Video Game History 101: The 1983 Crash
Alternate Title: "Why I'm Glad They Buried E.T. Out In the Desert"
If you asked a ton of people when console gaming really started, they'd reflexively tell you, “When the Nintendo (NES) came out.” While they'd be wrong, they're less wrong than we'd like to admit. The NES didn't start console gaming, but what it did do was swoop into Hades on white-feathered wings and pluck it from damnation.
What this article will attempt to do is illustrate a sequence of events that nearly caved in the concept of video games forever in North America. It's a tawdry tale featuring cutthroat economics, desperation, stagnation, and E.T. The Extraterrestrial.
Too Much of a Good Thing
In 1982-1983, the Atari 2600 was the done thing in console gaming. Homes across the United States were playing Atari. Some weren't, but they had something... a ColecoVision, a Commodore 64, a Vectrex, or maybe the Odyssey 2 (which was pretty good for its time). In fact, You could say that there were so many choices, the market was flooded.
Since most of us attended school back when they still taught basic economics, we know that if you flood a market with supply, the demand goes down and so does the price point. Well, there were no less than (and probably more than) twelve (12) consoles on the market by 1983, with more planned for '84 by many of the same companies.
Overabundance can lead to rot and stagnation. Guess what? It did.
Home Computers Muscle In
One of the gaming systems I mentioned up there was the Commodore 64. Now, the C64 wasn't designed just for gaming. It was meant as a home computer. If you were one of many up-and-coming go-getters in the 1980s, you could use this thing to write business reports, organize your finances, send a letter to your mom, or even play a game.
And you could buy all this functionality for about $499, plus a modest investment in some software.
Since the first gaming consoles did very little (if any) third-party licensing to start with, the independents of the day would often work with computer platforms. This led to many of them having more diverse game libraries than some consoles did. You know what else these rogue programmers loved about working with platforms like the C64? The graphics capability was miles above anything in console gaming, not to mention overall processing capability.
So why buy a system you can only play games on, that no one else is allowed to write programs for, and doesn't want to anyway?
Inflation Craps All Over the Dollar
Signs of inflation had started not long after the Bicentennial, with the value of a dollar slowly dropping. While it can be said that the economy improved in some areas in the early 80s, Many amusement and arcade interests lobbied for a smaller dollar coin in 1979 since the spending power of a quarter was a joke by this point. The end result was the Susan B Anthony coin, worth $1 but around the size of a quarter (and thus more manageable for things like vending machines or arcade cabinets). It was this very similarity to the US quarter that made it a flop; some machines would reject the coin, others would simply treat it as a quarter. Neither result was desirable for arcade owners. This hurt video gaming in the States along with everything else happening.
Activision Leads the Way to Freedom
We're going to take a detour for a moment, into the history of Activision. You know that company now as one of the biggest media companies, let alone video game companies, in the world. It's a well-known name. Activision has its roots in the time period we're exploring; in 1979, it was founded by programmers who'd left Atari over a lack of credit given – a lack of true meritocracy. You see, programmers of Atari games were never credited, as there WERE no credits in those games. To boot, there was no kickback if a game you developed sold well. You got no cut, just a (rather modest) salary. Activision was the first third-party development firm in video game history, and it DID credit its developers. Atari attempted to sue and do all kinds of other things to block sales, but eventually even they had to eat humble pie and knuckle to the third party wave. Mattel, maker of the Intellivision, stubbornly held out... and never did much in video gaming after the Intellivision.
My point here is that, because of how they ran their ships, these captains had regular, quiet mutinies as Activision and other new developers soaked up their talent and directed it elsewhere.
E.T. Phones it In / The Mass Grave in Alamogordo
E.T. The Extraterrestrial is frequently cited as the absolute worst game ever created for a console. It was developed in five and a half weeks, left approximately 3 million copies unsold, and was universally panned by video game critics of the era (as well as modern ones who've bravely re-examined it). At the exact moment Atari filled trucks with the E.T. Game cartridge, slapped the backs of them, and shut the gate, they had officially shit the bed with the lights on. They just didn't know it yet.
The game was so bad that Atari found itself woefully below their bottom line, with three and a half million unsold cartridges out of four million produced. Not only was Atari in serious financial trouble, but flubbing a sure-ticket licensed game like E.T. Made them look like a draft horse with a shattered leg; anyone they did business with was now considering putting them down out of sheer mercy. Atari also had, well, a metric shit-ton of cartridges to offload somehow. They also had no help doing this; Warner Communications had sold them off. Mommy wasn't around to clean this mess up.
Alamogordo is a very pretty little town in the Chihuahuan Desert in New Mexico. The scenic Sacramento Mountains border the town to its west, and to its east can be found the White Sands National Monument. Its features include a nearby Air Force base, an amazing zoo, and the corpses of some 700,000 Atari cartridges.
The overwhelming majority are copies of E.T. The Extraterrestrial.
Throughout September of 1983, Atari dumped approximately 700,000 cartridges into the dump on the town's south side. On the 29th of that year, to counter scavenging that had been taking place despite an ordinance banning such, the dump poured a layer of concrete over the buried and crushed games.
They were trying really hard to bury the industry's biggest turd. But that's not how the world works. A 2014 documentary, Atari: Game Over, shows the excavation of the long-buried games.
The Aftermath and Epilogue
1983 through 1985 were hard times for video gaming in the US, but the market in Japan was still a fertile ground for ideas. Looking west, companies like Nintendo and Sega had seen what too much “MORE” and not enough “NEW” could do. When Nintendo released the American-market version of their popular Famicom system, the NES... they went gently at first. When soft-launches in NYC and other major markets looked good, the NES (and its contemporaries) waded across the sea to change American gaming forever.
An era was over, and an era had begun.