History Main / TheGreatVideogameCrashOf1983

10th Mar '14 9:00:47 AM WaxingName
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[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.JPG]]]]
[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[GoneHorriblyWrong In retrospect... whoops.]]]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and the ''Pac-Man'' Fever (no relation to [[PacManFever the same-named trope]]) held America in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games went to a standstill, and the American console game market as a whole was dead in the water for the next two years. And when it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

So, what happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent and many of its programmers [[StartMyOwn starting their own companies]] to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy -- sell its consoles as cheaply as possible while relying on game sales for its profit margin -- made the situation worse. The strategy may have worked when Atari was the only game company in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of poor high-profile games in late 1982, most notorious of which were the home port of ''VideoGame/{{Pac-Man}}'' and [[VideoGame/ETTheExtraTerrestrial the adaptation of blockbuster film]] ''Film/ETTheExtraTerrestrial'', both ChristmasRushed, which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them -- 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry, hoping it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars' worth of worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories somewhere in New Mexico.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari projected a 10-15% profit increase. This doesn't sound too bad, but was way below the 50% people had been led to believe would be announced. Come next day, the stock of Warner Communications, Atari's parent company, dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kassar, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by inferior technology, Atari racked up nearly half a ''billion'' dollars' worth of losses (roughly ''$1.4 billion'' if we use the 2012 dollar) by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to cash in on Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) Bally Astrocade, {{Colecovision}}, Coleco Gemini, Emerson Arcadia 2001, {{Magnavox|Odyssey}} {{Odyssey2}}, Mattel {{Intellivision}}, Vectrex, Sears Tele-Games, and Fairchild Channel F-System II. Many of these featured indistinguishable libraries, partly due to Atari, Coleco and Mattel releasing games for each other's consoles -- in fact, the current trope image, an ad for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated... and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} all video games would sell, quality be damned]], [[SturgeonsLaw poor titles from dozens of hastily-created upstarts flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold products that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only screenshots and box text to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.
* The personal computer market made its first competitively-priced entry into American society. Though [=PCs=] had software libraries which catered to the early gaming crowd, their educational and office software gave them an edge. Certain computers, such as the {{Commodore 64}}, were also priced and marketed to compete directly with game consoles.
* A media backlash, viewing video games as a fad, played up all the company bankruptcies as proof the industry was dying.

The Crash killed the American home console market for two years -- video game sales dropped from $3B in 1982 ($7.13B in 2012 dollars) to as low as $100M ($213M in 2012 dollars) in 1985, and many game companies went out of business.

And when it was revived, it was largely due to the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be Japan taking over USA as the nexus of the home video game industry. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former US division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium (being more or less in line with the classic tale of American business hubris that led to the financial meltdowns of 1929 and 2008). Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around -- and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived... but we're getting ahead of ourselves.

Across ThePond, the European market was dominated by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith et al) to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the Japanese market. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mahjong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the Crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Both systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased PC competition. Interestingly, near the start of 1983, Atari had started early stages of negotiating rights for the Famicom's US release. This would eventually be scuttled by the effects of the Crash, but oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo exported the Famicom two years later as the "Nintendo Entertainment System", and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's "Seal of Quality" system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against low-quality shovelware which plagued the Atari. To assuage concerns of American shopkeepers uneasy about stocking a new video game console, the NES was designed with a front-loading cartridge slot to make it look more like a VCR (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy (R.O.B.) and Zapper light gun peripherals, which looked much more like conventional toys. The former [[RevenueEnhancingDevices only worked with two games]], and the latter wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And not only that, Nintendo also had the perfect game to bundle with the NES for its 1985 American debut: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].

