jan 16, 1981 - Crash of video games


The problem with the second generation of video games was that as it was easy to develop and produce games for systems, and the systems themselves were not always very expensive to manufacture, there was an overload of video game releases. Many non-video game companies were getting in on the act, such as famously Quaker Oats, known for their cereal brands. As well as this, Atari, then in a dominant position, were fiercely marketing the likes of Pac-Man and ET: The video Game for their Atari 2600 system, both suffering from extensive cutbacks due to the weak hardware. In short, there were too many games, too many systems that often struggled to run these games, and too much marketing, ultimately confusing American customers and shop owners. Stores did not know which games to sell, and as there was often no regulation in regards to quality adult-themed games could easily get into the hands of small children. Many shop owners simply saw video games as a fad, and moved onto the next best thing, refusing to stock video games and thus leaving many companies bankrupt.

As well as this, the home computer market was emerging (and suffering at the hands of the Commodore 64's aggressive marketing strategy), and consumers were again confused as to whether they should invest in expensive computers or video game consoles. Furthermore "next generation" consoles such as the Atari 5200 had their own share of flaws and also failed to deliever.

The video game crash did not effect other regions of the world, mostly because Atari did not achieve world dominance. In Europe, the focus was geared towards computers aimed at a specialist market (rather than the North American approach which was to market video games at everybody), and in Japan there was an entirely different set of early computers that had the most market share. There would not be much uniformity across the regions until the release of the Nintendo Entertainment System/Famicom in the next generation of games. It also did not effect arcade games. In fact, the 1980s is often considered the golden age of arcade games as many of the big releases were still being released there first.

Added to timeline:

7 Dec 2017


jan 16, 1981
~ 37 years ago
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