The Video Game Crash of 1984

This is an old post that I wanted to save from the burning remains of my old sites. It’s a small article about what really was going on during the first great crash, and the implications for the gaming industry at the moment.

For gamers, in 1984, the world ended. That was the year that the first major ‘video game crash’ destroyed the video game industry, ruining everything forever and forcing everyone back to the TVs to watch Superfriends and Bugs Bunny on Saturday mornings. It was all Atari’s fault and no one wanted video games anymore, nor would they ever again. Retailers, convinced of their reasoning, dumped all their video game products for pennies on the dollar. Games, like Defender, which had sold for $50 in 1983, was selling for a buck or two in the K-Mart discount bins. The fad was finally over, and retailers could take that precious space to sell real product, like those Polo shirts everyone wants.

Of course, twenty-five years later, we know how much of that wasn’t even remotely true, aside from how retailers took the ‘video game crash’. While retailers and business leaders simply felt that the ‘fad’ had passed, or was ‘maturing’ into that more-sophisticated home computer market, it’s important to note that the actual demand for video games increased during the crash. Total sales increased, and volume was good.

The problem, really, was that the supply of games exploded to an insane degree, with everyone from Kool Aid to Chuckwagon trying to cash in on the ‘fad’ of the time. Hundreds of cartridges were released for the Atari 2600 alone in 1983, and most of them were simply rushed piles-of-code meant to catch unwary consumers with inferior product. It was a bigger pie, but it was being divided into countless shares all fighting for an increasingly jaded consumer base. In other words, the video game industry actually killed itself.

While the Atari 2600 was the dominant console for this era of video-games, it suddenly found itself competing with a growing number of platforms. Not only could a consumer choose between the venerable 2600, and with the chief competitors Colecovision and Intellivision, but there were large number of ‘cloned’ consoles (mostly 2600 knock-offs), the ill-fated Vectrex, the Emerson, and a number of others. To complicate matters, both Atari and Intellivision were wisely cloning out their systems to Sears and Radio Shack futher cluttering the market.

It also didn’t help matters that the ‘big players’, notably Atari, couldn’t exactly be counted on for churning out good quality games. Atari had churned out the awful 2600 port of Pac-Man, which could have single-handedly turned the fortunes of the company around, but instead threw in a few hundred nails into Atari’s coffin as a rushed, badly sounding, badly played, horrid excuse of a ‘port’. Atari had also spent a fortune on making the video game version of the movie E.T.: The Extra Terrestrial, which was basically an awful puzzle-adventure game which delighted a grand total three people with its masochistic game-play. Sadly, both of these games were produced in insanely high numbers, which didn’t sell (even at the $1 price-point the following year) and many had to be thrown in a landfill somewhere in the Southwest Desert, ready to be discovered by an intrepid archeologist in the future who will be left to wonder just what the hell the 1980s were all about anyway.

The last bit contributing to the crash, though, was just mere ‘obsolescence’. Coloecovision had already gained ground against the Atari 2600 with superior graphics and sound capabilities, but even that system was looking dated by 1983. The question was ‘how do we move forward’, and all three major companies were stalling and fumbling. Atari had a successful computer line (the 800 series) which seemed to pave the way forward. Intellivision and Colecovision both decided to ‘update’ their existing units into computer systems. Colecovision came up with the ADAM, a computer that boasted the innovative feature of perpetually erasing its own data. Intellivision came up with a lot of promises and never delivered.

While Atari seemed poised to move forward based on their 800 computer series, Atari had to prove to the world that they too were not without great incompetence. They were already working on a new system, the upcoming 5200. The problem was that the unit had limited game support, couldn’t play Atari 2600 games (a feature which helped propel the Colecovision forward), and had some of the worst controllers envisioned by mankind until that date. The loss of both prestige and funds was so great for Atari that even their successful 800 series would be impacted, and Atari, as a company, would never recover. The message to video gamers was clear “The future is coming, and we don’t know what the hell to do about it.”

With the nails in the coffin, the coffin in the ground, all that was left to do was to bury the body. This, of course, came with the rise of the ‘cheap’ computer, notably the C-64. The Commodore 64 was a ‘light cost’ computer, but still had superior capability to all the video-game consoles out, and generally a superior game library to boot. Many gamers that hadn’t already resigned themselves to their existing (and substantial) game libraries just went to the C-64 (making Commodore a giant for a few brief years). With that transition in 1984, the age of Atari was effectively over.

Retailers, of course, completely misread the audience and figured that the ‘fad’ was over. They were wrong, of course, but since they were stuck with millions of unsold consoles and cartridges anyway, it would have been difficult or impossible to convince them otherwise. The big players in the industry, of course, never really admitted their own culpability with their myriad of mistakes. Atari would struggle for a few years trying to push old technology at premium prices. Coleco went on to sell Cabbage Patch Babies and then promptly go bankrupt when they screwed up that line. Intellivision would simply just disappear.

That, then, was that, at least as far as most of the ‘intelligent’ people were concerned. Time Magazine famously declared the era of video games as over. No one wanted to be told otherwise. Oh, there was this little upstart company in Japan making something called the ‘Famicom’, but who wanted another video game? Confident in their genius, retailers and trade shows shunted out all video-game materials for a couple of years. Some kept to the C-64 and the fledgling IBM PCjr, to give the kids something to do when daddy wasn’t working on important flowcharts you see (every household made flowcharts and pie-graphs back in the 1980s, apparently), but the fad was dead.

Of course, the Famicom would get another name soon, the Nintendo Entertainment System, and another phase of video game history would be written, proving the stupidity of the same people who caused the video game crash in the first place hadn’t relented. But that’s really the lesson of the 1983 crash, isn’t it? Make enough bad decisions and you too can turn a pile of gold into a pile of salted manure.

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