It was just CrazyEnoughToWork, ushering [[The8BitEraOfConsoleVideoGames a new era of gaming]].
----

to:

[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.JPG]]]]
[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[GoneHorriblyWrong In retrospect... whoops.]]]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and the ''Pac-Man'' Fever (no relation to [[PacManFever the same-named trope]]) held America in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games went to a standstill, and the American console game market as a whole was dead in the water for the next two years. And when it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

So, what happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent and many of its programmers [[StartMyOwn starting their own companies]] to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy -- sell its consoles as cheaply as possible while relying on game sales for its profit margin -- made the situation worse. The strategy may have worked when Atari was the only game company in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of poor high-profile games in late 1982, most notorious of which were the home port of ''VideoGame/{{Pac-Man}}'' and [[VideoGame/ETTheExtraTerrestrial the adaptation of blockbuster film]] ''Film/ETTheExtraTerrestrial'', both ChristmasRushed, which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them -- 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry, hoping it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars' worth of worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories somewhere in New Mexico.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari projected a 10-15% profit increase. This doesn't sound too bad, but was way below the 50% people had been led to believe would be announced. Come next day, the stock of Warner Communications, Atari's parent company, dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kassar, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by inferior technology, Atari racked up nearly half a ''billion'' dollars' worth of losses (roughly ''$1.4 billion'' if we use the 2012 dollar) by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to cash in on Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) Bally Astrocade, {{Colecovision}}, Coleco Gemini, Emerson Arcadia 2001, {{Magnavox|Odyssey}} {{Odyssey2}}, Mattel {{Intellivision}}, Vectrex, Sears Tele-Games, and Fairchild Channel F-System II. Many of these featured indistinguishable libraries, partly due to Atari, Coleco and Mattel releasing games for each other's consoles -- in fact, the current trope image, an ad for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated... and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} all video games would sell, quality be damned]], [[SturgeonsLaw poor titles from dozens of hastily-created upstarts flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold products that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only screenshots and box text to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.
* The personal computer market made its first competitively-priced entry into American society. Though [=PCs=] had software libraries which catered to the early gaming crowd, their educational and office software gave them an edge. Certain computers, such as the {{Commodore 64}}, were also priced and marketed to compete directly with game consoles.
* A media backlash, viewing video games as a fad, played up all the company bankruptcies as proof the industry was dying.

The Crash killed the American home console market for two years -- video game sales dropped from $3B in 1982 ($7.13B in 2012 dollars) to as low as $100M ($213M in 2012 dollars) in 1985, and many game companies went out of business.

And when it was revived, it was largely due to the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be Japan taking over USA as the nexus of the home video game industry. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former US division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium (being more or less in line with the classic tale of American business hubris that led to the financial meltdowns of 1929 and 2008). Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around -- and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived... but we're getting ahead of ourselves.

Across ThePond, the European market was dominated by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith et al) to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the Japanese market. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mahjong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the Crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Both systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased PC competition. Interestingly, near the start of 1983, Atari had started early stages of negotiating rights for the Famicom's US release. This would eventually be scuttled by the effects of the Crash, but oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo exported the Famicom two years later as the "Nintendo Entertainment System", and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's "Seal of Quality" system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against low-quality shovelware which plagued the Atari. To assuage concerns of American shopkeepers uneasy about stocking a new video game console, the NES was designed with a front-loading cartridge slot to make it look more like a VCR (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy (R.O.B.) and Zapper light gun peripherals, which looked much more like conventional toys. The former [[RevenueEnhancingDevices only worked with two games]], and the latter wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And not only that, Nintendo also had the perfect game to bundle with the NES for its 1985 American debut: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].

It was just CrazyEnoughToWork, ushering [[The8BitEraOfConsoleVideoGames a new era of gaming]].
----
[[redirect:UsefulNotes/TheGreatVideoGameCrashOf1983]]
14th Nov '13 9:19:07 PM zero5889
Is there an issue? Send a Message


[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[HilariousInHindsight In retrospect]]...[[WhatAnIdiot whoops]].]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and [[PacManFever no-relation-to-the-trope]] ''Pac-Man'' Fever held the nation in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games crawled to a standstill, and the American console game market as a whole was dead in the water for the next two years. When it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

What happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent. Many of Atari's programmers left to form their own companies to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy sell its consoles as cheaply as possible while relying on game sales for its profit margin made the situation worse. The strategy worked when Atari was the only game in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior work or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of notoriously poor high-profile cartridge efforts in late 1982. The most notable of these were [[PortingDisaster a designed-in-six-weeks version of]] ''VideoGame/{{Pac-Man}}'' and [[TheProblemWithLicensedGames an awful adaptation of]] ''VideoGame/ETTheExtraTerrestrial'', which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry in the hopes it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars in worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories in the New Mexico desert.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported a 10-15% expected increase in profits. This doesn't sound too bad, but was far below the 50% expected increase people had been led to believe would be announced. By the next day, the stock of Warner Communications (Atari's parent company) immediately dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kassar, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by its inferior technology, Atari had racked up nearly half a ''billion'' dollars [[note]](roughly $1.4 Billion in 2012 dollars)[[/note]] in losses by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to follow in Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) the Bally Astrocade, the {{Colecovision}}, the Coleco Gemini, the Emerson Arcadia 2001, the {{Magnavox|Odyssey}} {{Odyssey2}}, the Mattel {{Intellivision}}, the Vectrex, the Sears Tele-Games, and the Fairchild Channel F-System II. Many of the systems featured indistinguishable libraries, partly due to Atari, Coleco, and Mattel all releasing games for each other's consoles; the picture at the top of this page, an ad from this period for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated...and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} they'd sell no matter the quality]], [[SturgeonsLaw poor titles from dozens of hastily-created start-ups flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold product that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only the screenshots and text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.

to:

[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[HilariousInHindsight [[GoneHorriblyWrong In retrospect]]...[[WhatAnIdiot whoops]].]]

retrospect... whoops.]]]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and [[PacManFever no-relation-to-the-trope]] the ''Pac-Man'' Fever (no relation to [[PacManFever the same-named trope]]) held the nation America in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games crawled went to a standstill, and the American console game market as a whole was dead in the water for the next two years. When And when it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

What So, what happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent. Many dissent and many of Atari's its programmers left to form [[StartMyOwn starting their own companies companies]] to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy -- sell its consoles as cheaply as possible while relying on game sales for its profit margin -- made the situation worse. The strategy may have worked when Atari was the only game company in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior work or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of notoriously poor high-profile cartridge efforts games in late 1982. The 1982, most notable notorious of these which were [[PortingDisaster a designed-in-six-weeks version of]] the home port of ''VideoGame/{{Pac-Man}}'' and [[TheProblemWithLicensedGames an awful [[VideoGame/ETTheExtraTerrestrial the adaptation of]] ''VideoGame/ETTheExtraTerrestrial'', of blockbuster film]] ''Film/ETTheExtraTerrestrial'', both ChristmasRushed, which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them -- 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry in the hopes industry, hoping it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars in dollars' worth of worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories somewhere in the New Mexico desert.
Mexico.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported projected a 10-15% expected increase in profits. profit increase. This doesn't sound too bad, but was far way below the 50% expected increase people had been led to believe would be announced. By the Come next day, the stock of Warner Communications (Atari's Communications, Atari's parent company) immediately company, dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kassar, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by its inferior technology, Atari had racked up nearly half a ''billion'' dollars [[note]](roughly $1.4 Billion in 2012 dollars)[[/note]] in dollars' worth of losses (roughly ''$1.4 billion'' if we use the 2012 dollar) by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to follow cash in on Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) the Bally Astrocade, the {{Colecovision}}, the Coleco Gemini, the Emerson Arcadia 2001, the {{Magnavox|Odyssey}} {{Odyssey2}}, the Mattel {{Intellivision}}, the Vectrex, the Sears Tele-Games, and the Fairchild Channel F-System II. Many of the systems these featured indistinguishable libraries, partly due to Atari, Coleco, Coleco and Mattel all releasing games for each other's consoles; consoles -- in fact, the picture at the top of this page, current trope image, an ad from this period for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated... and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} they'd sell no matter the quality]], all video games would sell, quality be damned]], [[SturgeonsLaw poor titles from dozens of hastily-created start-ups upstarts flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold product products that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only the screenshots and box text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.



