The Great Video Game Crash Revisited

The Great Video Game Crash

The period of roughly 1982-84 has achieved a sort of mythical status among observers of video games as the period when the video game industry collapsed, it’s catastrophic fall just as dramatic as its precipitous rise in the years prior.  It is remembered as a dark period in the industry that dealt a devastating blow to the American games industry.  It is also viewed in the light of Nintendo’s arrival to the American market and the phoenix-like resurgence of video games.  This is roughly the story told in many of the video game histories available.

But was it really?

There’s no doubt that the early to mid eighties were a bad period for the industry, when the vast majority of game companies either abandoned video games or collapsed altogether.  However, I think that in focusing on the business side, the  story of the Crash ignores an extremely important actor: the players.

Allow me to offer a hypothesis: I feel the video game crash, while devastating at the time for the industry, actually helped to strengthen video gameplay as a whole.  It did so by making video games more accessible to more players by making them more affordable.   While this was a catastrophic time for the American home video game industry, I argue this was a pretty good time to be home video game player.

Before I go any further, allow me offer some brief background.  In 1982, the game industry was booming.  Fueled by arcade smash hits such as Space Invaders, Donkey Kong, and Pac-Man, the video games industry saw billion dollar profits.  As a result, countless game companies entered the market.  Moreover, larger companies running the gamut from Mattel to Quaker Oats formed games divisions to cash in on what some boasted was a recession-proof business.   The industry rapidly teetered on over-saturation.

Games like E.T.: The Extraterrestrial,  the grossly inferior port of Pac-Man for the Atari Video Computer System (VCS, now know as the Atari 2600)  to say nothing of the myriad cheap cash-ins of licensed brands of everything from Spiderman to the Chuckwagon from the Purina dogfood commercials proved the tipping point.  By the end of 1982, Warner Communications, the parent company of industry giant Atari, saw its stock tumble after promising record profits.  Games began to occupy bargain bins as exasperated retailers tried to dump them.  Even Atari dumped unsold merchandise in a New Mexico landfill.  By 1984, the outside companies had closed their games divisions and the small game companies folded altogether.  The most dramatic outcome came when Warner sold off the once-lucrative home games division of Atari to former Commodore head Jack Tramiel in July 1984.

So how was all of this a potentially good thing for players?  Stay with me here: When the VCS  made its debut in 1977, it cost $200 brand new.   According to the U.S. Department of Labor’s Bureau of Labor Statistics, $200 in 1977 is roughly the equivalent of $737.51 in present-day currency (source: Bureau of Labor Statistics), which is even greater than the PlayStation 3 at launch (if you exclude sales tax).  While the VCS at launch included two controllers and a copy of Combat, this figure does not include the cost of buying new games, which ran the gamut of anywhere from $20-$50 at the time.   It goes without saying even now that video games, especially home console gaming, can be an expensive hobby, and the cost of the VCS and other home consoles probably forced plenty who were interested to pass on video games because of the cost (of course you could still go to the arcades and pay a quarter to play the big titles, which were still arcade-centered).

However, following the Crash, cost became less of an issue.  Stores marked down 2600s as low as $50 each, and games ranged in the single digit dollar amounts.  To put it in perspective, this is like finding a brand new Xbox 360 Slim for fifty dollars and a shiny new copy of Homefront on a five dollar discount rack.  As a result, for people who felt on the outside looking in for much of the industry’s history, this was an opportunity to finally pick up a 2600 (or an Intellivision or Colecovision or a number of other systems) for a fraction of the initial cost.

Unfortunately I can’t offer any solid sales figures to back up this hypothesis, but I find it interesting that if video games were as dead as outside observers claimed during the 1980s, why did the NES ultimately succeed?  Looking at it from a consumer’s standpoint suggests the market for games never actually went anywhere even though studios were closing.  When Nintendo (and later Sega) joined the American home console market they tapped into an existing consumer base that was hungry for new games.

The current way of thinking about the Crash neglects to take into account the users and consumers of games, implying that people stopped playing video games from 1984 until the release of the NES in 1985/6, which is implausible.  Rather, it’s easier to believe Nintendo tapped into an existing market that just kept right on playing games while much of the American industry collapsed.

I’m not the first person to bring up the possibility of reexamining the period of the Crash.  A few weeks ago, ICHEG curator Eric Wheeler suggested that the early eighties were a pretty good time to play video games, citing a number of great titles including Paper Boy and Dragon’s Lair.

I’d love to hear some of your thoughts on this and hopefully we can expand our understanding of the history of the medium.   What are your thoughts on the Video Game Crash?


About kevinimpellizeri

I'm a Ph.D. candidate in history at the University of Delaware where I am studying the social and cultural impact of video games in America. When I'm not studying history or playing video games I offer my voice on 91.3 WVUD Newark and review bad horror movies at You can follow me on Twitter at @KDImpellizeri
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2 Responses to The Great Video Game Crash Revisited

  1. David Mobeck says:

    Hey I am using this on a research paper on history of video games and your name would help to make my work cited page. pretty please

    • Hey thanks for reading. I had an “About Me” up for a while but I must have moved the link in one of my site updates. My name is Kevin D. Impellizeri and I am a doctoral history student at the University of Delaware where I am working on a cultural history of video games in America.

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