Video game crash of 1977
In 1977, manufacturers of older, obsolete consoles and Pong clones sold their systems at a loss to clear stock, creating a glut in the market and causing Fairchild and RCA to abandon their game consoles. Only Atari and Magnavox remained in the home console market, despite suffering losses in 1977 and 1978.
The crash was largely caused by the significant number of Pong clones that flooded both the arcade and home markets. The crash eventually came to an end with the success of Taito's Space Invaders, released in 1978, sparking a renaissance for the video game industry and paving the way for the golden age of arcade video games. Soon after, Space Invaders was licensed for the Atari VCS (later known as Atari 2600), becoming the first big hit and quadrupling the console's sales. This helped Atari recover from their earlier losses. The success of the Atari 2600 in turn revived the home video game market, up until the North American video game crash of 1983.
North American video game crash of 1983
The North American video game crash was a massive recession of the video game industry that occurred from 1983 to 1985. Revenues that had peaked at around $3.2 billion in 1983, fell to around $100 million by 1985 (a drop of almost 97 percent). The crash was a serious event that brought an abrupt end to what is considered the second generation of console video gaming in North America. The crash almost destroyed the then-fledgling industry and led to the bankruptcy of several companies producing home computers and video game consoles in North America, including Atari. It lasted about two years, and many business analysts of the time expressed doubts about the long-term viability of video game consoles. The video-game industry was revitalized a few years later, mostly due to the widespread success of the Nintendo Entertainment System (NES), which was released in North America in 1985 and had become extremely popular by 1987.
There were several reasons for the crash, but the main cause was supersaturation of the market with hundreds of mostly low-quality games which resulted in the loss of consumer confidence. The full effects of the industry crash would not be felt until 1985.
Causes and factors!
The North American video game console crash of 1983 was caused by a combination of factors:
Plethora of games and consoles!
Competition from home computers!
Loss of publishing control!