The year of 1982 was a dark period for the video game industry. Early in the year the port of the popular arcade game Pac-Man was released. Atari bet on the game selling well and thus produced 12 million cartridges, however in the end it only sold 7 million units. Atari were facing into a bleak financial period and would soon to be facing completion from within. In 1979 a group of prominent Atari video game developers left the company and formed Activision. The group had become disgruntled at the lack of credit and financial reward for the creators of Atari’s successful titles. Activision was one of the first third party developers making games for other manufactures consoles.
In 1982 they released Pitfall! on the Atari 2600, the game was a major success although Atari didn’t see any of the money that it generated. Atari had filled a lawsuit against Activision when the company was formed, arguing that the formation of Activision as a third party developer didn’t have a legal basis. In 1982 the court case went in favour of Activision and set a precedence for the establishment of third party developers. Following in the footsteps of Activision a host of new video game companies where established producing games for various consoles with the manufactures having no creative or financial control. Although Activision always produced high quality titles many others looked simple to cash in on the growing video game craze and some saw it as a cheap advertisement opportunity. Companies such as Quaker Oats who where a food manufacture hired developers to make games that often focused more on promoting the companies brand then actual gameplay. The most infamous in this wave of bad games was Chase Chucks Wagon which involved the player controlling a dog and eating dog food, the game was made by Purina a pet food company. At the time Atari had no licencing deals in place with these game developers and had no control on the creative process, any developer could make games for Atari console and not have to pay them any royalties.
“Chase Chucks Wagon started a long tradition of companies using poor and hastily produce video games to market their products”
Atari needed to combat this flood of poor titles with a best seller of their own. The Atari executives felt that a popular movie tie in would be able to recoup their companies loses. The film they looked to was Steven Spielberg’s E.T. The Extra-Terrestrial. The licence for the film was obtained in July of 1982 with Atari later reported to have paid nearly $25 million for the rights. The developer Howard Scott Warshaw was then only given 5 weeks to build the game in order to release in time for the Christmas season. The game is often cited has one of the worst in the industry with poor gameplay, limited graphics and a non-existent narrative leading to the games failure. In the same manner as they had anticipated great success for their Pac-Man port again with E.T. The Extra-Terrestrial they overestimated how well the game would sell. The game did sell at 1.5 million units which was seen initially as a success but with over 3 million unsold cartridges once again Atari had gambled and lost. The unsold units rumoured to have been buried in a New Mexico landfill. It was the beginning of the end for Atari with the company continuing to struggle in an industry that was evolving at an ever increasing pace. Although Atari had the most high profile failures other video game manufactures failed to cope with the changing dynamics of the industry. Magnavox and Coleco both pulled out of the video game industry and others like Imagic went bankrupt and collapsed. The period of the early 80’s saw the industry grow out of control with companies forming and collapsing all in the hope of cashing in on the video game craze.
“Spielberg had originally asked Atari to make a Pac-Man like game, instead the developer felt that such a game would be to derivative”
The crash if often referred to as the North American video game crash as the European and Asian markets felt little effect during this period. The European market was less interested in console gaming, with the personal computer being a much popular gaming device. Companies like Commodore and Sinclair having great success with their respective devices the Commodor64 and ZX Spectrum. In Japan a well establish toy manufacture was having great success with its new gaming console the Nintendo Famicom. The company would soon take advantage of the failing American console market and change how third party developers and console manufactures would work together. Nintendo would rebrand the Famicom console as the Nintendo Entertainment System and lead the way in the console market for the rest of the decade.