Overview
In 1983, the North American video game market collapsed. Revenues dropped from $3.2 billion to $100 million within two years. Retailers refused to stock games. Publishers folded. Atari buried unsold cartridges in New Mexico. The industry many thought dead would be resurrected by a Japanese playing card company with a grey box called the NES.
Fast facts
- Peak market: $3.2 billion (1983).
- Trough: $100 million (1985).
- Primary cause: Market saturation and quality collapse.
- Recovery: Nintendo’s NES (1985 US launch).
Contributing factors
| Factor |
Impact |
| Market flooding |
Too many consoles competing |
| Poor quality |
Rushed, terrible games |
| No curation |
Anyone could publish |
| PC competition |
Home computers rising |
| Retailer exodus |
Stores stopped stocking |
The E.T. disaster
| Aspect |
Reality |
| Development time |
5 weeks |
| Quality |
Widely considered unplayable |
| Sales |
Millions returned unsold |
| Landfill |
Cartridges buried in New Mexico |
| Symbol |
Represented industry hubris |
Market saturation
| Year |
Competing consoles |
| 1982 |
Atari, Coleco, Mattel, others |
| 1983 |
Dozens of systems, thousands of games |
Quality collapse
| Problem |
Example |
| Licensed games |
Rushed tie-ins |
| Third-party flooding |
No quality control |
| Copy-cat titles |
Identical gameplay |
| Consumer fatigue |
Why buy more? |
Industry response
| Company |
Action |
| Atari |
Mass layoffs, cartridge burial |
| Mattel |
Exit games business |
| Coleco |
Exit games business |
| Retailers |
Declared games a fad |
Nintendo’s solution
| Strategy |
Implementation |
| Quality control |
Seal of Quality |
| Limited licenses |
Third-party restrictions |
| Positioning |
“Entertainment system” not “game” |
| Pack-in |
R.O.B. robot for toy stores |
See also