The Crisis of the PC Game Industry 1983

The 1983 crisis was triggered by a number of circumstances, but, regardless of their weight, together they led to a glut of the market and the subsequent collapse of the computer game industry.

Gaming consoles in the market

Atari 2600, the most popular game console before the crisis.

By the time the crash began, a number of gaming systems were introduced in the US market: Atari 2600 , Atari 5200 , Bally Astrocade , ColecoVision , Coleco Gemini (analogue of Atari 2600), Arcadia 2001 , Fairchild Channel F , Magnavox Odyssey² , Intellivision (together with peripheral redesign - Intellivision II), Sears Tele-Games consoles (among them were the Atari 2600 and Intellivision analogues), Tandyvision (the Intellivision analogue for RadioShack) and Vectrex . In the future, the number of consoles remained significant, but game sales were slower, causing less frustration among consumers. As, for example, in the case of the prefix Action Max.

Each console had its own game library, as well as an extensive offer from third-party companies. Also, many of the companies mentioned announced their intention to introduce in 1984 a new generation of game consoles, for example, Magnavox Odyssey 3 or Atari 7800 . ^[five]

In addition to all the troubles of the industry, a huge number of mediocre games from hastily funded new companies hit the market during the same period. Such games, complementing the very weak Atari 2600 bestsellers, such as the game adaptation of the popular movie “ Alien ” or the port of the game Pac-Man from slot machines, have significantly damaged the industry’s reputation. ^{[6] [7] [8]} And finally, the main product of Atari - the 2600 prefix, released for the sixth year, began to reach saturation of its market, which was overcome only in 1985, as noted above.

Home Computer Competition

The first microcomputers, such as the Altair 8800 and Apple I , were more like toys for electronics and radio enthusiasts, and were often sold as self-assembly kits. However, since 1977, fully assembled machines have appeared on the market, equipped with the BASIC programming language written in the ROM , the most famous of which are Apple II , Commodore PET and TRS-80 . The last two were sold for less than $ 1,000, with the TRS-80 having support from the RadioShack chain of electronics stores and in front of buyers, while at that time many computers were distributed only by mail upon reservation. In 1979, Atari introduced its Atari 400 and 800 computers, assembled on the basis of a chipset intended for a game console with a price corresponding to the model number. In 1982, the home computer market was growing rapidly, with the price of TI-99 / 4A and Atari 400 computers dropping to $ 349, TRS-80 Color Computer to $ 379, and Commodore dropping the price of its VIC-20 models to $ 199 and Commodore 64 - up to $ 499. ^{[9] [10]}

Since these and other home computers of that time had more memory, had more graphic and sound capabilities, they were acquired by more sophisticated players, and in addition to games, they could be used for editing texts or home accounting . The possibility of easy copying was also important, because the games for them were sold on floppy disks or magnetic tapes , and not on cartridges with ROM (although for the same reason, widespread circulation of cartridges with ROM continued). Also, the use of magnetic media allowed the introduction of saving in games, which was required due to the increased complexity of computer games in general, and was not available on consoles of that time.

For example, the strategy of Commodore , the main competitor of Atari, involved attracting players not only with discounts if they exchanged their old system for the new Commodore, but also with a wide advertising campaign that explained that it was much more beneficial for a child who entered college to have a computer than a game console.

Another key advantage of Commodore was the ownership of the chip manufacturer MOS Technology . Due to the possibility of manufacturing LSIs within the company, VIC-20 and C64 computers could be sold at much lower prices than competitor computers. This led to price wars that ravaged Atari and Texas Instruments (RadioShack barely affected it due to its own sales network and switching to the IBM PC standard with Tandy 1000 and 3000 computers). In addition, European and Japanese manufacturers did not want to enter the market with unfavorable conditions created by Commodore, so computers like the MSX and Amstrad CPC were never widely represented in the US market.

Despite the abundance of advertising praising the advantages of computers over game consoles, the computer market could not avoid a fall due to the collapse of the gaming industry. Games have always been a major driver of computer hardware sales, but after the crash, computer games were seen as an obsolete phenomenon. Like the market for game consoles, the computer market suffered from a glut and an abundance of competing platforms. The home computer market experienced steady growth throughout the first half of the 1980s, setting another record in 1984, gradually saturating the market until new technologies emerged that necessitated a technology upgrade.

But the home computer industry wasn’t the only one affected by the collapse. The rapid growth of IBM PC computers (fueled by the exclusive Lotus 1-2-3 spreadsheet editor for the IBM platform) predetermined the exit from the business of Kaypro, Morrow and other computer manufacturers targeting the corporate market. IBM's monopoly in this market ended when Compaq created an analogue of the BIOS using reverse engineering and clean room techniques. By 1987, inexpensive Taiwanese IBM PC-compatible computers from companies such as Acer and Leading Edge became widely available, which finally secured the victory of the IBM architecture.

Inflation

The US gaming industry has actively lobbied in Washington to reduce the size of a 1 dollar coin to about the size of a coin of 25 cents, indicating inflation (in the early 1980s, the purchasing power of a coin of 25 cents fell by about a third), which significantly reduced their profitability. ^[11] Arcade machines, which were in circulation at that time in Japan, accepted a 100 yen coin , which corresponded to $ 1. This factor, industry veteran Mark Cerney called one of those who supported the stability of the Japanese gaming industry at that time. ^[eleven]

Losing Game Control

Activision was founded in 1979 by programmers who quit Atari due to the fact that the latter refused to mention their names in games and refused to pay royalties to developers in proportion to sales. Atari was a subsidiary of Warner Communications in those days, and the developers wanted the same recognition as musicians, actors and directors from other Warner divisions. Immediately after the formation of Activision, a lawsuit was filed by Atari, but she still failed to obtain an injunction until the closure of the case in 1982. ^[12] The court made a decision allowing third-party companies to develop games without the consent of the platform owner, so companies like Quaker Oats (represented by the US Games division) quickly opened computer game divisions, hoping to impress both shareholders and users. These companies lured engineers from each other or resorted to reverse engineering to understand how games should be programmed for proprietary systems. Even Atari lured several engineers from Mattel 's Intellivision division, for which it was sued for industrial espionage .

