I’ve been meaning to do this article for a while now.
I have two drafts of this article in my hard drive. Both are long, melodramatic pieces that work hard to weave a story about how the Video Game Crash of 1983 was a tragic tale. Maybe I’ll use one of them as the script for a documentary about the topic. It’s good stuff.
The story about the Video Game Crash of 1983 – the era where video gaming almost died – isn’t that melodramatic, though. It’s not even that tragic a tale. Actually, it’s a tale that has a pretty catchy theme:
Smart People doing Stupid Things. This theme will pop up a lot.
In 1980, home video games were a technological marvel. The company who benefited the most from the marvel, Atari, was riding high on the hog. Its home video game console, the Video Computer System (VCS), had just scored a huge hit in Space Invaders, the home port of Taito’s ultra-successful arcade classic. That port would sell one million copies and the VCS‘s sales would double as a direct result of it.
Things were good for then –CEO Ray Kassar. He was worried about Atari as early as 1978. Video games were kitschy but had nothing solid to pull in the masses. Kassar, a shrewd businessman, navigated Atari through the rough patches and positioned it to properly cash in when the hit finally came. Without Kassar at the helm, it possible Atari’s name would just be a footnote in the home gaming arena.
As smart as Kassar was, though, he was unable to see the real reason why Atari found success. Space Invaders was a great game, but it didn’t make itself. Atari employed some of the most talented programmers at the time. However, they were practically unknown. Rick Maurer, the person who programmed the VCS port of Space Invaders, was never officially credited by Atari. Kassar didn’t think the programmers deserved any recognition. They were employees, and employees don’t get their name put on everything they do. They had a job to do, they did it, and they got paid for it. End of story.
Ray Kassar was shitting on the very people that were responsible for Atari’s sudden success. Smart People doing Stupid Things, right?
Things came to a head in 1979. A group of Atari programmers requested a meeting with Kassar. In the meeting, they demanded that Atari change the way Atari handled them. They asked Kassar to credit them for their work and adopt a royalty system similar to how musicians were credited and paid royalties based on sales. Kassar refused. The programmers, upset by Kassar’s dismissal of their importance, decided to do something totally unthinkable.
They decided to leave Atari. They would then make a game that would rock the industry. The game would become the catalyst for the Video Game Crash of 1983. The effects of the game would ultimately lead to the near-extinction of video games in the home.
The game was called Dragster. It was released in 1980 for the VCS, the same year as Space Invaders.
This is the part where everyone that thought they knew how the story goes does a double-take.
When talking about the game that almost destroyed the video game industry, many people love to point at E.T.: The Extra-Terrestrial. That game, released in 1982 for the VCS, seems to reside in the top spot of nearly everyone’s “Worst Game Ever” lists. And, yes, it’s an awful game. But that game didn’t nearly destroy the industry. If anything, E.T. is just the candle on the shit cake that home video games had become by then. The shit cake was first put in the oven in 1980 with the release of Dragster.
With the release of the game, the aforementioned programmers that confronted Kassar decided to do something no one had dared try until then: make their own games for the console, out from under the Atari umbrella. They formed their own company, named as a mash-up of the words Active and Television: Activision.
This was something no one had dared try. It was assumed that since Atari owned the VCS, only Atari could make games for it. The programmers, however, decided that nothing legally prevented others from making games for the console. With one fell swoop, a rogue group of programmers invented the concept of the third-party developer. The aftermath nearly destroyed everything they set out to do.
Smart People doing Stupid Things. In this case, with good reason.
Activision ended up creating some of the best games for the Atari VCS: Laser Blast, Kaboom!, Enduro, River Raid, and the timeless Pitfall. The games were great, and Activision made sure to differentiate their cartridges from Atari’s with bright colors. It’s just that the concept of third-party development was batshit-crazy back then. In 1980, nobody thought it was crazy; by 1982, they would.
Atari sure thought it was crazy – and illegal. They sued Activision in 1980, claiming patent and copyright infringement. It took two years for the case to eventually be thrown out. By that time, Activision had cemented itself as a quality publisher. Worse still, others took note and aped their business model – or pretended to.
What happened next was inevitable. Activision’s launch coincided with the sudden boom of popularity for the Atari VCS. It seemed everyone at the time wanted Atari’s wood-trimmed home console. It also seemed that everyone wanted to make games for it to cash in. Activision’s success convinced everyone that they could do it, too. Of course, the majority of them weren’t talented programmers; many of them were hacks and shit-peddlers looking to make a quick buck.
