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Christian Sposta

Lizardi
COM 350
4 April 2018

Shovelware and the Video Game Crash

Shovelware is always a danger when it comes to buying video games, but it was

responsible for nearly ending the entire business of of gaming and production.

The video game crash occurred in 1983. This was a wide spread recession for the

gaming industry until 1985. Revenue peaked at around $3.2 billion in 1983, and fell sharply to

about $100 million in 1985, which is a drop of almost 97%. At the time of the North American

crash, there were many consoles on the market, including the Atari 2600, Atari 5200,

ColecoVision, Odyssey and the Fairchild II. In addition to this, Mattel and Coleco created

devices that allowed them to play Atari 2600 games on their consoles, and others created Atari

2600/Intellivision clones such as the Coleco Gemini, the Sears Tele-Games systems (private-

labeled versions of the Atari 2600 and Intellivision), and Tandyvision (an Intellivision clone for

Radio Shack).

Each of these consoles had its own library of games produced by the console maker, and many

had large libraries of games produced by third-party developers. In 1982, analysts noticed

trends of saturation, mentioning that the amount of new software coming in will only allow a few

big hits, that retailers had too much floor space for systems, along with price drops for home

computers could result in an industry shakeup.

The first microcomputers such as the Altair 8800 and Apple I were marketed to a niche of

electronics hobbyists as most required assembly from a kit. In 1977, pre-assembled machines

with BASIC in ROM became available, including the "Trio of '77": the Apple II, Commodore PET,

and TRS-80 Model I. The latter two retailed for under $1,000, but lacked game joysticks and

high-resolution color video. Third-party developers created games for all of these platforms. The
TRS-80 benefited from Radio Shack's retail stores, which displayed computers and accessories

locally in an era where many personal computers were mail-ordered from manufacturers.

In 1979, Atari unveiled the Atari 400 and 800 computers, built around a chipset originally meant

for use in a game console, and which retailed for the same price as their respective names. In

1981, IBM introduced the IBM 5150 PC with a $1,565 base price (equivalent to $4,213 in 2017),

while Sinclair Research introduced its low-end ZX81 microcomputer for £70 (equivalent to £246

in 2016). By 1982, new desktop computer designs were commonly providing better color

graphics and sound than game consoles and personal computer sales were booming. The TI

99/4A and the Atari 400 were both at $349 (equivalent to $885 in 2017), Radioshack's Color

Computer sold at $379 (equivalent to $961 in 2017), and Commodore International had just

reduced the price of the VIC-20 to $199 (equivalent to $505 in 2017) and the 64 to $499

(equivalent to $1,265 in 2017).

One of the more predominant effects of the 1983 crash was on Atari. In 1982, it had

published large volumes of Atari 2600 games that they had expected to sell well, including a

port of Pac-Man and game adaption of the film E.T. the Extra-Terrestrial. However, due to the

quality of these games and other market factors, much of Atari's production did not get sold. In

September 1983, Atari discreetly buried much of this excess stock in a landfill near Alamogordo,

New Mexico. The Atari video game burial became an urban legend, with claims that millions of

cartridges had been buried here, though Atari executives said in 2014, alongside the unearthing

of the landfill as part of a documentary, that only about 700,000 cartridges were buried there,

and the discovery of Atari games that were before the crash. Though the scale of the urban

legend has since been disproven, the existence of the burial remains an iconic representation of

the 1983 video game crash.

As a result, while some stores sold new games and machines, most retailers stopped selling

video game consoles or reduced their stock significantly, reserving floor or shelf space for other
products. This was the most formidable barrier that confronted Nintendo, as it tried to market its

Famicom system in the United States. Retailer opposition to video games was directly

responsible for causing Nintendo to brand its product an "Entertainment System" rather than a

"console", using terms such as "control deck" and "Game Pak", as well as producing a toy robot

called R.O.B. to convince toy retailers to allow it in their stores.

The North American video game crash had two long-lasting results. The first result was

that dominance in the home console market shifted from the United States to Japan. By 1986,

three years after its introduction, 6.5 million Japanese homes—19% of the population—owned a

Family Computer, and Nintendo began exporting it to the U.S.; by 1987 the Nintendo

Entertainment System was very popular in North America. When the U.S. video game market

recovered in the late 1980s the NES was by far the dominant console, leaving only a fraction of

the market to a resurgent Atari. By 1989, home video game sales in the United States had

reached $5 billion, surpassing the 1982 peak of $3 billion during the previous generation. A

large majority of the market was controlled by Nintendo; it sold more than 35 million units in the

United States, exceeding the sales of other consoles and personal computers by a considerable

margin. Other Japanese companies also rivaled Nintendo's success in the United States, with

Sega's Mega Drive/Genesis in 1989 and NEC's PC Engine/TurboGrafx 16 released the same

year.

A second, highly visible result of the crash was the advancement of measures to control

third-party development of software. Using secrecy to combat industrial espionage had failed to

stop rival companies from reverse engineering the Mattel and Atari systems and hiring away

their trained game programmers. While Mattel and Coleco implemented lockout measures to

control third-party development (the ColecoVision BIOS checked for a copyright string on

power-up), the Atari 2600 was completely unprotected and once information on its hardware

became available, little prevented anyone from making games for the system. Nintendo thus
instituted a strict licensing policy for the NES that included equipping the cartridge and console

with lockout chips, which were region-specific, and had to match in order for a game to work. In

addition to preventing the use of unlicensed games, it also was designed to combat piracy,

rarely a problem in the United States or Europe, but rampant in East Asia.

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