The Crash killed the American home console market for two years video game sales dropped from $3 Billion in 1982 [[note]]($7.13 Billion in 2012 dollars)[[/note]] to as low as $100,000,000 [[note]]($213,000,000 in 2012 dollars)[[/note]] in 1985, and many game companies went out of business.

When it was revived, it was done from the outside via the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be the dominance of the home video game market shifting from the United States to Japan. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former U.S. division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium. Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived...but we're getting ahead of ourselves.

Across ThePond, the European market was dominated at this stage by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far-cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith ''et al'') to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the industry in Japan. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer competition. Interestingly, near the start of '83, Atari had started early stages of negotiating the rights to the Famicom's U.S. release, though this would eventually be scuttled by the effects of the Crash. But oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo launched the Famicom two years later in the States as the Nintendo Entertainment System, and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's Seal of Quality system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against the low-quality shovelware which had plagued the Atari. To assuage the concerns of American shopkeepers uneasy about stocking a new video game system, the NES was designed with a front-loading cartridge slot to make it look more like a VCR than a game console (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy and Zapper peripherals, which looked much more like conventional toys. R.O.B. [[RevenueEnhancingDevices only worked with two games]], and the Zapper light gun wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And the NES had the perfect game to bundle for the 1985 U.S. release: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].

to:

The Crash killed the American home console market for two years -- video game sales dropped from $3 Billion $3B in 1982 [[note]]($7.13 Billion ($7.13B in 2012 dollars)[[/note]] dollars) to as low as $100,000,000 [[note]]($213,000,000 $100M ($213M in 2012 dollars)[[/note]] dollars) in 1985, and many game companies went out of business.

When And when it was revived, it was done from the outside via largely due to the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be Japan taking over USA as the dominance nexus of the home video game market shifting from the United States to Japan. industry. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former U.S. US division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium. medium (being more or less in line with the classic tale of American business hubris that led to the financial meltdowns of 1929 and 2008). Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around -- and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived... but we're getting ahead of ourselves.

Across ThePond, the European market was dominated at this stage by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far-cheaper far cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith ''et al'') et al) to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the industry in Japan. Japanese market. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong Mahjong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the crash Crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two Both systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer PC competition. Interestingly, near the start of '83, 1983, Atari had started early stages of negotiating the rights to for the Famicom's U.S. release, though this US release. This would eventually be scuttled by the effects of the Crash. But Crash, but oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo launched exported the Famicom two years later in the States as the Nintendo "Nintendo Entertainment System, System", and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's Seal "Seal of Quality Quality" system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against the low-quality shovelware which had plagued the Atari. To assuage the concerns of American shopkeepers uneasy about stocking a new video game system, console, the NES was designed with a front-loading cartridge slot to make it look more like a VCR than a game console (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy and Zapper peripherals, which looked much more like conventional toys. R.(R.O.B. ) and Zapper light gun peripherals, which looked much more like conventional toys. The former [[RevenueEnhancingDevices only worked with two games]], and the Zapper light gun latter wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And the NES not only that, Nintendo also had the perfect game to bundle with the NES for the its 1985 U.S. release: American debut: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].
12th Nov '13 6:07:33 PM FurryKef
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* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported a 10-15% expected increase in profits. This doesn't sound too bad, but was far below the 50% expected increase people had been led to believe would be announced. By the next day, the stock of Warner Communications (Atari's parent company) immediately dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kasser, had sold 5,000 shares of the company half an hour before making his announcement.

to:

* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported a 10-15% expected increase in profits. This doesn't sound too bad, but was far below the 50% expected increase people had been led to believe would be announced. By the next day, the stock of Warner Communications (Atari's parent company) immediately dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kasser, Kassar, had sold 5,000 shares of the company half an hour before making his announcement.
10th Nov '13 1:55:00 AM eddddd
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Added DiffLines:

[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.JPG]]]]
[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[HilariousInHindsight In retrospect]]...[[WhatAnIdiot whoops]].]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and [[PacManFever no-relation-to-the-trope]] ''Pac-Man'' Fever held the nation in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games crawled to a standstill, and the American console game market as a whole was dead in the water for the next two years. When it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

What happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent. Many of Atari's programmers left to form their own companies to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy sell its consoles as cheaply as possible while relying on game sales for its profit margin made the situation worse. The strategy worked when Atari was the only game in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior work or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of notoriously poor high-profile cartridge efforts in late 1982. The most notable of these were [[PortingDisaster a designed-in-six-weeks version of]] ''VideoGame/{{Pac-Man}}'' and [[TheProblemWithLicensedGames an awful adaptation of]] ''VideoGame/ETTheExtraTerrestrial'', which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry in the hopes it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars in worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories in the New Mexico desert.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported a 10-15% expected increase in profits. This doesn't sound too bad, but was far below the 50% expected increase people had been led to believe would be announced. By the next day, the stock of Warner Communications (Atari's parent company) immediately dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kasser, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by its inferior technology, Atari had racked up nearly half a ''billion'' dollars [[note]](roughly $1.4 Billion in 2012 dollars)[[/note]] in losses by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to follow in Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) the Bally Astrocade, the {{Colecovision}}, the Coleco Gemini, the Emerson Arcadia 2001, the {{Magnavox|Odyssey}} {{Odyssey2}}, the Mattel {{Intellivision}}, the Vectrex, the Sears Tele-Games, and the Fairchild Channel F-System II. Many of the systems featured indistinguishable libraries, partly due to Atari, Coleco, and Mattel all releasing games for each other's consoles; the picture at the top of this page, an ad from this period for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated...and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} they'd sell no matter the quality]], [[SturgeonsLaw poor titles from dozens of hastily-created start-ups flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold product that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only the screenshots and text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.
* The personal computer market made its first competitively-priced entry into American society. Though [=PCs=] had software libraries which catered to the early gaming crowd, their educational and office software gave them an edge. Certain computers, such as the {{Commodore 64}}, were also priced and marketed to compete directly with game consoles.
* A media backlash, viewing video games as a fad, played up all the company bankruptcies as proof the industry was dying.

The Crash killed the American home console market for two years video game sales dropped from $3 Billion in 1982 [[note]]($7.13 Billion in 2012 dollars)[[/note]] to as low as $100,000,000 [[note]]($213,000,000 in 2012 dollars)[[/note]] in 1985, and many game companies went out of business.

When it was revived, it was done from the outside via the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be the dominance of the home video game market shifting from the United States to Japan. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former U.S. division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium. Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived...but we're getting ahead of ourselves.

Across ThePond, the European market was dominated at this stage by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far-cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith ''et al'') to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the industry in Japan. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer competition. Interestingly, near the start of '83, Atari had started early stages of negotiating the rights to the Famicom's U.S. release, though this would eventually be scuttled by the effects of the Crash. But oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo launched the Famicom two years later in the States as the Nintendo Entertainment System, and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's Seal of Quality system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against the low-quality shovelware which had plagued the Atari. To assuage the concerns of American shopkeepers uneasy about stocking a new video game system, the NES was designed with a front-loading cartridge slot to make it look more like a VCR than a game console (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy and Zapper peripherals, which looked much more like conventional toys. R.O.B. [[RevenueEnhancingDevices only worked with two games]], and the Zapper light gun wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And the NES had the perfect game to bundle for the 1985 U.S. release: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].

It was just CrazyEnoughToWork, ushering [[The8BitEraOfConsoleVideoGames a new era of gaming]].
----
10th Nov '13 1:54:54 AM eddddd
Is there an issue? Send a Message


[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.JPG]]]]
[[caption-width-right:333: [[MultiPlatform Four consoles. Four computers. All with the same game.]] [[HilariousInHindsight In retrospect]]...[[WhatAnIdiot whoops]].]]

