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In 1982, the North American video game market was very developed, with sales revenue of $3.2 billion, far exceeding the personal computer software industry. However, within 12 months, the market collapsed and nothing left. why?

Editor’s note: This article is from WeChat public account “ Internet and entertainment monster group ” (ID: TMTphantom), of PEI Pei.

“After a while, many video games made me like it, like Pac-Man. Now these games are really boring. They all look exactly the same. In the game, you only want to kill the alien invasion. Then, it’s over. It’s boring!”

——Chris Foudy, a 12-year-old boy from New Jersey, USA; cited in the New York Times report on October 17, 1983

In the 1970s, video games from casinos to thousands of households

In 1962, a group of students at the Massachusetts Institute of Technology completed the first recorded video game in human history on the DEC minicomputer in the lab: Spacewar; the game allowed two players to manipulate the spacecraft to shoot each other. At the time, the use of computers was limited to academic and complex commercial uses, and it was first discovered that it was still available for entertainment. Soon, Spacewar became very popular in the American academic circle, and some even developed external devices such as handles.

The problem is that computers in the 1960s and 1970s were still very expensive, and the “home computer” market was not yet born. Is there a way to allow consumers to play video games? Some clever developers think that if you can customize a “dedicated game console” and charge a fee, you can create a sustainable business model.. In 1971, the first batch of “arcade” was born in the United States: they run a similar Spacewar game play for 2-4 people, usually placed in bars, shopping centers and other large entertainment venues. The arcade has attracted some sales and attention, but is far from popular.

• In 1972, the newly established Atari company developed a game that simulates table tennis: Pong. From the current point of view, The game is rudimentary: the light spot on the screen represents table tennis, and the line represents the racket. What the player has to do is to manipulate the racket to hit the table tennis ball to the opponent. However, for the consumers at the time, this was almost a spectacle – within a year of launch, Pong’s arcade sold 2,500 units, swept through the entertainment venues of major American cities, and sold overseas. Since then, the arcade industry has begun to grow at a high speed, and video games have entered the mainstream of consumers.

• Almost at the same time as the arcade industry was launched, the first home game console in human history was born: September 1972, US electronics manufacturing Magnavox released the Odyssey game console. Magnavox Odyssey consists of integrated circuits, with a simple controller and video signals output to the TV, which is theoretically suitable for any home user with a TV. Since the concept of “video games” has not yet been born, the long and funny concept of “closed circuit television electronic casino” is used in advertising. The games on this console include table tennis, skiing, tennis, cat and mouse… Most of the gameplay is very similar to Pong.

• Although Magnavox Odyssey has a very imperfect feature and a single game, it has achieved commercial success – in 1972, at the beginning of the release, sales were It broke through 100,000 units; by 1974, the total sales volume was close to 300,000 units. Considering the price of $99.99, this means about $30 million in sales! In 1974, Magnavox was acquired by Dutch home appliance giant Philips. Since then, with the support of Philips, a series of derivative and improved game consoles have been built and promoted to many countries around the world; the total sales of Odyssey series mainframes exceeded 1 million units. Undoubtedly, it was one of the most successful home electronics products of the 1970s.

Seeing the huge potential of the home game console market, the arcade overlord Atari is certainly not far behind, and together with the retail giant Sears launched the Home Pong in 1975, which is the home version of Pong; this host is not successful. It makes Atari accumulated valuable experience in the home market. Since then, toy giant Coleco has also entered the market and launched the Telstar home console. In this period, most of the game consoles are “bound”: software and hardware are not divided, each host will embed several games, players can only play these games. Given that most games are simple and similar in their gameplay, players don’t need to buy any additional games. The “game software market” has not yet been born.

When the US game console market is in full swing, in Japan, across the ocean, a large number of manufacturers from the electronics, toy, and entertainment equipment industries are closely following this emerging industry. Among them, Sega, Nanmeng Palace, Nintendo and other companies all entered the arcade market in the mid-1970s and achieved some success. Nintendo released the Color TV-Game series in Japan in 1977, with a total sales volume of 3 million – this is the highest-selling game console in the 1970s! However, at this time, the focus of the video game industry is in the United States, and what happened in Japan has not caused much concern.

In the late 1970s, video games were widely accepted as a form of mass entertainment, and they have become emerging industries in the United States, Europe, and Japan. In the future, the famous game giants such as Atari, Nintendo and Sega have joined the battle. However, in the eyes of mainstream consumers, the difference between “video games” and “toys” is not particularly obvious. Many home game consoles are even sold with toys. In the era of rapid advances in computer technology, the game industry needs to advance by leaps and bounds.

