Regulatory Impacts

After the crash, the industry knew it needed better rules and quality checks. Developers and publishers had to make sure only top games got to players. They kept a closer eye on third-party developers and focused more on what players wanted.

The crash showed the need to reach out to more gamers. No longer could the industry just focus on one type of player. They started working to attract a wider audience.

Strategies for Preventing Future Crashes

• Improved market research to understand consumer trends and demands
• Stricter quality control measures for third-party game development
• Diversifying the gaming audience and not relying on a single demographic
• Fostering innovation and creating high-quality, engaging games
• Monitoring market saturation to avoid oversaturation and declining interest

The industry has learned a lot from the 1983 crash. These lessons have helped it deal with the fast-changing gaming world. By avoiding past mistakes, the industry has grown and thrived.

Key Statistic	Value
Retail sales in 1982	$3.2 billion
Retail sales in 1984	$800 million
Atari’s market share in 1982	80%
Atari’s losses after the crash	$356 million
Atari staff laid off by 1983	3,000 out of 10,000

The 1983 video game crash changed the industry for the better. By learning from past mistakes, the industry has put in place new strategies. These aim to prevent future crashes and keep the video game industry going strong.

The Legacy and Long-Term Effects of the 1983 Crash

The 1983 crash in the video game industry left a lasting impact. It changed the course of the industry for many years. Companies like Nintendo were key in bringing the market back to life.

This crash taught the industry the value of quality control and market research. It also showed the need to attract a wider audience. These lessons have been crucial for the industry’s growth and change.

Lasting Impacts on the Gaming Industry

The 1983 crash made the industry rethink its ways. It focused more on making quality products and understanding what players want. Developers now pay close attention to market trends and user needs.

This change helped the industry thrive eventually. It also showed the importance of having various games and consoles. Relying too much on a few hits was considered a risk.

Reflection on How the Crash Shaped Modern Gaming

The 1983 crash was a turning point for the gaming world. It changed the industry in big ways. The way companies responded to the crisis set the stage for growth and innovation.

From Nintendo’s rise to the start of mobile gaming, the 1983 crash’s impact is still felt. It has influenced how the industry has grown and what strategies it uses.

The legacy of the 1983 video game crash and its long-term effects have greatly shaped the modern gaming industry. The industry’s ability to learn from this moment has been key to its success. This has led to growth and innovation over the years.

Conclusion

The 1983 video game crash was a major turning point for the gaming world. It was caused by too many games flooding the market, poor game quality, and Atari’s mistakes. These factors led to a big drop in the industry’s success.

Recap of Key Points

The crash started with too many home consoles and a flood of games in 1983. Many of these games were not good enough to keep players interested. Atari was a big part of the crash, with the failure of the E.T. game and losing its lead in the market.

Many big companies like Atari, Mattel, and Coleco went bankrupt or left the market. This made people wonder if video games would still be around in the future.

The Significance of the Crash in Gaming History

The 1983 crash changed the gaming industry for the better. It taught the industry about the importance of making quality games and controlling the market. It led to the success of Nintendo’s NES, which fixed some problems from the crash.

Today, the 1983 crash is considered a key moment in gaming history. It shows how crucial innovation, player interest, and a balanced market are for success.

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