Researching about the video-game crash of 1983

[per]

I'm doing a school project (history) about "The North-American video-game crash of 1983" (as most peope like to call it). Since I wasn't born before '92 and have grown up in Europe, I have no knowledge about what actually happened through personal experience. Because of this, I'll try to read all documents I can find about it.

After reading quite a lot on the internet, I seem to have gotten the following facts:

1970's:

• The birth of console games, home computers, and the general 4th generation computers.
• TI throwing Commodore out of the calculator market, and Commodore almost goes bankrupt.
• The market for console games is quite small.
• Arcade machines gets quite common and popular.

1980-81:

• The market for video-games is getting bigger.
• Most games released are ports of popular Arcade games (like "Space Invaders").
• Atari is gaining popularity with their "Atari 2600".
• Atari is the leading company in the market.

1982:

• Atari anounces that they'll release an Atari-2600 port of the popular game "pac-man".
• There is an ongoing boom-time in the console-market, and demands for consoles goes up because of popularity.
• There is a similar boom-time for the Arcade-market and home-computer market.
• Atari steps in the salad by over-estimating the sales of "Pac-man"; making 12 million of cartridges with only a proptotype (even only 10 million Atari 2600's were sold at that time). Some million people buys the game and many of them gets dissapointed and tries to return it.
• Numbers of different consoles appears from companies created overnigth.
• Numbers of games appears from even more companies created overnigth.
• The market is flooded with games and consoles.
• Atari buys the rigths to make a game based on the popular movie "E.T.", and they want it done untill the Christ-mass sale (giving the development team just a few weeks to complete the game). The game gets ready in time, and Atari estimates high sales and makes quite a lot of cartridges. The game actually sells quite well in the start, but not as much as people expected.

1983:

• Lower-than-expected sales of the Christ-mass made the Atari-executives dump their stock on their Parent-company; Warner Communication.
• Stores are having problems selling games, and they reduces the price by sometimes more than 98%.
• The discounted games prevents expensive games to sell well, and as time goes by, most games arriving are rushed and of very poor quality.
• Commodore asks for a price-war in the Home-computer market, and TI responds. A lot of other home-computer makers follows, but not Apple. This price war spread quicly into the struggeling video-game market and more or less wiped it out. In the end, Commodore won, and dominaded the home-computer market for years. Jack Tramiel of Commodore migth have done this personally to get a revenge on TI after their actions in the 1970's (see above), but this is not confirmed yet.
• Some of the biggest video-game makers instantly quitted the market.
• The console-market is dead, nothing new is being produced and shops are struggeling selling what they have since many people tend to buy Commodore 64s instead. Most stores reffer to consoles as a "fad" that had passed.

1984:

• Companies that went to sell games for the C64 is doing good, as Commodore had a boom-time after winning the price-war.
• Console-stuff was still at sale in the stores, but almost nothing new was released. At this time customers could actually start to realize something was wrong in the console-market.

---The crash itself ends here---

1985:

• Nintendo tries in late 1985 to carefully occupy the abadonned market by releasing a console without defining it a "console". "console" was renamed to "entertainement system", "cartridge" was renamed to "control deck", you mounted the cartridges in a different way, and they shipped a toy-robot with it in the start. This made it seem more like a toy or an "utility" than a game console. All games developed for it had to be approved, and one company could not make more than 5 games per year.

1986:

• Nintendo proves that there still is a market and gains popularity, more stores starts to trust them, and the industry is reborn with Nintendo as the leading company.

It is to note that in Europe, console games wasn't common before the NES came around. Pong-clones were known and sold quite some units, but as of I understand, most people went directly to home-computers like the Commodore PET or later VIC-20 / C64.

----------

As you see, the major cause of the crash was a market flooded with games, often crappy games. In addition, there was this price-war started by Commodore. Wenether this price war had too much infuence on the crash or not, I'm not sure. Many sites I have seen doesn't state the price-war at all, and the section about it has been removed from the Wikipedia article about the crash. That's why I am quite unsure aobut how big factor the price-war actuslly had on the crash.

