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Concept
Video game crash of 1983
Summary
The video game crash of 1983 (known in Japan as the Atari shock) was a large-scale recession in the video game industry that occurred from 1983 to 1985, primarily in the United States. The crash was attributed to several factors, including market saturation in the number of video game consoles and available games, many of which were of poor quality, as well as waning interest in console games in favor of personal computers. Home video game revenues peaked at around 100 million by 1985 (a drop of almost 97 percent). The crash abruptly ended what is retrospectively considered the second generation of console video gaming in North America. To a lesser extent, the arcade video game market also weakened as the golden age of arcade video games came to an end.
Lasting about two years, the crash shook a then-booming video game industry and led to the bankruptcy of several companies producing home computers and video game consoles. Analysts of the time expressed doubts about the long-term viability of video game consoles and software.
The North American video game console industry recovered a few years later, mostly due to the widespread success of Nintendo's Western branding for its Famicom console, the Nintendo Entertainment System (NES), released in 1985. The NES was designed to avoid the missteps that caused the 1983 crash and the stigma associated with video games at that time.
The Atari Video Computer System (renamed the Atari 2600 in late 1982) was not the first home system with swappable game cartridges, but by the early 1980s it was the most popular second-generation console by a wide margin. Launched in 1977 just ahead of the collapse of the market for home Pong console clones, the Atari VCS experienced modest sales for its first few years. In 1980, Atari's licensed version of Space Invaders from Taito became the console's killer application; sales of the VCS quadrupled, and the game was the first title to sell more than a million copies.
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