In [[TheEighties the early 1980s]], the American video game industry was in [[TheGoldenAgeOfVideoGames its second generation]] and making money hand over fist. Arcades were popping up across the country like daisies, the {{Atari 2600}} dominated its competitors in the home market, and [[PacManFever no-relation-to-the-trope]] ''Pac-Man'' Fever held the nation in its iron grip.

In 1983, however, something [[GoneHorriblyWrong went terribly wrong]]. Dozens of game manufacturers and console producers went out of business, production of new games crawled to a standstill, and the American console game market as a whole was dead in the water for the next two years. When it came back in vogue later in the decade, it was thoroughly dominated by Japanese companies, with old American stalwarts viewed as also-rans desperately playing catch-up.

What happened? Although '''''The Great Video Game Crash of 1983''''' was an industry-wide phenomenon, the best place to start is with the downfall of {{Atari}}, a tale forever linked to the Crash:

* Atari refused to give game designers authorial credit or royalties for their work, which led to a growing culture of dissent. Many of Atari's programmers left to form their own companies to make games for the 2600, the most famous and successful of which was Creator/{{Activision}}. Atari lost its legal attempts to prevent the use of its cartridge format, which allowed the most creative people in the industry to directly compete with Atari's own efforts.
* Atari's business strategy sell its consoles as cheaply as possible while relying on game sales for its profit margin made the situation worse. The strategy worked when Atari was the only game in town and had a home-market monopoly on ''VideoGame/SpaceInvaders'' and ''VideoGame/{{Asteroids}}'', but as competing companies produced either superior work or cheaper-yet-comparable work, [[NiceJobBreakingItHero Atari's profits suffered]].
* The company was responsible for a number of notoriously poor high-profile cartridge efforts in late 1982. The most notable of these were [[PortingDisaster a designed-in-six-weeks version of]] ''VideoGame/{{Pac-Man}}'' and [[TheProblemWithLicensedGames an awful adaptation of]] ''VideoGame/ETTheExtraTerrestrial'', which are widely panned as [[Horrible/VideoGames two of the worst games ever made]]. Not only were these (and numerous other) games awful, but Atari overproduced them 12,000,000 copies of ''Pac-Man'' were made for a 10,000,000-console industry in the hopes it'd be a [[KillerApp system-seller]]. Angered stores either returned the unsellable products in droves or relegated them to the clearance section. It isn't certain what the company did with millions of dollars in worthless cartridges, but it dumped and paved over many of the defective consoles and other such accessories in the New Mexico desert.
* The closest thing the Crash had to a "Black Tuesday" was December 7, 1982: during a shareholder meeting, Atari reported a 10-15% expected increase in profits. This doesn't sound too bad, but was far below the 50% expected increase people had been led to believe would be announced. By the next day, the stock of Warner Communications (Atari's parent company) immediately dropped 33%, and a mini-scandal erupted when it was revealed that the president of Atari, Ray Kasser, had sold 5,000 shares of the company half an hour before making his announcement.

With its customer base eroded by its inferior technology, Atari had racked up nearly half a ''billion'' dollars [[note]](roughly $1.4 Billion in 2012 dollars)[[/note]] in losses by the end of 1983. Atari wasn't alone in its troubles, as its competitors were also facing hard times:

