Video Game Crash of 1983: the Apocalypse That Wasn’t

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The Dark Age

In the year of 1983, a great disaster happened to the gaming world as the market crashed, companies went bankrupt and games stopped being made. This dark age lasted until Nintendo came with their Nintendo Entertainment System and saved the gaming world.

Well, not really. This might be a common narrative among gamers but – like almost every other dark age narrative – it’s an extremely exaggerated one. The truth is more complex and less black and white than many would like to believe. This is something worth remembering especially nowadays when the new crash is being prophesized all the time.

Everyone from Reddit to #egmr and from Forbes to Cracked has been talking about the impending doom for a few years – but only few writers (I personally recommend Ollie Barder’s Forbes article as an interesting, non-alarmist take on the subject) give it enough thought.

E.T. for the Atari 2600: The (almost) destroyer of worlds
E.T. for the Atari 2600: The (almost) destroyer of worlds

What Crashed?

The huge success of the famous Atari 2600 console led to the creation of a whole market of 8-bit consoles as well as official and unofficial hardware clones. To stay competitive on the crowded market, Atari relaxed its quality control standards and not only started releasing half-assed ports of popular arcade games and disappointing movie tie-ins but also caused a lot of controversy by allowing a certain other company to create pornographic games for their console. The large number of systems and games combined with their varying quality and a lot of bad publicity resulted in the American public getting fed up with consoles and console games as the development companies went bankrupt and investors started avoiding this particular market. Thus, the market crashed.

Outside of the console market, the effects of the crash were felt in the arcade industry. While the decline of the arcades was not nearly as dramatic as what happened to the console market (American developers like Midway continued releasing arcade video games through the years of the crash), the revenues dropped significantly.

Both the console market and the arcade market started to recover in the late 1985 and early 1986. This is, of course, the result of how succesful the NES was. The console which made consoles popular again was the console which no American company wanted to distribute, the console which wasn’t even sold as a console. The early history of the NES was the history of a developer struggling against the crash and winning.

What Didn’t Crash?

Seven Cities of Gold: a part of the non-destroyed world of computer games
Seven Cities of Gold: a part of the non-destroyed world of computer games

The answer to this question is simple – things which didn’t crash with the American console and arcade market were the things outside of the American console and arcade market. For example, there’s a reason why Nintendo was even able to bring the NES to America and it’s a very simple one: from the start, Famicom was a huge success in its home country and it didn’t even need to pretend not to be a console – porting popular arcade games was enough (although they did release some edutainment games to make it seem the console was for more than just having fun). As the gaming market wasn’t so globalized in the 1980s, the industry in Japan was different from the industry in the United States and the problems which plagued American market were mostly unheard of in Asia.

In the North America, consoles and arcades suffered but it’s important to remember that console and arcades were not the only things American gamers had access to. During the years of the console crash, computer gaming lived on. Two of the biggest 1980s RPG series, Ultima and Wizardry, got new installments in 1983 while a little company known as Electronic Arts released many inventive strategy games a few years before its inevitable descent into villainy.

The computer games market was smaller from the console one – and some classic games from that era were a part of the free and open-source software movement – as the machines were more expensive, the games were less intuitive to play (with the whole genres built around reading long descriptions and typing commands into text parsers) and the hardware had trouble dealing with some common arcade and console game features (e.g. scrolling) but it had its advantages: it was relatively easy for a user to become a developer (as using computers often required knowing how to program and the hardware allowed to easily produce copies of homemade games on tapes or disks), larger memory allowed for more complex calculations and the games could freely save player’s progress.

As a result of those factors, computer games had a more niche appeal – they were slower, more complex and not meant to be played in a single sitting – but they were also extremely important in the development of adventure, strategy and role-playing genres.

It’s also worth noting that there were many places were the consoles didn’t really take off and most of gamers didn’t care about them failing. In the United Kingdom, early 1980s were the years of cheap microcomputers like Dragon32, BBC Micro, and the ZX Spectrum. The last one was especially important as the home of many of the classics of British gaming. Computers – both personal and mainframe – were also more available than consoles in the Soviet Bloc countries. While most of people in the West know the game for its NES and Game Boy versions, Tetris was originally a computer game which didn’t see a console port until four years since its release.

The crash of 1983 mostly impacted a certain segment of a market in a certain region. While the impact was big and destructive and both segment and region were large, important and profitable, the fact that it wasn’t the whole gaming industry is worth remembering. Because as bad as it got, gaming as a whole wasn’t in danger of dying – just in danger of becoming a niche hobby for computer enthusiasts that is somehow also big in Japan.

Will Something Crash Again?

Shenmue 3: AAA games arriving in the crowdfunded world
Shenmue 3: AAA games arriving in the crowdfunded world

As I’ve said in the beginning of the article, there’s a lot of talk about the possibility of a new crash. There is a lot of shovelware on the market (and the more relaxed policy taken by Steam can be seen as the analogue of Atari’s policy in 1982 and 1983), the big budget developers are releasing unfinished games, the new consoles have hardware similar both to each other and to PCs. The crash is possible.

I wouldn’t say it’s inevitable though, as the industry is clearly changing, trying to adapt to the new situation. One of those changes can be seen in the Shenmue 3 crowdfunding campaign. While Kickstarters for new games in cult classic series and niche genres are nothing new, they were usually done by small and medium developers. Today, large companies like Sega are using the strategies which made independent and semi-independent developers successful.

It’s hard to predict what will come of this but one thing is obvious – AAA devs realize that the way they were doing things is not working anymore and they are trying to change it. Maybe the Shenmue example will not start a trend among other big budget companies, maybe it will, but it won’t be enough to save them – however, something has moved in the game industry.

Will We Care if it Crashes?

Even if the video game industry crashes, there’s no reason to think it will be a great disaster and the beginning of a new dark age. Gaming survived in 1983 and it will surely survive in 2015 when the machines are cheaper, distribution is easier, and people with niche interests can easily communicate with each other on the Internet. There will not be a video game apocalypse.

If the crash happens, gamers are not the ones who will be hurt the most. While the potential bankruptcy of the bigger companies might mean less big budget AAA games, the only reason the companies can go bankrupt is that people don’t really care about big budget AAA games that much. If it’s the indie market that falls apart, it will fall apart because of the indie devs who didn’t fulfill the big promise of independent games by not creating something different, interesting and fascinating enough. If the consoles die, it’s because they aren’t dedicated gaming hardware anymore and their place will be taken by the personal computers – maybe made more ‘dedicated’ by the introduction of VR headsets and other innovative peripherals.

You should fear the prospect of a new market crash – but not if you’re a gamer. You should fear it if you’re a developer or a publisher and you think you’re not doing a good enough job. Because if the crash comes, the gamers will not be its victims but the ones who cause it – not through any dramatic action but by simply losing interest in your games.

Further Reading:

Header image: Wikipedia

Maciej Miszczyk


I play games (I have a preference for old, weird and difficult ones but that's not the rule) and write articles about them that are sometimes a bit too long. Sometimes I also do things other than gaming, I swear.