Editing Atari 2600 (section)

===Decline and redesign===
In addition to third-party game development, Atari also received the first major threat to its hardware dominance from the ColecoVision. Coleco had a license from [[Nintendo]] to develop a version of the arcade game ''[[Donkey Kong (1981 video game)|Donkey Kong]]'' (1981), which was bundled with every ColecoVision console. Coleco gained about 17% of the hardware market in 1982 compared to Atari's 58%.<ref name="ieee history">{{cite journal | title = Innovation and Competition in Standard-Based Industries: A Historical Analysis of the U.S. Home Video Game Market | first1 = Scott | last1 =Gallager | first2 = Seung | last2 =Ho Park | date = February 2002 | journal = IEEE Transactions on Engineering Management | publisher = [[IEEE Technology and Engineering Management Society]] | volume = 49 | issue = 1 | pages = 67–82 | doi = 10.1109/17.985749 }}</ref> With third parties competing for market share, Atari worked to maintain dominance in the market by acquiring licenses for popular arcade games and other properties to make games from. ''Pac-Man'' has numerous technical and aesthetic flaws, but nevertheless more than 7 million copies were sold. Heading into the 1982 [[economics of Christmas|holiday shopping]] season, Atari had placed high sales expectations on ''[[E.T. the Extra-Terrestrial (video game)|E.T. the Extra-Terrestrial]]'', a game programmed in about six weeks.  Atari produced an estimated four million cartridges,<ref name="kassarmaster">Bruck, ''Master of the Game: Steve Ross and the Creation of Time Warner'', pp. 179–180</ref> but the game was poorly reviewed, and only about 1.5 million units were sold.<ref name="retroign-tas">{{cite web | last = Buchanan | first = Levi | url = http://retro.ign.com/articles/903/903024p1.html | title = IGN: Top 10 Best-Selling Atari 2600 Games | website = IGN | date = August 26, 2008 | access-date = September 21, 2009 | archive-url = https://web.archive.org/web/20110726161836/http://retro.ign.com/articles/903/903024p1.html | archive-date = July 26, 2011 | url-status = live }}</ref>

Warner Communications issued revised earnings guidance in December 1982 to its shareholders, having expected a 50% year-to-year growth but now only expecting 10–15% due to declining sales at Atari.<ref name="atariyears">{{cite magazine|last1=Crawford|first1=Chris|title=The Atari Years|magazine=The Journal of Computer Game Design|date=1991|volume=5}}</ref><ref name="Snopes">{{cite web | first1=Barbara | url=http://www.snopes.com/business/market/atari.asp | title=Buried Atari Cartridges | publisher=[[Snopes.com]] | date=May 10, 2011 | access-date=September 10, 2011 | first2=David P | last1=Mikkelson | last2=Mikkelson | archive-date=September 11, 2012 | archive-url=https://archive.today/20120911032250/http://www.snopes.com/business/market/atari.asp | url-status=live }}</ref> Coupled with the oversaturated home game market, Atari's weakened position led investors to start pulling funds out of video games, beginning a cascade of disastrous effects known as the [[video game crash of 1983]].<ref name="atariyears"/> Many of the third-party developers formed prior to 1983 were closed, and Mattel and Coleco left the video game market by 1985.<ref name="down many times">{{cite book | last = Ernkvist | first = Mirko  | chapter = Down many times, but still playing the game: Creative destruction and industry crashes in the early video game industry 1971–1986 | year = 2008 | pages = 161–191 | title = History of Insolvancy and Bankruptcy | publisher = Södertörns högskola | editor-first =Karl | editor-last=Gratzer | editor-first2=Dieter | editor-last2=Stiefel | isbn = 978-91-89315-94-5 }}</ref>

