On the 1983 video game crash: Context matters


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[Everyone likes to discuss the video game crash of the ’80s every now and then. Thanks to games like E.T. for the Atari, there is a dark, alternate timeline in which video games never progressed past the 8-bit era and Ronald Reagan became a cyborg to fight the war on drugs. But many people don’t remember it with much context or accuracy. So I submit for your reading pleasure, Killias’ contextual look on the video game crash of the ’80s. ~Strider]

I’m not sure there’s a single moment in gaming history that is referenced as frequently or as intensely as the video game crash of 1983. Almost any discussion of the flaws of gaming, whether the discussion focuses on games, marketing, sales, DLC, or anything else, leads to the crash being referenced.

It’s almost reached a Godwin’s law level of consistency at this point. But can you really blame us? If you’re enough of a fan of games to even know about the crash, chances are you have strong feelings about the medium and where it is heading. When aspects of this hobby seem to have gone so wrong, what could better represent the potential consequences?

There’s something almost seductive about the idea of the crash from a modern perspective. Video game companies made a whole slew of terrible choicesand paid the consequences! It’s an easy canvas on which to paint one’s own assumptions and this has led to a fair amount of myth making about the origins of and lessons to be drawn from the crash.In the beginning, there was Atari, but Atari made bad games and were banished for its sins.

However, the truth is, as always, infinitely muddier. For all of the references to the crash, few gaming enthusiasts try to engage with the history of the event. The actual crash itself is quite irrelevant. Rather, appeals to the crash are really appeals to the myth.“Hey, remember the video game crash of 1983?”This is at once a call to arms for gamers and a warning for developers.

This is not to say that there aren’t lessons to be drawn from the crash. On the contrary, I’m writing this precisely because I think the moment wasand isimportant for our hobby. But emotional appeals from a modern perspective obscure more than they tell us about the actual event. In the interest of separating history from mythology, here are some vital pieces of context about the video game crash that, in my opinion, need greater emphasis.

1. The crash was a North American phenomenon.

This is one misconception about the crash that most do not seem to grasp. The video game crash was not global. In fact, the first two console generations were largely North American exclusives. Sure, there was some presence for the Atari 2600/VCS in foreign markets (especially Europe), and Pong clones caught on in much of the first world (even Nintendo made a Pong clone!By and large though, the early video game consoles lived and died in North America. As a result, when the market went south in North America, it took much of the early console business with it.

Why does this matter? Because it serves as such a clear contrast to the gaming market of today. North America may still be the most important market, but video games as a whole are global. A crash today would have to be a more universal phenomenon than it was in 1983 in order to have the same impact.

2. The histories of video and computer games in the early 1980s were closely intertwined

If there is one thing I have been surprised about during my own jump into gaming history, it is the close association of computer and video games in those early days. Sure, there was a real demarcation. On one side of the line, you have the classic consoles. These were cheap, easy to use, easy to play, and filled with fun arcade-style titles. Here you have the likes of Atari’s VCS/2600, as well as the also-rans (Odyssey 2, Intellivision, Colecovision, etc.). On the other, you had the early wave of microcomputers. These machines tended to be pricier. They were marketed as having wider appeal and capabilities and they often had awkward keyboard interfaces and the kinds of games that matched that playstyle. Examples include the TRS-80, Apple II, Commodore PET/VIC-20/64, Atari 400/800, TI-99/4A, etc.

However, in reality, the gap was smaller than marketing would have us believe. The microcomputers of the early ’80s were more exclusively game machines than the PCs of today. The fact is, most of these devices were almost entirely worthless in any sort of word processing or spreadsheeting capacity. Additionally, some of these devices went out of their way to focus on grabbing gaming market share. For example, the Atari 400 and 800 computer both had four joystick ports (!!!) and had cartridge ports. The fact is, by 1983, the cutting edge of gaming was not found on the aging Atari VCS/2600 (which launched in 1977 initially) or its direct competition. It was found in the emergent market of the microcomputer.

Just to contextualize all of this a little bit more, I should note that 1982 saw a huge wave of enthusiasm about computing and how it would impact the future. While theactualcomputer revolution wouldn’t hit until the early to mid ’90s when Windows-driven media PCs with CD-ROM drives were capable of connecting to the Internet, there was a false spring over a decade earlier. Microcomputers had quickly gone from a hobbyist market to the next big thing and the expectation was that this would impact games consoles as well. In addition to this wave of enthusiasm, an intense pricing war between Texas Instruments and Commodore had drive the prices of microcomputers into the ground. Suddenly, the revolution was nigh, and it wouldn’t even be that expensive!

