Editing Video game crash of 1983 (section)

=== Impact on third-party software development ===
A second, highly visible result of the crash was the advancement of measures to control [[third-party developer|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 [[software piracy]], rarely a problem in North America or Western Europe, but rampant in East Asia. The concepts of such a control system remain in use on every major video game console produced today, even with fewer cartridge-based consoles on the market than in the 8/16-bit era. Replacing the security chips in most modern consoles are specially encoded [[optical disc]]s that [[Copy protection#Video game console systems|cannot be copied]] by most users and can only be read by a particular console under normal circumstances. [[Accolade, Inc.|Accolade]] achieved a technical victory in one court case against [[Sega]], challenging this control, even though it ultimately yielded and signed the Sega licensing agreement. Several publishers, notably [[Tengen (company)|Tengen]] (Atari Games), [[Color Dreams]], and [[Camerica]], challenged Nintendo's control system during the 8-bit era by producing unlicensed NES games.

Initially, Nintendo was the only developer for the Famicom. Under pressure from [[Namco]] and [[Hudson Soft]], it opened the Famicom to third-party development, but instituted a license fee of 30% per game cartridge for these third-parties to develop games, a system used by console manufacturers to this day.<ref>{{cite web | url = https://www.bloomberg.com/news/articles/2020-08-19/epic-games-fortnite-battle-with-apple-and-google-can-be-traced-to-nintendo-tax | title = Epic's Battle With Apple and Google Actually Dates Back to Pac-Man | first1 = Takahashi | last1 = Mochizuki | first2 = Vlad | last2 = Savov | date = August 25, 2020 | access-date = August 25, 2020 | work = [[Bloomberg News]] | url-access = subscription | archive-date = November 6, 2021 | archive-url = https://web.archive.org/web/20211106025128/https://www.bloomberg.com/news/articles/2020-08-19/epic-games-fortnite-battle-with-apple-and-google-can-be-traced-to-nintendo-tax | url-status = live }}</ref> Nintendo maintained strict manufacturing control and requiring payment in full before manufacturing. Cartridges could not be returned to Nintendo, so publishers assumed all the financial risk of selling all units ordered. Nintendo limited most third-party publishers to only five games per year on its systems (some companies tried to get around this by creating additional company labels like [[Konami]]'s [[Ultra Games]] label). Nintendo ultimately dropped this rule by 1993, after the release of the successor [[Super Nintendo Entertainment System]].<ref>{{cite web | url = https://kotaku.com/5930361/how-konami-cheated-to-get-around-a-silly-nintendo-rule | title = Konami's Cheat to Get Around a Silly Nintendo Rule | first = Luke | last = Plunkett | date = July 21, 2012 | access-date = September 21, 2018 | work = [[Kotaku]] | archive-date = September 21, 2018 | archive-url = https://web.archive.org/web/20180921225906/https://kotaku.com/5930361/how-konami-cheated-to-get-around-a-silly-nintendo-rule | url-status = live }}</ref> Nintendo's strong-armed oversight of Famicom cartridge manufacturing led to both legitimate and bootleg unlicensed cartridges to be made in the Asian regions. Outside of Japan, Nintendo placed its [[Nintendo Seal of Quality]] on all licensed games released for the system to try to promote authenticity and detract from bootleg sales, but failed to make significant traction to stalling these sales.<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>

As Nintendo prepared to release the Famicom in the United States, it wanted to avoid both the bootleg problem it had in Asia as well as the mistakes that led up to the 1983 crash. The company created the proprietary [[10NES]] system, a [[lockout chip]] which was designed to prevent cartridges made without the chip from being played on the NES. The 10NES lockout was not perfect, as later in the NES' lifecycle methods were found to bypass it, but it did sufficiently allow Nintendo to strengthen its publishing control to avoid the mistakes Atari had made and initially prevent bootleg cartridges in the Western markets.<ref>{{cite web | url = https://arstechnica.com/gaming/2013/07/time-to-feel-old-inside-the-nes-on-its-30th-birthday/ | title = The NES turns 30: How it began, worked, and saved an industry | first = Andrew | last = Cunningham | date = July 15, 2013 | access-date = September 21, 2018 | work = [[Ars Technica]] | archive-date = July 22, 2021 | archive-url = https://web.archive.org/web/20210722154751/https://arstechnica.com/gaming/2013/07/time-to-feel-old-inside-the-nes-on-its-30th-birthday/ | url-status = live }}</ref> These strict licensing measures backfired somewhat after Nintendo was accused of [[Competition law|monopolistic]] behavior.<ref>{{cite web |author1=U.S. Court of Appeals |author2=Federal Circuit |year=1992 |title=Atari Games Corp. v. Nintendo of America Inc. |work=Digital Law Online |url=http://digital-law-online.info/cases/24PQ2D1015.htm |access-date=March 30, 2005 |url-status=live |archive-url=https://web.archive.org/web/20110808062812/http://digital-law-online.info/cases/24PQ2D1015.htm |archive-date=August 8, 2011 }}</ref> In the long run, this pushed many western third-party publishers such as [[Electronic Arts]] away from Nintendo consoles and supported competing consoles such as the Sega Genesis or [[PlayStation (console)|Sony PlayStation]]. Most of the Nintendo platform-control measures were adopted by later console manufacturers such as Sega, Sony, and Microsoft, although not as stringently.