In September 1983, Atari sent 14 truckloads of unsold Atari 2600 cartridges and other equipment to a landfill in the New Mexico desert, later labeled the [[Atari video game burial]].<ref>{{cite news|title=Atari Parts Are Dumped|newspaper=The New York Times|date=28 September 1983|url=https://www.nytimes.com/1983/09/28/business/atari-parts-are-dumped.html|url-access=limited|access-date=May 20, 2018|archive-date=February 9, 2017|archive-url=https://web.archive.org/web/20170209222223/http://www.nytimes.com/1983/09/28/business/atari-parts-are-dumped.html|url-status=live}}</ref> Long considered an [[urban legend]] that claimed the burial contained millions of unsold cartridges, the site was excavated in 2014, confirming reports from former Atari executives that only about 700,000 cartridges had actually been buried.<ref>{{cite magazine |last1=Poeter |first1=Damon |title=Atari's Buried E.T. Games Up for Sale |url=https://www.pcmag.com/news/ataris-buried-et-games-up-for-sale |magazine=PC Magazine |date=May 31, 2014 |access-date=September 29, 2020 |archive-date=January 18, 2021 |archive-url=https://web.archive.org/web/20210118140812/https://www.pcmag.com/news/ataris-buried-et-games-up-for-sale |url-status=live }}</ref> Atari reported a {{US$|536 million|long=no}} loss for 1983 as a whole,<ref name="Ultimate History">{{cite book |first= Steven | last= Kent | authorlink = Steven L. Kent|year=2001 |title=The Ultimate History of Video Games |publisher=[[Three Rivers Press]] |isbn=0-7615-3643-4 |url=https://archive.org/details/ultimatehistoryofvideogamesrevisited/}}</ref>{{rp|ch14}} and continued to lose money into 1984, with a {{USD|425 million|long=no}} loss reported in the second quarter.<ref name="sale"/> By mid-1984, software development for the 2600 had essentially stopped except that of Atari and Activision.<ref name="holyoak19840530">{{cite news | url=https://news.google.com/newspapers?id=PqZNAAAAIBAJ&pg=7081%2C6575510 | title=Here are ColecoVision's jewels | work=Deseret News | date=May 30, 1984 | access-date=January 10, 2015 | author=Holyoak, Craig | pages=4 WV | archive-date=May 10, 2023 | archive-url=https://web.archive.org/web/20230510234406/https://news.google.com/newspapers?id=PqZNAAAAIBAJ&pg=7081,6575510 | url-status=live }}</ref>

Warner, wary of supporting its failing Atari division, started looking for buyers in 1984. Warner sold most of the assets of Atari's counsumer electronics and home computer divisions to [[Jack Tramiel]], the founder of [[Commodore International]], in July 1984 in a deal valued at {{US$|240 million|long=no}}, though Warner retained Atari's arcade business. Tramiel was a proponent of [[personal computer]]s, and halted all new 2600 game development soon after the sale.<ref name="sale">{{Cite news
 |last=Sange
 |first=David E.
 |title=Warner Sells Atari To Tramiel
 |newspaper=[[The New York Times]]
 |pages=Late City Final Edition, Section D, Page 1, Column 6, 1115 words
 |date=July 3, 1984
 |url=https://www.nytimes.com/1984/07/03/business/warner-sells-atari-to-tramiel.html
 |url-status=live
 |url-access=limited
 |archive-url=https://web.archive.org/web/20161118132248/http://www.nytimes.com/1984/07/03/business/warner-sells-atari-to-tramiel.html
 |archive-date=November 18, 2016
}}</ref>