Between 1968 and 1976, it was called the “first generation” of the video game industry. During this period, video games went from scratch, from the laboratory to entertainment venues, and went to the living room of thousands of families. However, due to technical limitations, video games have not yet been separated from toys, and the market size is still small. Soon, Atari will solve the above problems with the “second generation” and achieve great success, and then bring huge disasters.

From “flame cooking, flowers and flowers” to “white earth is really clean”

In November 1976, Fairchild Semiconductor released an epoch-making game console, Channel F. This host is equipped with a separate CPU, and its computing power is far stronger than all previous competing products; using a removable cassette Memory, you can change the game software at any time. These epoch-making changes mean that the game console is completely out of the way.The category of toys is closer to computers. At this point, the global video game industry has entered the “second generation.”

Fairchild Channel F has not achieved commercial success, but it inspired arcade giant Atari, who launched the famous Atari 2600 console in September 1977. The mainframe’s infrastructure is similar to that of a home computer at the time, with separate CPU and cassette storage, as well as a standardized joystick controller. Supported by powerful computing power, the Atari 2600 can run color games and graphics performance is greatly enhanced, opening the door to more complex gameplay.

• Although there has been a huge breakthrough in technology, the sales of Atari 2600 can only be considered tepid: only 10,000 sold in 1977-78 unit. After all, the entire home gaming console market is so large that it lacks “killer content.” At the same time, the arcade market is in a “golden age”, and there are endless achievements; the personal computer market is also emerging, and the Apple II computer has just been released, attracting many home users. Fortunately, Warner Communications (now Warner Entertainment) acquired Atari in 1976 and provided huge financial support, otherwise the company may not be able to survive.

• In January 1980, the turning point of fate came: the Japanese arcade game Space Invader was ported to the Atari 2600, which is the long-awaited home console industry. Killer content!” Previously, the Space Invader arcade sold more than 300,000 units worldwide; now, as long as you buy the Atari console, you can take home the arcade games that are popular all over the world. This temptation is really big! In 1980, the Atari 2600 sold 7 million units and the Space Invador cassette sold more than 2 million units. Space Invador became the first home game with $100 million in sales.

• From this point on, Atari became unstoppable. It continues to port excellent arcade games to its own consoles and introduces new Atari 2700, 5200 and more.No., technical parameters continue to improve. On the Christmas of 1980, children throughout the United States were clamoring for a gift from the Atari game console. In 1981, Atari became an “unstoppable monster”: the annual sales revenue reached 1.1 billion US dollars, becoming the largest subsidiary of Warner Communications, accounting for 75% of the global video game market (it is in the arcade The market is also very strong) with 10,000 employees.

• As of the end of 1982, the Atari series of consoles had sold about 30 million units, half of which came from the United States. Home appliance giants Philips, toy giants Coleco and Mattel also launched their second generation home console. In 1982, sales of video game cartridges in the United States were $3.2 billion, exceeding the sales of personal computer software. No one would have thought that in just 12 months, the booming American video game industry would be on the verge of extinction – this is the notorious “Atari collapse”.

In 1982, the problem was on the content side. A large number of developers have entered the video game industry. They believe that the market is big enough and the users are stupid enough. Even if the products developed are rubbish, users will buy them! At that time, the home game software market was in a disorderly state, and anyone could develop software, and anyone could distribute the goods in the channel. At that time, the media was still underdeveloped, and it was difficult for users to select products based on word of mouth; game development techniques and ideas were also immature, and the products were homogenized. In June 1982, the Atari host platform had a total of 100 games; in December of that year, the number soared to 400.

Atari has no control over the game release and is not interested in controlling it. At the beginning of 1983, there were at least 100 console game developers in the United States, and even a competitor’s product could be listed for money. This situation is certainly not normal, but everyone thinks that it is still far from the day of shuffling. In 1982, the CEO of Atari said: One day, half of the American families will have a game console, and the bubble in the game industry will burst. Until today, this goal has not been reached!

