Editing Video game crash of 1983 (section)

=== Loss of publishing control ===
Prior to 1979, there were no [[third-party developer]]s, with console manufacturers like Atari publishing all the games for their respective platforms. This changed with the formation of [[Activision]] in 1979. Activision was founded by four former Atari [[Game programmer|video game programmers]] who left the company because they felt that Atari's developers should receive the same recognition and accolades (specifically in the form of sales-based royalties and public-facing credits) as the actors, directors, and musicians working for other subsidiaries of [[Warner Communications]] (Atari's parent company at the time). Already being quite familiar with the Atari VCS, the four programmers developed their own games and cartridge manufacturing processes. Atari quickly sued to block sales of Activision's products but failed to secure a [[restraining order]], and they ultimately settled the case in 1982. While the settlement stipulated that Activision pay royalties to Atari, this case ultimately legitimized the viability of third-party game developers. Activision's games were as popular as Atari's, with ''[[Pitfall!]]'' (released in 1982) selling over 4 million units.

Prior to 1982, Activision was one of only a handful of third parties publishing games for the Atari VCS. By 1982, Activision's success emboldened numerous other competitors to penetrate the market. However, Activision's founder [[David Crane (programmer)|David Crane]] observed that several of these companies were supported by venture capitalists attempting to emulate the success of Activision. Without the experience and skill of Activision's team, these inexperienced competitors mostly created [[shovelware|games of poor quality]].<ref name="Gamasutra Activision2">{{cite web|last=Fleming|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> Crane notably described these as "the worst games you can imagine".<ref name="aa201605092">{{cite web|author=Adrian|date=May 9, 2016|title=INTERVIEW{{snd}}DAVID CRANE (ATARI/ACTIVISION/SKYWORKS)|url=http://www.arcadeattack.co.uk/david-crane/|url-status=live|archive-url=https://web.archive.org/web/20160509160135/http://www.arcadeattack.co.uk/david-crane/|archive-date=May 9, 2016|access-date=May 10, 2016|work=Arcade Attack}}</ref> While Activision's success could be attributed to the team's existing familiarity with the Atari VCS, other publishers had no such advantage.

The rapid growth of the third-party game industry was easily illustrated by the number of vendors present at the semi-annual [[Consumer Electronics Show]] (CES). According to Crane, the number of third-party developers jumped from 3 to 30 between two consecutive events.<ref name="aa201605092" /> At the Summer 1982 CES,<ref name="nytimes 19832">{{cite news|last=Kleinfield|first=N.R.|date=October 17, 1983|title=Video Games Industry Comes Down To Earth|url=https://www.nytimes.com/1983/10/17/business/video-games-industry-comes-down-to-earth.html|access-date=September 21, 2018|newspaper=[[The New York Times]]|url-access=limited|archive-date=September 13, 2018|archive-url=https://web.archive.org/web/20180913223742/https://www.nytimes.com/1983/10/17/business/video-games-industry-comes-down-to-earth.html|url-status=live}}</ref> there were 17 companies, including [[MCA Inc.]] and [[20th Century Fox|Fox Video Games]], announcing a combined 90 new Atari games.<ref name="goodman1983spring2">{{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|url-status=live|magazine=Creative Computing Video & Arcade Games|page=32|archive-url=https://web.archive.org/web/20171107020633/http://www.atarimagazines.com/cva/v1n1/vgupdate.php|archive-date=November 7, 2017}}</ref> By 1983, an estimated 100 companies were attempting to leverage the CES into a foothold in the market. ''[[AtariAge]]'' documented 158 different vendors that had developed for the Atari VCS.<ref name="helsinki2">{{cite conference|last=Ernkvist|first=Mirko|year=2006|title=Down Many Times, but Still Playing the Game: Creative Destruction and Industry Crashes in the Early Video Game Industry 1971–1986|url=http://www.helsinki.fi/iehc2006/papers2/Ernkvist.pdf|conference=XIV International Economic History Congress|location=Helsinki|access-date=September 11, 2020|archive-date=August 10, 2020|archive-url=https://web.archive.org/web/20200810104521/http://www.helsinki.fi/iehc2006/papers2/Ernkvist.pdf|url-status=live}}</ref> In June 1982, the Atari games on the market numbered just 100 which by December, grew to over 400. Experts predicted a glut in 1983, with only 10% of games producing 75% of sales.<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=nwsdAAAAIBAJ&sjid=QX8EAAAAIBAJ&pg=3635%2C1989311|url-status=dead}}</ref>

''[[BYTE]]'' stated in December, "in 1982 few games broke new ground in either design or format ... If the public really likes an idea, it is milked for all its worth, and numerous clones of a different color soon crowd the shelves. That is, until the public stops buying or something better comes along. Companies who believe that microcomputer games are the [[hula hoop]] of the 1980s only want to play Quick Profit."<ref name="clark1982122">{{cite news|author=Clark, Pamela|date=December 1982|title=The Play's the Thing|pages=6|work=BYTE|url=https://archive.org/stream/byte-magazine-1982-12/1982_12_BYTE_07-12_Game_Plan_1982#page/n7/mode/2up|access-date=October 19, 2013}}</ref> [[Bill Kunkel (journalist)|Bill Kunkel]] said in January 1983 that companies had "licensed everything that moves, walks, crawls, or tunnels beneath the earth. You have to wonder how tenuous the connection will be between the game and the movie ''[[Marathon Man (film)|Marathon Man]]''. What are you going to do, present a video game root canal?"<ref name="harmetz198301152">{{cite news|last=Harmetz|first=Aljean|date=January 15, 1983|title=New Faces, More Profits For Video Games|page=18|newspaper=Times-Union|url=https://news.google.com/newspapers?id=jnhcAAAAIBAJ&pg=4201,2482231|access-date=February 28, 2012|archive-date=August 1, 2019|archive-url=https://web.archive.org/web/20190801133617/https://news.google.com/newspapers?id=jnhcAAAAIBAJ&sjid=a1cNAAAAIBAJ&pg=4201,2482231|url-status=live}}</ref> By September 1983, the ''Phoenix'' stated that 2600 cartridges were "no longer a growth industry".{{r|mitchell19830906}} Activision, Atari, and Mattel all had experienced programmers, but many of the new companies rushing to join the market did not have the expertise or talent to create quality games. Titles such as the ''[[Kaboom! (video game)|Kaboom!]]''-like ''[[Lost Luggage (video game)|Lost Luggage]]'', rock band tie-in ''[[Journey Escape]]'', and plate-spinning game ''[[Dishaster]]'', were examples of games made in the hopes of taking advantage of the video-game boom, but later proved unsuccessful with retailers and potential customers.

The flood of new games was released into a limited competitive space. According to Activision's Jim Levy, they had projected that the total cartridge market in 1982 would be around 60 million, anticipating Activision would be able to secure between 12% and 15% of that market for their production numbers. However, with at least 50 different companies in the new marketspace, and each having produced between one and two million cartridges, along with Atari's own estimated 60 million cartridges in 1982, there was over 200% production of the actual demand for cartridges in 1982, which contributed to the stockpiling of unsold inventory during the crash.<ref name="high score activision crash"/>