The Video Game Crash of 1983

In 1983, the North American video game industry suffered a catastrophic collapse. Revenue fell from $3.2 billion in 1982 to just $100 million by 1985 — a 97% decline. The crash was caused by market oversaturation: dozens of companies flooded the market with low-quality games, retailers lost confidence, and consumers stopped buying. The nadir was symbolized by Atari's E.T. the Extra-Terrestrial, a game so rushed (developed in five weeks) and so terrible that millions of unsold cartridges were famously buried in a New Mexico landfill. Atari lost $536 million in 1983 alone. Many analysts declared video games a passing fad, like pet rocks or disco. They were spectacularly wrong. The crash cleared the market for a Japanese company called Nintendo, which would revive the industry with strict quality controls and a plumber named Mario.