The North American video game market did not recover until about 1986, after [[Nintendo]]'s [[History of the Nintendo Entertainment System#North American launch (1985-1986)|1985 launch]] of the [[Nintendo Entertainment System]] in North America. [[Atari Corporation]] released a redesigned model of the 2600 in 1986, supported by an ad campaign touting a price of "under 50 bucks".<ref>{{cite web|title=Atari 2600 1986 Commercial 'The Fun is Back'|url=https://www.youtube.com/watch?v=m752qiGqSm4|website=YouTube| date=December 21, 2011 |access-date=May 20, 2018|archive-date=August 17, 2019|archive-url=https://web.archive.org/web/20190817092507/https://www.youtube.com/watch?v=m752qiGqSm4&gl=US&hl=en|url-status=live}}</ref> With a large library of cartridges and a low price point, the 2600 continued to sell into the late 1980s. Atari released the last batch of games in 1989–90 including ''[[Secret Quest]]''<ref>{{cite web|title=Secret Quest|url=http://www.atarimania.com/game-atari-2600-vcs-secret-quest_7464.html|website=Atari Mania|access-date=May 20, 2018|archive-date=May 20, 2018|archive-url=https://web.archive.org/web/20180520124517/http://www.atarimania.com/game-atari-2600-vcs-secret-quest_7464.html|url-status=live}}</ref> and ''Fatal Run''.<ref>{{cite web|title=Fatal Run|url=http://www.atarimania.com/game-atari-2600-vcs-fatal-run_16746.html|website=Atari Mania|access-date=May 20, 2018|archive-date=May 20, 2018|archive-url=https://web.archive.org/web/20180520124402/http://www.atarimania.com/game-atari-2600-vcs-fatal-run_16746.html|url-status=live}}</ref> By 1986, over {{nowrap|20 million}} Atari VCS units had been sold worldwide.<ref>{{cite news |title=Where every home game turns out to be a winter |url=https://www.newspapers.com/clip/18547690/the-guardian/ |access-date=3 October 2021 |work=[[The Guardian]] |date=6 March 1986 |pages=15 |archive-date=October 3, 2021 |archive-url=https://web.archive.org/web/20211003220523/https://www.newspapers.com/clip/18547690/the-guardian/ |url-status=live }}</ref><ref name="Pollack">{{cite news |last1=Pollack |first1=Andrew |title=Video Games, Once Zapped, In Comeback |url=https://www.nytimes.com/1986/09/27/business/video-games-once-zapped-in-comeback.html |newspaper=The New York Times |date=September 27, 1986 |publication-date=September 27, 1986 |page=A1 |no-pp=yes |access-date=November 2, 2015 |url-access=limited |archive-date=June 6, 2021 |archive-url=https://web.archive.org/web/20210606050154/https://www.nytimes.com/1986/09/27/business/video-games-once-zapped-in-comeback.html |url-status=live }}</ref> The final Atari-licensed release is the PAL-only version of the arcade game ''[[Klax (video game)|KLAX]]'' in 1990.

After more than 14 years on the market, 2600 production ended in 1992,{{sfn|Montfort|Bogost|2009|p=137}} along with the [[Atari 7800]] and [[Atari 8-bit computers]]. Despite this fact, Atari continued sales in Europe for years to come. It cost less than £39.99 and was mainly distributed through mail order chains. In 1991, 200,000 units were sold on the continent and in it was a bestseller at [[Littlewoods]] stores in UK.<ref>{{cite journal |title=Atari triumphs in Index |journal=CTW |issue=362 |page=4 }}</ref> After the fall of communism, Atari attempted to legally introduce the Atari 2600 and 7800 to the former Eastern Bloc countries, with small price being main advantage of the system, but Atari was defeated by even more cheaper and easily available clones called "Rambo TV Game 2600" (advertised with the 1982 movie character [[First Blood|Rambo]] played by [[Sylvester Stallone]]), containing up to several hundred built-in games.<ref>{{Citation |url=https://www.kommersant.ru/doc/44974 |title=Бурный рост приводит к аномалиям|date=April 14, 1993 }}</ref><ref>{{Cite journal | title = Atari 2600 |journal = Bajtek | issue = 4/1992 | page = 14}}</ref><ref>{{Citation |url=https://www.retrobajty.cz/video-computer-game-console-rambo-hry/ |title=Video Computer Game Console (Rambo hry)|date=February 16, 2020 }}</ref><ref>{{Citation |url=https://dzen.ru/a/YtBQy5-AFWLXBLu8 |title=Игровая приставка Рэмбо. Китайский аналог легенды из США}}</ref> In Western Europe, last stocks of the 2600 and 7800 were sold until Summer/Fall of 1995.<ref>{{cite web | url=https://atarimuseum.nl/history-of-atari-benelux/ | title=Atari Benelux Timeline – Atarimuseum.nl | access-date=May 16, 2023 | archive-date=May 16, 2023 | archive-url=https://web.archive.org/web/20230516214620/https://atarimuseum.nl/history-of-atari-benelux/ | url-status=live }}</ref>