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Compendium: The Video Game Crash of 1977

Video Game Crash of 1977The video game industry rise to prominence hasn’t being without its rocky periods. Twice within less than a decade the industry had two major financial meltdowns. The first of which happen in 1977 and would threaten the future of the entire medium. The crash in the market was caused by the success of Atari’s Pong home console. Many other electronics and toy manufactures wanted to capitalize on the growing trend of video games and attempted to make their own clones of the Pong system. At the time the idea of copyright infringement in the industry hadn’t been fully brought into practise. Magnavox was successful in forcing Atari to pay a licence fee over the production of Pong machine due to its clash with their own tennis game on the Odyssey console. Activision and Mattel also came under the scrutiny of the law, however the company also pursued many other console manufactures to no avail. Unlike in today’s video game market which operate on a global level, many consoles where produced and sold locally in European and Asian countries where American copyright law couldn’t reach them. In Britain there was the Video Sport MKII or the Videomaster Home T.V. Game. 1975 saw the release of the Interton Video 2000 and the Tele-Spiel in Germany. A year later in France saw the launch of the Lasonic 2000 and the Orelec PP-2000. The Italians and Spanish could play the Ping-O-Tronic and TeleTenis Multi-Juegos respectively. Even on the other side of the world in Australia there was the Playtech Telesport to add the growing list of Pong clones.

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“UK company Videomaster produced over 15 different system in the 70’s”

In the years between the release of the original Pong system in 1976 and the end of the decade nearly 500 different consoles where produced with a large proportion of them being clones of Atari’s console. In a similar five year period from the release of the Xbox360 which is seen as the start of the 7th generation of consoles no more than 20 different systems were released including handheld devices. With so many systems for sale around the world many major manufacturers couldn’t get a share of the market in countries where Pong clones where being produced at an unsustainable rate. It is easy to see why the market for video games couldn’t sustain such large number of consoles, which forced many manufactures to sell their systems at a loss just too clear stock. Both Fairchild and RCA abandoned their own plans for future video game consoles, with Fairchild moving towards the production of electronics for the military and RCA eventually become defunct a decade later. Atari where able suffer the financial loses and survive the crash with the release of their 2600 console which was met with great success. In no small part due the release of the game Space Invaders that helped the console to record sales. It was the game created by Japanese’s company Taito that heralded in a renaissance for the video game industry, with many major franchises being released over the coming years until the market would run into an even bigger financial trouble in the mid-80’s.

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