However, my main questions for those of you that was born before the crash, and lived in North-America at that time; are:

1. In what degree have I gotten this rigth?
2. Is there anything I have missed, or is there anything I have gotten wrong?
3. What document/book/article would you suggest that gives a clear, preferable complete, and factual explanation of this?

 

[Lorne]

I may be crazy, but I think you need to look at demographics too.
Sorry I'm not really answering your questions, but I think it's not really that cut and dried.

There was a baby boom after WWII.
I was born after that in 1956.
By 1981, I was 25 years old.
While I played the pong type games on the computer before then, at 25 I was in the workforce, concentrating on real computers, my career, and trying to make money to buy more beer in the bars/pubs and meet more women.
That was me and my direction at my age.
The real baby boomers were even older (ancient now), and probably quit playing video games even earlier.
The baby boomers were the ones with the real money.
I'd suspect that when they stopped buying and playing video games, that was probably the end of it, and that could have caused the 'crash".

After that, my history gets a bit fuzzy (I must have made and spent too much money in the pub).

Now, still somewhat related, as it relates to Nintendo:
By 1982 I had a kid (the pub secene had worked).
Now, IIRC in 1992, a little past the time frame you're looking for, my kid at 10 years old, (and pretty much every other kid) had a Nintendo Game Boy.
That was a great device.
It was portable, and kept kids quiet and happy in the car, and everywhere else they went.

In short, I think you need to do some research on demographics in the US, and look at the majority of ages for the years you are looking at regarding video games.

That's just my take.
Maybe someone else (eg: an ancient baby boomer) has a simpler answer.

 

[nigwil]

I am curious about this topic too, having only recently heard about its existence. I expect I was asleep at the wheel at the time this "crash" happened, too distracted to notice.

Could I suggest you checkout the story of the VECTREX made by WE/Smith, GCE, later purchased by Milton Bradley - I understand (from wikipedia) that VECTREX was an early victim of this crash, and perhaps makes a good example of the outcome (or at least rise-and-fall).

http://en.wikipedia.org/wiki/Vectrex

I admit bias in that I find the VECTREX simply fascinating due to its vector graphics mode, 6809, built-in (all-in-one) screen combination, and its longevity (people still write software for them!).

 

[per]

I may be crazy, but I think you need to look at demographics too.
Sorry I'm not really answering your questions, but I think it's not really that cut and dried.

There was a baby boom after WWII.
I was born after that in 1956.
By 1981, I was 25 years old.
While I played the pong type games on the computer before then, at 25 I was in the workforce, concentrating on real computers, my career, and trying to make money to buy more beer in the bars/pubs and meet more women.
That was me and my direction at my age.
The real baby boomers were even older (ancient now), and probably quit playing video games even earlier.
The baby boomers were the ones with the real money.
I'd suspect that when they stopped buying and playing video games, that was probably the end of it, and that could have caused the 'crash".

After that, my history gets a bit fuzzy (I must have made and spent too much money in the pub).

Now, still somewhat related, as it relates to Nintendo:
By 1982 I had a kid (the pub secene had worked).
Now, IIRC in 1992, a little past the time frame you're looking for, my kid at 10 years old, (and pretty much every other kid) had a Nintendo Game Boy.
That was a great device.
It was portable, and kept kids quiet and happy in the car, and everywhere else they went.

In short, I think you need to do some research on demographics in the US, and look at the majority of ages for the years you are looking at regarding video games.

That's just my take.
Maybe someone else (eg: an ancient baby boomer) has a simpler answer.

That's an interesting statement.
The first thing I need to know then is what age-group the console/home-computer market targeted for. Today most of it is targeted at children and teens, but has it allways been like that?

I tried to search for the birth rates in the posw-war years, and it seems like the teen generation of the early 80's is what's called "Generation X". It's in fact dramaticly lower than of the post-war years, but it sligthly increased some few years around 1970. However, it seems unlikely that such a smal peak should have that big effect on the 80's.

Of course strategic marketing has allways been imporiant. This is another reason why Atari never was able to recover, as they never got the marketing rigth.

