Editing Intellivision (section)

===Competition and market crash===
{{See also|North American video game crash of 1983}}

According to the company's 1982 [[Form 10-K]], Mattel had almost 20% of the domestic video-game market. Mattel Electronics provided 25% of revenue and 50% of [[operating income]] in fiscal 1982.<ref name=csmonitor/> Although the [[Atari 2600]] had more third-party development, ''[[Creative Computing]] Video & Arcade Games'' reported after visiting the summer 1982 [[Consumer Electronics Show]] that "the momentum is tremendous". [[Activision]] and [[Imagic]] began releasing games for the Intellivision, as did hardware rival [[Coleco]]. Mattel created "[[M Network]]" branded games for Atari's system.<ref name="goodman1983spring">{{Cite magazine |last=Goodman |first=Danny |author-link=Danny Goodman |date=Spring 1983 |title=Home Video Games: Video Games Update |url=http://www.atarimagazines.com/cva/v1n1/vgupdate.php |magazine=Creative Computing Video & Arcade Games |page=32 |access-date=2017-11-06 |archive-date=2017-11-07 |archive-url=https://web.archive.org/web/20171107020633/http://www.atarimagazines.com/cva/v1n1/vgupdate.php |url-status=live }}</ref> The company's advertisement budget increased to over {{US$|long=no|20 million}} for the year. In its October 1982 stockholders' report [[Mattel]] announced that ''Electronics'' had, so far that year, posted a nearly {{US$|long=no|100 million}} profit on nearly {{US$|long=no|500 million}} sales; a threefold increase over October 1981.<ref name=Lives>{{usurped|1=[https://web.archive.org/web/20170614/http://www.intellivisionlives.com/retrotopia/lives.shtml "Intellivision Lives! PC/Mac CD"]}} Intellivision Productions</ref><ref name = nyt84 />

However, the same report predicted a loss for the upcoming quarter. Hiring still continued, as did the company's optimism that the investment in software and hardware development would pay off. The ''M Network'' brand expanded to personal computers. An office in Taiwan was opened to handle [[Apple II]] programming.<ref>{{cite web|url=http://www.intellivisionlives.com/bluesky/games/credits/computers.shtml#comments|archive-url=https://web.archive.org/web/20170323054420/http://www.intellivisionlives.com/bluesky/games/credits/computers.shtml#comments|url-status=usurped|archive-date=2017-03-23|title=Intellivision Classic Video Game System / M Network Computer Games|website=www.intellivisionlives.com}}</ref> The original five-person Mattel game development team had grown to 110 people under new vice president Baum, while Daglow led Intellivision development and top engineer Minkoff directed all work on all other platforms. In February 1983, Mattel Electronics opened an office in the south of France to provide European input to Intellivision games and develop games for the [[ColecoVision]].<ref name=lives_companies /><ref name="gamotek.fr">{{cite web|url=http://www.gamotek.fr/collectionneurs/patrick-aubry/|title=Patrick Aubry, Nice Ideas – GAMOTEK|access-date=2017-03-22|archive-date=2017-03-23|archive-url=https://web.archive.org/web/20170323054735/http://www.gamotek.fr/collectionneurs/patrick-aubry/|url-status=live}}</ref> At its peak Mattel Electronics employed 1800 people.<ref name = nyt84/>

Amid the flurry of new hardware and software development, there was trouble for the Intellivision. New game systems ([[ColecoVision]] and [[Atari 5200]]) introduced in 1982 took advantage of falling [[RAM]] prices to offer graphics closer to arcade quality. In 1983, the price of home computers, particularly the [[Commodore 64]], came down drastically to compete with video game system sales. The market became flooded with hardware and software, and retailers were ill-equipped to cope. In spring 1983, hiring at Mattel Electronics came to a halt.

At the June 1983 Consumer Electronics Show in Chicago, Mattel Electronics had the opportunity to show off all their new products. The response was underwhelming. Several people in top management positions were replaced due to massive losses. On July 12, 1983, Mattel Electronics President Josh Denham was replaced with outsider Mack Morris. Morris brought in former Mattel Electronics president and marketing director Jeff Rochlis as a consultant and all projects were under review. The Intellivision III was cancelled and then all new hardware development was stopped when 660 jobs were cut on August 4.<ref name = nyt84/> The price of the Intellivision II (which launched at {{US$|long=no|150}} earlier that year) was lowered to {{US$|long=no|69}}, and Mattel Electronics was to be a software company.<ref name=timeline/> However, by October 1983, Electronics' losses were over {{US$|long=no|280 million}} for the year and one third of the programming staff were laid off.<ref name=Lives/><ref name = nyt84 /> Another third were gone by November, and, on January 20, 1984, the remaining programming staff were laid off.<ref>{{cite web|url=http://www.digitpress.com/library/interviews/interview_daniel_bass.html|title=DP Interviews...|website=www.digitpress.com|access-date=2017-04-01|archive-date=2017-03-26|archive-url=https://web.archive.org/web/20170326155913/http://www.digitpress.com/library/interviews/interview_daniel_bass.html|url-status=live}}</ref> The Taiwan and French offices continued a little while longer due to contract and legal obligations. On February 4, 1984, Mattel sold the Intellivision business for {{US$|long=no|20 million}}. In 1983, 750,000 Intellivision Master Components were sold, compared to 1.8 million in 1982.<ref name = nyt84>{{cite news|url=https://www.nytimes.com/1984/02/04/business/mattel-is-counting-on-its-toys.html|title=MATTEL IS COUNTING ON ITS TOYS|first=Thomas C.|last=Hayes|newspaper=The New York Times|date=4 February 1984|access-date=1 September 2017|archive-date=30 January 2018|archive-url=https://web.archive.org/web/20180130161501/http://www.nytimes.com/1984/02/04/business/mattel-is-counting-on-its-toys.html|url-status=live}}</ref><ref name="vgu_83oct">{{cite journal |last1=Simon |first1=Richard |title=Console Sales, 1982 |journal=[[Computer Entertainer|The Video Game Update, Computer Entertainer]] |date=October 1983 |volume=2 |issue=7 |page=99}}</ref>