The 1983 Game Crash

The 1980s; the era of spandex, electro, mobile phones the size of house bricks, and a dark time for the video games industry. This was the era of the 1983 Game Crash: A predominantly North American phenomenon that would cripple the gaming industry for two years.

So what the hell happened?

Well as a starting point, Atari had quite a major role in this catastrophic event. In fact, the Crash is sometimes referred to as the Atari Débâcle. Previously Atari were the big boys of the gaming market, but a series of terrible decisions brought them to their knees.

Firstly, refusing to give game designers authorial credits or royalties for their hard work upset many of the most creative people in the industry. Many decided to cut their close ties with Atari, forming their own companies to design games for the Atari 2600. Atari attempted to take legal action to prevent other developers using their format, but lost. This meant they were then competing with quality developers for sales. One of the most famous examples of companies being formed around this time is the birth of Activision.

Considering Atari’s business strategy of making a loss on each console sold and making their profit from games, this was quite a shock to the system. Faced with heavy competition, their sales plummeted and the company started losing money.

Understanding that they were in trouble, Atari attempted to release a couple of games based on popular household names, in hopes that people would buy the games out of brand loyalty. Most notable are the infamously terrible Pacman and E.T. The Extra Terrestrial. With E.T. being a huge success in the film box office and Pacman being a huge gaming hit in the arcades, Atari thought they would be onto a winner. This may have been the case if they gave developers more than six weeks to work on these titles, but Atari insisted that developers had these games completed and ready for sale by the Christmas season of 1982.

As you’d expect, these games were so awful that they severely damaged the reputation of the home gaming industry. But not only did Atari authorise games of abysmal quality, they over produced them. 12 million copies of Pacman were made for what was essentially only a 6 million console market. Not surprisingly, neither game sold very well. Atari were left with millions of pounds worth of unsold cartridges and, as a testament to their failure, buried millions of copies of Pacman and E.T. in a New Mexico desert, and then paved over it.

By the end of 1983, Atari had racked up £3 000 000 worth of losses. But although Atari did play a major part in the Crash, they weren’t the only reason that it happened.

Around this time the industry was becoming oversaturated with similar systems competing against each other. The Bally Astrocade, the ColecoVision and the Emerson Arcadia 2001 are just a few examples of other consoles on sale around this time. In fact, other companies even set out to make consoles that were essentially clones of the Atari 2600 and the Intellivision. The sheer quantity of companies in the niche meant that nobody could really get a good hold on the market, everyone was struggling.

To make matters worse, a lot of personal computers were dropped in price to compete against consoles. Previously, personal computers sold for around £2000+, in today’s terms. Computers that could be hooked up to TVs such as the Commodore and the TI 99/A4 added further unwanted competition. Since many of the consoles and PC hybrids offered nearly identical catalogues of games at nearly identical prices, how the hell were potential consumers meant to choose?

More problems were faced with the lack of quality control in software releases. Games for these systems were cheap to make, allowing inexperienced companies to release poor quality titles and get them on store shelves without much hassle. Games were even being produced by non-gaming companies as a form of advertising that they could make people pay for. Games such as Kool Aid Man started making an appearance, and when Quaker Oats has its own gaming division, you know something has gone horribly, horribly wrong.

With the gaming industry so congested, and total crap being shamelessly flogged to consumers, some sort of implosion was inevitable. Boom. Nobody cared any more. Everyone who wanted a console already had one, and those who didn’t were deterred by the overwhelming choices and bad press. Even people who had consoles didn’t want to fork out for games that were hastily made and often broken.

Around this time there was already an economic crisis and people were being cautious with their spending. Gaming was considered to be an unwise investment. Many developers of both software and hardware pulled down the shutters for good, and so, for two years, home gaming in America was a barren wasteland. This isn’t to say the entire gaming industry was dead though. Minor arcade classics such as Paper Boy, Punch Out and Gauntlet still made an appearance post-crash.

As I say, this was a uniquely American problem. Through Europe there wasn’t really an overflow of consoles and the Japanese gaming industry thrived.

For America, it was the introduction of a Japanese console that would revitalise home gaming. Nintendo, showing a little more intelligence than Atari, did a number of things to ensure the success of their console in America. They had already achieved great success in Japan under ferocious competition and were about to hold a monopoly on the American market. Firstly, Nintendo decided to rename the console. The name Famicom, or Family Computer, would have had too many negative implications since computers were one of the causes of the crash. They understood that it wouldn’t have been well received.

Instead, they named their console the NES (Nintendo Entertainment System). As a way to soothe the worries of retailers they also released the first batch of consoles with R.O.B, a toy that never really worked properly. Even though it was just a cheap gimmick, it worked.

All developers wanting to work with Nintendo had to sign a non-competition agreement and Nintendo also introduced an anti-piracy feature to deter unlicensed 3^rd party developers from making games for the console. Even the few developers that were bold enough to try and make games illegally were subject to brutal legal action, which put a lot of them out of business for good.

As well as their careful marketing Nintendo also introduced the Nintendo Seal Of Approval. This filtered out a lot of the crap that was clogging up the games industry, ensuring quality games. People began to take an interest in the new machine. Not only were games what they should have been, filtering out the pornography and advertising that was a problem for Atari, it offered phenomenal graphical improvements. You may laugh at the idea of Super Mario Brothers being cutting edge, but it really was. Before this, gamers were used to playing games that displayed simple rectangles representing goblins and limited palates of colours. Nintendo offered players vibrantly coloured worlds and sprites that actually looked reasonably convincing.

Nintendo held the lead for two generations. Their unwillingness to move graphics up a notch allowed Sony to get a foothold with their groundbreaking Playstation. And the rest is history.

References:

Game Over by David Sheff (Paperback)

http://en.wikipedia.org/wiki/North_American_video_game_crash_of_1983