The final cause of the market crash was the “E.T.” released in December 1982. This is an adventure game developed by Atari and adapted from the movie of the same name. The New York Times predicts that since the film is very successful, the game will certainly succeed – this is probably the earliest “moving and moving linkage.” E.TThe game was the most anticipated Christmas gift for American teenagers, and sold 1.5 million copies. However, when the user actually played the game, it was stunned by its rudeness. The media comments at the time included: “boring and boring”; “image quality is poor”; “no one can play customs clearance”; “should apply for a refund”…

The game makers always underestimate the user’s IQ, thinking they can accept any inferiority. However, the patience of the user has a tipping point. Once the bottom line is broken, they will ruthlessly withdraw all support. At the beginning of 1983, the US retail channel found that the original game shelves were completely unattended! As the chief culprit of “E.T.”, about 3 million cassettes were returned by the channel. The original $35 game cassette is now being discounted to $5. In all fairness, this is not only the fault of E.T., but also the Pac-Man who was listed in the same period (note: not the game of the same name on the red and white machine) was rated as “the worst game in history” by many media. Nowadays, video games have become synonymous with “high quality and high price”, and playing games is simply impossible!

In 1985, the US console game industry actually died out. The game software market was only $100 million, and dozens of game developers collapsed. Most retail channels decided to permanently revoke the video game counter. Even arcade games have been affected – 15% of the arcades in the US have closed, and the average revenue of the surviving arcades has fallen by 40%. As a culprit, Atari, which was sold by the parent company Warner Communications, is no longer an important game company.

When the US game industry was shocked by the collapse of Atari, in Japan on the other side of the ocean, Nintendo was enjoying the spring breeze. In 1980, Nintendo released Game & Watch, one of the world’s first portable game consoles. Although the computing power is weak and can only display a small black and white picture, with the support of excellent industrial design and high-quality game content, this product has achieved a total sales volume of 43.4 million in a long life cycle, becoming the first in Nintendo. Successful game hardware products. No one expected that Nintendo will begin to rule the global game industry for more than a decade, and no one can replicate this rule anymore.

The second generation of the video game industry ended at the time of “Atari’s collapse.” The winner of this generation is Atari, whose Atari 2600/5200 series mainframe sold more than 30 million units; but it quickly fell to the altar and was gone. Magnavox (Philips), Mattel, and Coleco divided up the rest of the cake, but it was also badly hurt in the “Atari collapse.” At the same time, Nintendo has established an unshakable advantage in the field of handhelds; Sega is waiting for opportunities in the arcade industry while making money. The next generation is destined to belong to these Japanese companies.

History lesson of “Atari’s collapse”: Will it happen again?

The biggest historical lesson left by the Atari collapse is that content, content only, is what consumers ultimately care about. Without high-quality content, the development of the game market has become a passive water, no roots. Atari’s domination of the game industry began with “killer content” such as Space Invader and ended with “tragic content” such as E.T. Since then, a high-quality content ecosystem has become the key to the success of any gaming console platform.

Why did Atari lose control of the content? The first is that it lacks influence on third-party content; in other words, it does not control the distribution process, resulting in a large amount of “spam” flooding into the market and exhausting the patience of consumers. Secondly, it has relaxed its independent research and development capabilities, so it does not have enough first-party content. In 1981, 75% of the game software sales on the Atari platform came from Atari’s first-party game; in 1982, the percentage dropped to 40%. When competitors madly rid the Atari developer, it did not respond in time.

From the listing of Pong in 1972 to the collapse of Atari in 1982, the video game industry has only gone through a decade of development. This young industry has not enough experience to face it.For the intricate consumer needs. At the same time, the PC market is on the rise – on the Apple II computer in 1977, the IBM PC was launched in 1982, and they all have certain gaming features. After the collapse of the console game market, a large number of talents and capitals flocked to the computer software industry. However, due to the high price of personal computers, they are destined to completely fill the blank space left by the game console.

In 1982, the eve of the “Atari collapse”, the global video game market (including software and professional hardware) once reached $42 billion. By 1985, the number had fallen to $14 billion, and most of it came from the arcade market. If it is not for Nintendo and Sega to take a different path from Japan, the game industry may fall into the sinking for many years. “Atari collapse” has shifted the development center of the video game industry from the United States to Japan, which has absolute advantages in hardware development, content development and marketing. The United States once again regained its position as the center of the global game industry. After Microsoft joined the war in the early 21st century, the United States had already taken the lead in information technology. However, the “one big” pattern in the US game market has never reappeared.

So, how do Japanese manufacturers such as Nintendo and Sega solve the problem that caused Atada’s collapse? Here, let us quote the original words of the management of the two manufacturers.

“Atari collapsed because they gave too much freedom to third-party developers, causing the market to be filled with spam!”

——Mt. Yamauchi, President of Nintendo, 1986

“We will attract the interest of many 19-27 year old players who used to be fans of Atari games, but later tired of the whole system.”

——Bruce Lowry, President, Sega USA, 1986

As for how they implemented the above strategy, that is another story.