 

[carlsson]

You should remember the Famicom was released in Japan in 1983, prior to the "crash". It was even reported in Western video game magazines of the day. Sega also struggled on somewhat, so it doesn't seem a crash ever happened in Japan, or at much lower rates.

As to your point about target groups, I think consoles today target adults just as much as children and teenagers. Today you have rather compilcated war simulations as well as party and family games suitable for the whole family. Back in the late 1970's and early 1980's, a video game would to a much higher degree be considered an electronic toy. Perhaps the childish dad would find joy in playing it too.

 

[Lorne]

Wow - being born in 1956, I never realized I was considered one of the baby boomers. I must be ancient too then.

So, if people played video games primarily from say ages 10 through 20, you could figure that the people born toward the end of the baby boom (1960-1964) would have stopped playing video games between 1980 and 1984. That fits your crash date of 1983.
People born before the end of the baby boom would have already stopped playing the games.

Marketing is a potential, but if there's no longer a ton of people to market to, it doesn't matter if your marketing is right or not. If the majority of people have stopped playing video games, there would be no one to sell them to.

I wouldn't be surprised at all, if demographics was the cause. That's just my opinion and suspicion though.

Let us know what you finally come up with.

Edit - And the PC starting in 1981, might have had a big impact on the console and video game market as well.

 

[BlueofRainbow]

A few words should be made about the topic of Interactive Fiction (IF) in general and Infocom (best known for the Zork series of games and the infamous Cornerstone database program). This type of games also "crashed" - maybe for similar reasons.

 

[per]

A few words should be made about the topic of Interactive Fiction (IF) in general and Infocom (best known for the Zork series of games and the infamous Cornerstone database program). This type of games also "crashed" - maybe for similar reasons.

What one of the articles said about that, is that the people that made games for (home-)computers wanted to take part in/compete with the console-game market. Hence, they decided to prioritize graphics in terms of plot and gameplay. As I recall, Zork is completely text-based.

This was in the console boom-time in 1982, but the changes didn't appear in stores before 1983. This is because of the same reason the effects of the crash didn't appear for customers before 1984.

 

[saundby]

Here's my brief take on what happened. I could go on at great length.

Home computers: the promises to consumers of the amazing powers of the home computer had fallen flat by the end of 83. Most people had enough experience with them or someone close to let them know that before you could actually do something useful with the computer you had to spend a lot more than base price, then be a data entry slave to your system. All it really did well was entertainment, and a console or a television were cheaper and easier to use.

Video games: lower prices on older systems gutted the margins in the market, but also increased volume. The increase in volume tricked investors and execs into thinking there was a general increase in videogame market size that would translate into sales of newer, higher margin models. Also, in an attempt to get the real money, which was in the software, lots of titles were shipped, including a lot of shovelware under the assumption that the consumer picks their carts based on name recognition and marketing.

In 1983 the dreams were realized to be just that. The increased sales volume was only happening with low margin systems, new systems weren't selling for a number of reasons--mainly that consumers wouldn't pay more for what they perceived as less. Consumers had more information sources and more savvy than the companies credited them for, buying better titles but leaving the masses of awful ones behind, many of which had more money behind them than the ones that sold.

Investors fled, execs got cold feet and started making bad decisions. Among these was sitting on the Atari 7800--a 2600 compatible that was cheaper to produce than the failed 5200.

The initial price drops in home computers was not that great, but declining sales and margins caused several mass market outlets to reduce or eliminate their home computer sections. They usually blew out the unwanted stock, and that undercut the prices elsewhere, sated the market, and took away some console sales (as many consoles were sold to folks who couldn't afford a full home computer system.)

It was the confluence of these factors that caused the "crash" of 83.

Personally, I spent money like a drunken sailor. I bought sacks full of software, some for computers I didn't even own but expected to get. I bought second and third disk drives each for my Vic-20 and C-64. I put off buying a VCR to get a monitor.

