The 1983 video game crash, also known as the Atari shock, was a period of severe decline in the video game industry that lasted from 1983 to 1985. It affected mainly the North American market, where revenues dropped by more than 97% from $3.2 billion in 1983 to $100 million in 1985.
The 1983 video game crash was a significant downturn in the video game industry lasting from 1983 to 1985, mainly affecting the United States. This crash was caused by various factors, notably the oversaturation of the market with numerous video game consoles and low-quality games.
Causes of the 1983 Video Game Crash
Several factors contributed to the 1983 video game crash, such as:
Oversaturation of the Market
Oversaturation of the market was one of the main causes of the 1983 video game crash. It means that there were too many video game consoles and games available for consumers, which created confusion, competition, and low quality. This reduced the demand and profitability of video games and led to the collapse of the industry.
The success of the Atari 2600, the first popular home video game console, attracted many competitors who released their own consoles with similar features and games. By 1983, there were over a dozen different consoles on the market, creating confusion and fragmentation among consumers and developers.
Loss of Publishing Control
Unlike today, where console manufacturers have strict quality control and licensing policies, in the early 1980s anyone could produce and sell games for any console without paying any fees or royalties. This resulted in a flood of low-quality, unoriginal, and unauthorized games that saturated the market and damaged the reputation of the industry.
Lack of Consumer Confidence
The poor quality of many games, coupled with the deceptive marketing and false advertising of some publishers, eroded the trust and loyalty of consumers. One of the most notorious examples was the game E.T. the Extra-Terrestrial, based on the popular movie, which was rushed to meet the holiday season and turned out to be a critical and commercial failure. Millions of unsold copies of E.T. and other games were reportedly buried in a landfill in New Mexico.
Competition from Personal Computers
The rise of personal computers, such as the Commodore 64 and the Apple II, offered more advanced graphics, sound, and gameplay than the consoles of the time. They also had other features, such as keyboards, disk drives, and modems, that made them more versatile and appealing than consoles. Many consumers and developers switched to personal computers, which were also cheaper and more accessible than consoles.
Poor Gaming Quality
The lack of innovation, creativity, and diversity in the video game industry led to stagnation and boredom among gamers. Many games were clones, sequels, or ports of existing games, with little or no improvement or variation. The gameplay could have been more complex, repetitive, and frustrating, with no challenge, reward, or feedback. The graphics and sound were also primitive, dull, and unrealistic, compared to the expectations and standards of the time.
Immediate Impact of the Crash
The 1983 video game crash had a devastating impact on the video game industry, such as:
- Sharp decrease in sales: The sales of video games and consoles plummeted from $3.2 billion in 1983 to $100 million in 1985, a drop of more than 97%. Many retailers stopped selling video games or offered them at huge discounts. Some consumers returned their consoles or games for refunds or exchanged them for other products.
- Bankruptcies of major video game companies: Several video game companies went out of business or suffered heavy losses due to the crash. Some of the most prominent examples were Atari, which was split and sold by its parent company Warner Communications; Coleco, which discontinued its ColecoVision console and filed for bankruptcy in 1988; and Mattel, which sold its Intellivision division and almost went bankrupt in 1984.
- Abandoned projects and games: Many video game projects and games were canceled or left unfinished due to the crash. Some of the most notable examples were the Atari 5200, a successor to the Atari 2600 that was discontinued after two years; the Atari 7800, another successor to the Atari 2600 that was delayed and overshadowed by the Nintendo Entertainment System; and the Nintendo Advanced Video System, a prototype of the Nintendo Entertainment System that was never released in North America.
