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Video game crash of 1983

video game crash

In 2021 revenues from the industry were huge. Income from the mobile segment is 93.2 billion. Console segment had an income of 50.3 billion. The PC segment had a revenue of 36.7 billion. Making it a total of whooping 180.3$ billion. Just a fun fact, cinematography had a income of 21.3$ billion. It is one of the biggest and most expensive industries in the modern world, but this wasn’t always the case. It faced huge losses during the 1983-1985 era. And we are gonna discuss this period which is now called Video Game Crash of 1983.

Reasons, level and results of the video game crash

Firstly I have to point out that great revenue of 180.3 billion dollars in 2021 wouldn’t be possible if businessmen didn’t learn from the mistakes made by people during the video game crash of 1983.

Level of the Crash

Today there are 3 main players. Only two of them are competing with each other, Microsoft and Sony. But in 1983 it was much more flooded and complex. In 1983 it reached the all time revenue record of 3.2$ billion . Of course, we cannot even compare these numbers to modern 180.3$ billion, but these were still great numbers. But it took just 2 years for revenues to drop to 100 million. In just 2 years revenues dropped by 96%.


Video game crash had many reasons. But if we are going to discuss the main ones. They are: Flooded market of expensive but low quality products, upcoming rivalry from pc games, and loss of customers’ trust.

Flooded market

Until the NES by Nintendo came along, there were 10-15 consoles in the market. There were a lot of companies: Atari, Magnavox, Vectrex, Epoch, etc. It is common for the industry to get bigger and better because of the rivalry. But this wasn’t the case. These companies were just stealing ideas from each other, and just tried to take a small bite from business, but not develop it. There was no originality, all games and all consoles were clones of each other. And they were pretty expensive for their times.

Upcoming competition from PC

The new PCs were cheap and started gathering popularity among people. The PC industry was very young but still it was a potentially great rival. But, none of the Home Console companies reacted to this new player.

Loss of customers’ trust

Because of such problems, customers started losing their interest in business. Whatever games they bought, they couldn’t get satisfaction. They were not getting more interesting after each year, they were getting more and more boring. Thus, they started changing media, but companies didn’t care that much, they were thinking inside of frames.

Industry could collapse. But fortunately, it was averted. Savior of which is still in the market and still going strong for the last 40 years. Savior was of course Nintendo. Nintendo has released Famicom in Japan. Same console is known as NES in most of the countries, Hyundai Comboy in Korea, and Samurai in India, and of course as Dendy in Post Soviet Union countries.

The NES console was much better and technically powerful than everything that came before it. And the games were original and very interesting, especially if we compare them to the ones that came before it. NES is the main reason why this business can get revenue of 180.3$ billion.

For business to get bigger it must innovate, not stagnate. If you wish to read about SEGA’s aggressive marketing, click here.

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