* A glut of companies [[FollowTheLeader attempting to follow in Atari's success]] gave consumers too many choices, which meant no one system could succeed in the long term, since very few consumers would buy more than one. These included (but weren't limited to) the Bally Astrocade, the {{Colecovision}}, the Coleco Gemini, the Emerson Arcadia 2001, the {{Magnavox|Odyssey}} {{Odyssey2}}, the Mattel {{Intellivision}}, the Vectrex, the Sears Tele-Games, and the Fairchild Channel F-System II. Many of the systems featured indistinguishable libraries, partly due to Atari, Coleco, and Mattel all releasing games for each other's consoles; the picture at the top of this page, an ad from this period for ''VideoGame/QBert'', shows the exact problem left to consumers looking to determine just what system to buy. In the end, consumers largely waited to see which console dominated...and when it became clear that nobody would, companies were already going out of business.
* A similar problem occurred with software development. Games for these systems were cheap to produce, and since their makers figured [[{{Shovelware}} they'd sell no matter the quality]], [[SturgeonsLaw poor titles from dozens of hastily-created start-ups flooded the market]]. Even non-video game companies like Quaker Oats produced games, which were little more than [[ProductPlacement thinly-disguised commercials for their products]], such as ''Chase the Chuck Wagon'' (Purina) and ''The Kool-Aid Man''. As the Crash started, these companies were the first to go.
* As game developers began going out of business, retailers were left with unsold product that couldn't be returned to now-defunct manufacturers. Hoping to salvage ''something'', stores offered massive discounts just to clear inventory. The market for higher-priced new games shrunk in the face of large amounts of budget-priced crap, especially since...
* There was almost no way for consumers to discern the good games from the bad. The Internet was still a military and academic research project, and there were few video game magazines, so most buyers were left with only the screenshots and text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.
* The personal computer market made its first competitively-priced entry into American society. Though [=PCs=] had software libraries which catered to the early gaming crowd, their educational and office software gave them an edge. Certain computers, such as the {{Commodore 64}}, were also priced and marketed to compete directly with game consoles.
* A media backlash, viewing video games as a fad, played up all the company bankruptcies as proof the industry was dying.

The Crash killed the American home console market for two years video game sales dropped from $3 Billion in 1982 [[note]]($7.13 Billion in 2012 dollars)[[/note]] to as low as $100,000,000 [[note]]($213,000,000 in 2012 dollars)[[/note]] in 1985, and many game companies went out of business.

When it was revived, it was done from the outside via the introduction (and overwhelming success) of the Creator/{{Nintendo}} [[NintendoEntertainmentSystem Entertainment System]]. The main result of the Crash would be the dominance of the home video game market shifting from the United States to Japan. This was particularly evident in the case of Creator/{{Sega}}, whose American parent company, Gulf & Western, sold it to a Japanese corporation in 1984, minus its former U.S. division (which it sold to Bally).

The Crash was a uniquely American phenomenon, and even there, it never risked killing video games as a medium. Although the home gaming market was weakened by the temporary death of the dedicated console, the growing PC base (especially the Commodore 64) provided a viable replacement for home video game production by the small number of companies which were still around and while the American arcade scene was beginning its slow descent into obscurity, arcade games were still very near the height of their popularity. Even with a death of domestic game creation, minor arcade classics like ''VideoGame/{{Paperboy}}'', ''VideoGame/PunchOut'', ''VideoGame/SpaceAce'', ''VideoGame/KarateChamp'', and ''VideoGame/{{Gauntlet}}'' found their release during this period. Many of these arcade games would later be ported to home consoles (with varying degrees of success) after the market was revived...but we're getting ahead of ourselves.

Across ThePond, the European market was dominated at this stage by early home microcomputers (predominantly the Sinclair ZXSpectrum and the [=C64=]), with an outrageous number of one-person coders writing games for the far-cheaper tape-distribution system. These machines flourished and became the backbone of the industry for the next decade, with the so-called "bedroom coders" receiving status ranging from "cult hero" (Jeff Minter, Matthew Smith ''et al'') to "legend" ([[VideoGame/{{Elite}} Bell and Braben]], the Oliver Twins). That didn't prevent some quite talented developers from making enough stupid decisions to snatch defeat from the jaws of victory, of course (Imagine Software, most notably; see [[http://worldofstuart.excellentcontent.com/bruceworld/ here]] for info, with a big example of an OrwellianEditor as a bonus). Even with the missteps, the European gaming industry remained solid.

Across the other pond, the Crash also had little effect on the industry in Japan. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the massive discounts computer technology was forced to be sold at following the crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer competition. Interestingly, near the start of '83, Atari had started early stages of negotiating the rights to the Famicom's U.S. release, though this would eventually be scuttled by the effects of the Crash. But oh, WhatCouldHaveBeen...

