Editing History of video games (section)

===Video game crash of 1983===
{{Main|Video game crash of 1983}}
[[File:Atari E.T. Dig- Alamogordo, New Mexico (14036097792).jpg|thumb|right|Unsold Atari VCS games in a landfill]]
Activision's success as a third-party developer for the Atari VCS and other home consoles inspired other third-party development firms to emerge in the early 1980s; by 1983, at least 100 different companies claimed to be developing software for the Atari VCS.<ref name="down many times"/> This had been projected to led to a glut in sales, with only 10% of games producing 75% of sales for 1983 based on 1982 estimates.<ref name="mj198212262">{{cite news|date=December 26, 1982|title=Stream of video games is endless|pages=Business 1|work=Milwaukee Journal|url=https://news.google.com/newspapers?id=nwsdAAAAIBAJ&pg=3635%2C1989311|access-date=January 10, 2015|archive-date=March 12, 2016|archive-url=https://web.archive.org/web/20160312093025/https://news.google.com/newspapers?id=|url-status=dead}}</ref> Further, there were questions on the quality of these games. While some of these firms hired experts in game design and programming to build quality games, most were staffed by novice programmers backed by venture capitalists without experience in the area. As a result, the Atari VCS market became watered down with large quantities of poor quality games. These games did not sell well, and retailers discounted their prices to try to get rid of their inventory. This further impacted sales of high-quality games, since consumers would be drawn to purchase bargain-bin priced games over quality games marked at a regular price.<ref>{{cite web|last=Flemming|first=Jeffrey|title=The History Of Activision|url=https://www.gamedeveloper.com/business/the-history-of-activision|url-status=live|archive-url=https://web.archive.org/web/20161220122651/http://www.gamasutra.com/view/feature/1537/the_history_of_activision.php?print=1|archive-date=December 20, 2016|access-date=December 30, 2016|work=Gamasutra}}</ref>

At the end of 1983, several factors, including a market flooded with poor-quality games and loss of publishing control, the lack of consumer confidence in market leader Atari due to the poor performance of several high-profile games, and home computers emerging as a new and more advanced platform for games at nearly the same cost as video game consoles, caused the North American video game industry to experience a severe downturn.<ref name="gallager innovation"/> The 1983 crash bankrupted several North American companies that produced consoles and games from late 1983 to early 1984. The {{US$|3 billion|long=no}} U.S. market in 1983 dropped to {{US$|100 million|long=no}} by 1985,<ref>{{Cite web|last=Boyd|first=Andy|title=No. 3038: The Video Game Crash of 1983|url=https://www.uh.edu/engines/epi3038.htm|access-date=September 30, 2020|website=www.uh.edu}}</ref> while the global video game market estimated at {{US$|42 billion|long=no}} in 1982 fell to {{US$|14 billion|long=no}} by 1985.<ref name="vgmarket">{{cite web | url = https://www.bloomberg.com/news/articles/2019-01-23/peak-video-game-top-analyst-sees-industry-slumping-in-2019 | title = Peak Video Game? Top Analyst Sees Industry Slumping in 2019 | first=  Yuki | last = Naramura | date = January 23, 2019 | access-date = January 29, 2019 | work = [[Bloomberg L.P.]] }}</ref> Warner Communications sold off Atari to [[Jack Tramiel]] in 1984,<ref>{{Cite news|last=Senger|first=Emily|title=The ODE: Atari (1972-2013)|work=Canadian Business}}</ref> while Magnavox and Coleco exited the industry.

The crash had some minor effects on Japanese companies with American partners impacted by the crash, but as most of the Japanese companies involved in video games at this point have long histories, they were able to weather the short-term effects. The crash set the stage for Japan to emerge as the leader in the video game industry for the next several years, particularly with Nintendo's introduction of the rebranded Famicom, the [[Nintendo Entertainment System]], back into the U.S. and other Western regions in 1985, maintaining strict publishing control to avoid the same factors that led to the 1983 crash.<ref name="odeonnel nes10">{{cite journal | title = The Nintendo Entertainment System and the 10NES Chip: Carving the Video Game Industry in Silicon | first = Casey | last = O'Donnell | date = 2011 | journal = [[Games and Culture]] | volume = 6 | issue = 1 | pages = 83–100 | doi =  10.1177/1555412010377319 | s2cid = 53358125 }}</ref>