Lots of other people already invested in computers were also spending money like crazy. A few new buyers were, too, but most would be new owners were sitting it out. The PC jr announcement was poisoning the water for those who hadn't already bought in. The common knowledge among non-computerists was that IBM would dominate the home market a much as they appeared to dominate business. There was an expectation that we Atari, Commodore, TI, and Apple users would be selling our stuff at garage sales to raise cash for a jr. TI dropping out of the market was a surprise to the average consumer--it was the one brand they'd heard of (other than IBM.) Common knowledge was that TI decided to bow out before IBM pushed them out.

Personally I think it was less a crash than a consolidation of the hardware market coupled with a weeding out of some bad practices that had gotten a free ride in software sales till that time. A lot of 'A' titles had been sold with destructive (literally) copy protection, and consumers were feeling burned by that in computers, I've already mentioned the videogame carts where companies got burned.

There, that's my short version.

-Mark

 

[tezza]

A few words should be made about the topic of Interactive Fiction (IF) in general and Infocom (best known for the Zork series of games and the infamous Cornerstone database program). This type of games also "crashed" - maybe for similar reasons.

These certainly disappeared but I would suggest for different reasons. The interactive fiction game genera (Microsoft Adventure (a la Collosus Cave), the Incofom series etc.) made their debute on very early computers with no graphics or primitive graphics. These were machines like the TRS-80 Model I/III. Apple II, Pet, CP/M machines and even the original IBM PC (in it's basic configuration on text-only, green screen). Many early games were text-based.

These machines were expensive and not bought for or marketed at children, and neither were the early text-based adventure games which ran on them. They were sophisticated in gameplay and appealled to late teens and adults...generally, the people who owned and used the machines. Even the most limited, such as the Scott Adams series designed to run in 16k or so, were challenging. Most took a very long time to play and only a limited number of people were prepared to commit the time.

The appearence of cheap home computers with good sound, colour and graphics lead to more tactile and visual games (some would say at the expense of a good story) where gratification could be much quicker. Interactive fiction had it's followers, but it quickly became a niche market in computer gaming, crowded out by more colourful and noisy titles, often aimed at younger users (whose parents could now afford to buy them a computer).

Tez

 

[minty]

> What document/book/article would you suggest that gives a clear, preferable complete, and factual explanation of this?

My favourite book covering this era is 'Hackers' by Steven Levy, especially the third section 'game hackers'. Ignore the blurb which paints this book as being only about 'malicious' hackers, it's much more than that and is a very well researched account of the early days on home computing and gaming.

 

[tezza]

Yes, the word "hacker" certainly seemed to change it's meaning somewhat during the 1980s. When I first started with microcomputers in 1981-82 the word "hacker" refered to people who tinkered around with the hardware (and software), adding bits and pieces, and essentially extending the capability of the original product (if they didn't blow it up in the meantime). They were good guys and generally looked up to...a source of technical advice and inspiration.

At some stage (and I'm not sure what event did it) the word came to mean people who broke into others computers via some on-line system, usually for malicious purposes.

Tez

 

[minty]

I think it was the movie 'Wargames' from 1983 that did it - for many, it was the first time they met the idea that computers could be used for 'hacking' ...

 

[per]

Yes, the word "hacker" certainly seemed to change it's meaning somewhat during the 1980s. When I first started with microcomputers in 1981-82 the word "hacker" refered to people who tinkered around with the hardware (and software), adding bits and pieces, and essentially extending the capability of the original product (if they didn't blow it up in the meantime). They were good guys and generally looked up to...a source of technical advice and inspiration.

At some stage (and I'm not sure what event did it) the word came to mean people who broke into others computers via some on-line system, usually for malicious purposes.

Tez

I usually call the later one "Cracker" instead of "Hacker".

I know it's sad that the definition of "Hacker" has changed. Usually, hackers are the ones that really know the machines they are working with... Like me on the IBM PC/XT :mrgreen: .

> What document/book/article would you suggest that gives a clear, preferable complete, and factual explanation of this?