Deciding to go it alone, Nintendo launched the Famicom two years later in the States as the Nintendo Entertainment System, and was able to achieve near-monopoly status thanks to the weakened state of the American console market. Nintendo's Seal of Quality system, coupled with [[CopyProtection a cartridge design that couldn't be manufactured without Nintendo's approval]], provided a degree of protection against the low-quality shovelware which had plagued the Atari. To assuage the concerns of American shopkeepers uneasy about stocking a new video game system, the NES was designed with a front-loading cartridge slot to make it look more like a VCR than a game console (a design that was problematic as hell, but that's not for here). The largest NES set was bundled with the Robot Operating Buddy and Zapper peripherals, which looked much more like conventional toys. R.O.B. [[RevenueEnhancingDevices only worked with two games]], and the Zapper light gun wasn't much better.

Very few toy stores were fooled, but success in test markets and a brilliant advertising strategy landed the NES space on store shelves across the country. And the NES had the perfect game to bundle for the 1985 U.S. release: [[Franchise/SuperMarioBros a fat Italian plumber]], [[VideoGame/DonkeyKong best known for antagonizing a giant ape]], [[VideoGame/SuperMarioBros ventures across a land overrun by turtles and walking mushrooms in order to save a princess from the grasp of a dragon-turtle villain]].

It was just CrazyEnoughToWork, ushering [[The8BitEraOfConsoleVideoGames a new era of gaming]].
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29th Jun '13 11:13:27 PM Rothul
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Across the other pond, the Crash also had little effect on the industry in Japan. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the cheap-technology Crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer competition. Interestingly, near the start of '83, Atari had started early stages of negotiating the rights to the Famicom's U.S. release, though this would eventually be scuttled by the effects of the Crash. But oh, WhatCouldHaveBeen...

to:

Across the other pond, the Crash also had little effect on the industry in Japan. Though the home of a massive arcade base that naturally grew from Pachinko parlors and Mah Jong dens, Japan wasn't a particularly early adopter of home variations, and most American imports were curiosities at best. Indeed, the cheap-technology Crash massive discounts computer technology was forced to be sold at following the crash provided the perfect storm for domestic development which received the [[NintendoEntertainmentSystem Famicom]] console and the {{MSX}} computer in 1983. Those two systems would dominate the Japanese gaming industry for the rest of the decade, though the latter would eventually fall to increased personal computer competition. Interestingly, near the start of '83, Atari had started early stages of negotiating the rights to the Famicom's U.S. release, though this would eventually be scuttled by the effects of the Crash. But oh, WhatCouldHaveBeen...
16th Jun '13 9:14:32 AM DamianYerrick
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* There was almost no way for consumers to discern the good games from the bad. There was no such thing as the Internet[[note]]Well strictly speaking there was, as the TCP/IP based Internet was just going live at the time, and it's ARPANet predecessor had been around since 1969, but these networks were little known outside of academia and military circles[[/note]], and there were few video game magazines, so most buyers were left with only the screenshots and text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.

to:

* There was almost no way for consumers to discern the good games from the bad. There was no such thing as the Internet[[note]]Well strictly speaking there was, as the TCP/IP based The Internet was just going live at the time, and it's ARPANet predecessor had been around since 1969, but these networks were little known outside of academia and still a military circles[[/note]], and academic research project, and there were few video game magazines, so most buyers were left with only the screenshots and text on the box to tell them anything at all about the game. Since these were almost always [[CoversAlwaysLie nonsense designed to get you to buy the game]], consumers were left once-bitten twice-shy. Some stores had places where consumers could demo certain games, but this didn't really help.
17th May '13 1:05:40 AM Telcontar
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[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.jpg]]]]

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[[quoteright:333:[[QBert http://static.tvtropes.org/pmwiki/pub/images/qbert_crash.jpg]]]]JPG]]]]
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