Soon enough, the Atari VCS was deluged by a literal tidal wave of new titles. The amount of new titles doubled from 1980 to 1981, and then doubled again from 1981 to 1982. There were great first-party titles, like Asteroids and Missile Command. There were even some awesome third-party titles, like Imagic’s Demon Attack and Atlantis. But there were also a ton of subpar titles with mediocre gameplay. When Purina – the Puppy Chow people! – thinks it’s a great idea to release a video game – named Chase the Chuck Wagon – you know things are bad.
The glut of new titles for the VCS included titles from an unexpected source: their competition. Mattel Electronics and newcomer Coleco made competing consoles, the Intellivision and Colecovision respectively. Both found success in their own niches but were perpetually behind Atari in sales and revenue. Their solution to remedy this is absolutely ridiculous in hindsight: THEY became third-party publishers, selling ports of their exclusive games for the Atari VCS.
The titles released by Mattel and Coleco were not quality ports. Since they were competitors, they didn’t want to make titles that would highlight the best of their rival. They were merely trying to get a piece of the action. They were, however, making shoddy ports of popular titles. Coleco even ported Donkey Kong, their prized exclusive title – which they paid Nintendo money to keep away from – to the Atari VCS. The only real-world parallel would be if Microsoft suddenly ported Halo to the PlayStation 4, only shittier so that the Xbox One looked better.
Smart People doing Stupid Things indeed!
Of course, Coleco wasn’t done. Since making third-party games wasn’t illegal, they decided to challenge the legal system further. They began to sell an adapter for the ColecoVision that allowed you to play Atari VCS games on it! Forget porting Halo to PS4; imagine popping the Halo Xbox One disc in your PS4 and playing away! Atari successfully sued Coleco in that case and got the adapters removes from store shelves, but the fact that it even existed is amazing.
The ColecoVision adapter was but a mere footnote: the real damage was already occurring. The Atari VCS was beginning to buckle from the weight of so many subpar video games. Many of them weren’t even sincere attempts at making a game, just crappy cash-ins by shit “programmers” that went bankrupt and disappeared as soon as they made a couple of games. Quite a few games barely worked. Consumers were beginning to sour on the console and video gaming in general. By the time E.T.: The Extra-Terrestrial and its sister Pac-Man were released for in 1982, they were only the latest – and most expensive – failures for the console.
Soon enough, consumers stopped buying video games, citing a lack of quality among the reasons. In 1983, the industry pulled in about $3.3 billion dollars; by 1985, revenues had dropped to $100 million. The losses killed off the majority of the industry; only Atari emerged from the crash somewhat intact.
Lost in all this is the infamy E.T. would receive as a result. Sure, Atari didn’t help matters with the way they handled the game. Atari reportedly paid Steven Spielberg $20 million for the rights to port the game, gave star programmer Howard Scott Warshaw SIX WEEKS to complete it, then order four million copies of the game to be made. Famously, that amount was greater than the amount of VCS consoles sold to that date.
This is all the game’s fault? Nope. Smart People doing Absolutely Moronic Things!
It didn’t matter in the end. All that happened was that E.T. for the VCS ended up bearing the brunt of the industry’s failures. Atari took massive losses, cartridges were buried in landfills, and consumers moved on. Atari tried to bounce back, heavily discounting the VCS, now remarketed as the Atari 2600. Later consoles, named 5200 and 7800, were introduced. None were able to reignite the success Atari once enjoyed.
No one cared about home video games anymore, not even me. In 1985, I was a teenager and more interested in chasing skirts than chasing high scores. The industry was considered dead. And I say Dragster killed it.
Obviously, the game didn’t really kill the industry, but the thinking behind it did. The concept of third-party development and publishing was foreign and legally murky. Because of this, Atari had no controls in place to account for it. That was one of the first lessons Nintendo learned when it decided to enter the Japanese video game console market in 1985 with the Famicom.
The console, renamed the NES when it reached the U.S. market in 1986, would have tight restrictions on third-party content. Outside publishers would have to enter into a certification program that would severely limit their ability to release games for Nintendo consoles. The idea was to restrict the total number of Famicom/NES games that released in a given month. That would make sure the market wouldn’t flood with titles. Furthermore, Nintendo kept a tight rein on the components used to make the game cartridges, ensuring that only quality components were used. That way, consumers would be assured that he games would work.
Atari did not have any of these measures in place. In their defense, they didn’t know to have them. The industry was new and trailblazing, but it was like the Wild West. It wasn’t full lawlessness in Silicon Valley, but the few laws that were in place were written in pencil. Everyone was still trying to figure things out. Thankfully, someone eventually did.
Today, video games are a multi-billion dollar industry again. Although many worry about the state of gaming now may bring about another crash, the series of events that brought gaming to its knees in 1983. Can’t possibly happen again.
Then again, Activision is still around. Nowadays, though, they’re seen as the bad guys. They destroyed video gaming once; maybe they’ll do it for keeps this time!