My favourite book covering this era is 'Hackers' by Steven Levy, especially the third section 'game hackers'. Ignore the blurb which paints this book as being only about 'malicious' hackers, it's much more than that and is a very well researched account of the early days on home computing and gaming.

Is the book itself is being critisized, or just the definition of the title?

 

[minty]

> Is the book itself is being critisized, or just the definition of the title?

Oh no, not the book at all - it uses 'Hacker' in the same way we do; as someone who's an expert on a system or with a language. The problem is with publisher of my edition, who's decided that hacking is just about phone phreaking and has used the blurb to made it look like that's the entire content of the book, which isn't true. Anyway, I'd recommend it as a good history of this period.

 

[per]

> Is the book itself is being critisized, or just the definition of the title?

Oh no, not the book at all - it uses 'Hacker' in the same way we do; as someone who's an expert on a system or with a language. The problem is with publisher of my edition, who's decided that hacking is just about phone phreaking and has used the blurb to made it look like that's the entire content of the book, which isn't true. Anyway, I'd recommend it as a good history of this period.

I may in fact plan to buy it. However, to get back on topic, I found an book that seems exellent: "The ultimate history of video games" (AKA: "The First Quarter") by Steven L. Kent.

Anyone know how historically correct and/or compleete this book is? Does it include some words on the Price-war and home-computer market? Does it favoritize some sides of the case?

 

[barythrin]

It would be interesting to see what machines (computer and console) and what "break-through's" occurred during this "crash". Of course I've never heard of the crash before so I'm speaking blindly here but I would imagine it would have a lot to do with computers becoming the norm vs consoles, graphics becoming the norm instead of the older games (obsoleting some vendors), and perhaps a year that may of the incompatible computers which hosted both started their task of becoming vintage collectibles while the market thinned out into more distinct leaders and compatibles? I don't know first hand, similarly to your boat I was 5.. I wouldn't have noticed a crash other than reduction in candy. Actually that would be about the year we DID buy our first family computer (Zenith Z-150) as it was cheaper than an IBM and compatible. Just two floppy drives and not sure how much memory until my dad slapped at AST Six Pack Pro in there and we had 640K and eventually a hard drive. I never owned a console, we just played games on the computer which were comparable. I also wouldn't think this would be a factor but do recall games being passed around at that time so the more folks with a computer and ability to copy a game could have an affect?

I'll look it up when I'm off work but was this "crash" video console specific or games in general or what? I'm curious about it myself though. I would think that there wasn't really a crash but perhaps the current technology needed to be refreshed (would be curious to see timelines since then to see the trend in console generations and releases).

As saundby also indicated it could have been over zealous production that made the appearance of a crash.

 

[carlsson]

To most part, the "crash" is attributed to the console market. It would be unqualified simplification to blame everything on E.T., Custer's Revenge and Bachelorette. It is true that Atari produced more E.T. game cartridges than they had sold Atari 2600 consoles and it is true that sex oriented games like the latter two may have tainted the general public's view on video games, but there were some cheap imitations (think a Pong made to look like a newer console) and generally many people might have had higher expectations on the gaming market than what it was able to deliver.

As I pointed out, the Nintendo Famicom debuted in Japan in late 1983, just before or in the middle of the crash. More or less the same Famicom was what Atari negotiated to resell and eventually the NES came onto the market, reviving the video game. If it had been a super 16-bit system contemporary with the Macintosh, Atari ST and so on, it had made sense this newer technology was what the market needed to start playing video games again, but it was no more than one of the better but still old school 8-bit technology. I think this is an interesting point to make.

 

[EvanK]

What document/book/article would you suggest that gives a clear, preferable complete, and factual explanation of this?

I highly recommend Len Herman's book, "Phoenix: The Fall & Rise of Videogames" which is entirely focused on your subject.

It's available new from the publisher at http://www.rolentapress.com/3rd_edition/thank_you5.html or you could probably find a cheap copy at http://used.addall.net.

 

[barythrin]

Spinning off of a conversation on the swcollect list and poking around this entertaining site I found they're video game timeline Nothing definitive but is interesting high level view of released hardware and times.