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