What does this have to do with the video game crash? To oversimplify: the video game bubble of the early ’80s became the microcomputer bubble of 1983. The early microcomputers upped expectations both of the present and, maybe even more importantly, of the future. Consoles must have seemed like relics by this point. Keep in mind, this was still in the early days. Nowadays, we have this structure of games history that everything fits neatly into. However, at the time, there was no sense that this was justaconsole generation, which would inevitably be succeeded by another. Consoles had replaced Pong clones. Why shouldn’t microcomputers replace consoles? And, taking away our modern conceptions about what consoles and computers are meant to do, it’s definitely arguable that this generation of microcomputers fits more into the history of gaming consoles than the history of, say, personal computers as we know them now.

To sum up this large section: the 1982/1983 wave of microcomputers helped to cause the video game crash by essentially acting as a second-and-a-half generation of gaming consoles. Of course, microcomputers would see their own crash as the false promises of the microcomputer revolution were revealed and as the financial strain caused by the Commodore-TI price war finally caught up with the manufacturers. But regardless, a large part of the story of the video game crash is less sin => punishment, and more competition => difficulty.

3. Video games as fads, toys, and bubbles

As I noted above, it is easy for us to see the early 1980s through the lens of someone who knows the future. But, for those living in that time period, video games were not yet seen as an intrinsic part of the media landscape. While video games were part of the public consciousness and the general culture of the era, they were not as deeply rooted as they are now. Let me put it this way: Pac-Man is still one of the highest-grossing video games of all time. It has grossedbillionsof dollars (as an arcade title). Almost everyone knows who Pac-Man is. That’s probably why a certain film, which shall not be named, is still trying to use Pac-Man to lure us to theaters all these decades later. Pac-Man was abroadly-perceivedcultural institution in a way even successful modern games simply are not.

But of the people who loved and played Pac-Man in the early ’80s, how many do you think became committed gamers? To most Americans, the big arcade and console booms of the late ’70s and early ’80s were pop culture moments, like a popular song or a big movie hit. While that meant that video games were hot and heavy for a few years, it also meant that this growing interest in games was shallow and driven more by timing and a fad mentality than anything else. A few games, especially Pong, Space Invaders, Pac-Man, and Donkey Kong, caused gigantic waves, but they weren’t creating a deep and committed fan base capable ofsustainingthis popularity. Sure, there were a subset of what we could now label as hardcore gamers, but they didn’t have the influence to even touch a hit like Pac-Man.

So what happened? Basically, particular video games became huge pop phenomena, which drove casual interest in gaming. While most of these big hits were arcade titles, they were also the biggest forces driving sales of home consoles. Space Invaders for the VCS/2600, for example, was hugely significant, and Pac-Man looked to be likewise. However, this historical moment soon passed, and… well… it never came back. Even with the entrance of Nintendo, the pop sensibility of early gaming never returned. Sure, Nintendo and Mario and the like were huge hits, but they never had thepop cultural cache of Pac-Man or Space Invaders.

The problem, which led directly to the crash, was that Atari and its competitors expected the immediate future to continue from the immediate past. Video games emerged in the early 1970s with the Odyssey, and then they became ever increasingly popular. Most discussions of the crash bring up the fact that Atari produced more copies of Pac-Man for the VCS/2600 than actually were owned by consumers. Why? Because they expected the pop culture viability of video games to continue.All of these companies thought video games were going to keep growing and growing, and everyone wanted a slice of that pie. But the video game business of the early ’80s was more bubble than paradigm shift, and only after the bubble popped were the various players able to grow the business in a sustainable fashion.


There’s no easy, clean way to wrap this up. The point of this essay isn’t to simplify the video game crash of 1983. Rather, it was to expand upon its mythology and to help point out the intricacies that are often glossed over. However, if I had to streamline my own telling of the crash, it’d look something like this: The United States (as well as some other parts of the world) experienced a pop cultural moment in which video games had become hugely significant. This led to over-investment and overly optimistic projections for the video game market. In 1983, it became obvious how overly optimistic those projections had been. Additionally, the pop culture moment shifted from video games to the microcomputer revolution, which also served as stiff competition for the aging VCS/2600. Only once that bubble too had popped and faded (the microcomputer bubble itself would pop in 84/85) would the U.S. be ready for a more mature and sustainable take on the console market.

Is it possible that, with an ironclad dedication to quality, Atari and its peers could have avoided the crash? Honestly, I doubt it. The crash was inevitable without an understanding that the market was already overly saturated. By 1983, the market success of video games had exceeded their capabilities and their actual roots in the culture. Space Invaders and Pac-Man were lightning-in-a-bottle pop cultural moments, and they would never be repeated in that form. Even when video games finally became popular again, they became so only within their demographic niche. Only in the last few years, can you talk about video games as a genuinely pop phenomena in the same way that Pac-Man and Space Invaders had been over three decades prior.