The North American Video Game crash of 1983, called the Atari Shock in Japan, was the second video game recession to hit the North American video game history. The recession hit between 1983 and lasted 2 years to 1985 and caused irreparable damage to gaming in North America. Revenue dropped almost 97% for companies, bringing about an end to what was called the second generation of console video gaming in North America. The crash had almost destroyed the then-booming industry and led to the bankruptcy of most production and gaming companies. It led to many specialists and consumers questioning the viability of video game consoles.
The blame for the Crash of 1983 can be pushed to many factors, although some were much more important than others. Overall, the oversaturation that occurred in the industry has been blamed.
There were numerous consoles on the market, including Atari 2600, Atari 5200, Bally Astrocade, ColecoVision, Coleco Gemini, Emerson Arcadia 2001, Fairchild Channel F System II, Magnavox Odyssey 2, Mattel Intellivision, Intellivision II, Sears Tele-Games systems, Tandyvision and the Vectrex to name a few. Each of these consoles, and more, had their own library of games, their own third-party developers, their own code, and eventually, their own console upgrades. Adding to the oversaturation, the hype and popularity of games had driven countless poorly-thought-out starter companies to pop up to get some of the action. Another devastating blow is the fabled E.T. video game flub that severely damaged the industry’s reputation. Poor planning in software requirements, less concern for quality and questionable treatment of game creators by publication companies shook console gaming at its core. Many also place blame on the popularity of the home computer, which was gaining traction as well during this time but this was largely due to the fact that console creators did not want to improve their consoles and would rather make more games.
Much of the recovery has been credited to the success of the Nintendo Entertainment System (NES), which first appeared in New York City in late 1985 and became exponentially popular for the next two years. The narrowly avoided self-destruction of the console industry did bring up many changes that are still felt today. Nintendo skyrocketed in popularity, shifting the home console market to Japan and giving Nintendo until 1983 to become the dominant console, when North American market culture got back on its feet. Measures to control third-party development also became very important, Nintendo also leading the charge with its strict licensing policies that has continued since the NES days. Most of Nintendo’s control policies were adopted by later manufacturers such as Sega, Sony, and Microsoft, although none as stringent.