Despite the situation around Atari leading to the transition of programmers to Activision , Mattel continued the "old" policy and avoided including the names of developers in their games. Moreover, instead of publishing the names of its developers, Mattel in 1981 in an interview with TV Guide specifically changed their names, explaining this by protecting the right to privacy. At Coleco, the developers were in the same “unknown” position, periodically moving to new companies.

Unlike Sega , Sony , Microsoft , Nintendo and other manufacturers in the following years, second-generation console manufacturers have completely lost control over the offer of games for their systems. Without control, they could not affect the fact that retail stores were full of games. Both Activision, Atari, and Mattel had highly qualified professionals, but many young companies that rushed to the market had neither the necessary experience nor the talent to create games. Games such as Chase the Chuck Wagon (about food-consuming dogs commissioned by Purina, a pet food producer), Skeet Shoot, and Lost Luggage were examples of games released in the hope of making a boom around games. Supported by extensive advertising campaigns and aggressive marketing, these games were of mediocre quality and did not live up to expectations, inflicting more damage on the industry.

Byte magazine stated in December 1982: “In 1982, only a few games opened up new horizons ... If the public really likes an idea, they try to squeeze everything out of it, and numerous clones painted in different colors appear on the shelves. This continues until the public loses interest, or something more appealing comes out. The only thing that companies want that believe that microcomputer games is the hula-hoop of the 1980s is just quick money. ” ^[13]

Failure of Expected Best Sellers

The main reason for the crash is the commercial failure of two games for the Atari 2600 . In 1982, Atari, rushing for the hype around the arcade game Pac-Man , released a version for its 2600 system. Unfortunately, the development was too fast, as the company wanted to have time to release the game by the beginning of the 1982 Christmas season. Although sales of the game were quite successful in absolute terms, the company greatly overestimated the capabilities of the market. The game was destroyed by the press and the players criticized for the lack of any advantages, especially comparing it with a bright, colorful original. As a result, Atari sold only slightly more than half the number of cartridges ordered. Costs of production and a wide advertising campaign exceeded revenues, which was Atari's biggest financial loss. In the second half of 1983, when Atari was in extreme distress, its CEO Ray Kassar was fired, and his actions were subsequently classified by the US Securities and Exchange Commission as embezzlement and became the subject of investigation. ^[14]

Atari also released the widely-advertised ET game based on the movie Alien . Again a huge number of cartridges were produced due to the expected demand due to the high popularity of the film. Striving to catch the Christmas sales season, Atari took just six weeks to develop the game. As a result, the game is often referred to as one of the worst games in history. ^{[15] [16]} Many sources indicate that Atari resorted to burying unclaimed copies in the Alamogordo area to empty warehouses. Given the high cost of a license to release a movie game, ET was Atari's next major financial loss. Ultimately, Atari was split into two companies according to the lines of business: the manufacturer of arcade products and the manufacturer of home products. Ironically, the last was bought by Jack Tramiel and his sons, who were fired from her at one time.

Immediate effect

The release of a large number of games in 1982 overwhelmed the market. Most stores did not have a place to store all new games and consoles. As the stores began to return surplus games to their publishers, the latter did not have any new products or money due to the payment of refunds to the stores. Many publishers, such as Games by Apollo and US Games, quickly ceased to exist. Unable to return the games to non-existent publishers, the stores had no choice but to, by lowering the price, declare promotions or sales. New games, recently priced at $ 35, now cost $ 5. ^[17] By June 1983, the market for more expensive games was rapidly declining, being replaced by the market for hasty low-budget games.

This has led to major shifts in the industry. Magnavox and Coleco have closed all their gaming divisions. Imagic canceled its IPO the day before the public circulation of shares and soon ceased to exist. Another company, Activision , managed to survive only due to the fact that the profit of its home computer divisions could compensate for some of the losses from the collapse of the console game industry. Subsequently, patent litigation in the early 1990s weakened the company, and it was bought by an investment group led by Robert Kotik . The company still exists, despite the merger with Vivendi Games in 2007 , and is one of the largest game publishers in the market for various personal computers, while most of the publishers who supported the Atari 2600 then closed. In 2013, Activision bought itself from Vivendi , again becoming an independent company.

Also, toy distributors, who controlled the distribution of computer games by shopping, came to the conclusion that the passion for games was fleeting. Since the hobby passed, it was decided to fill the store shelves with other products, so for several years many stores did not sell computer games at all. This was the most significant barrier Nintendo had to overcome before launching its Famicom system in the United States. It was the seller’s resistance that caused Nintendo to use the notion of “entertainment system” instead of the word “set-top box”, the terms “control panel” and “game package”, as well as supply a robot toy called ROB to convince sellers to allow their product to shelves. ^{[18] [19]}

The market for computer games fell from $ 3 billion in 1983 to $ 100 million in 1985, which caused the bankruptcy of many companies in the market. After the Atari 7800 and NES entered the market, in 1986 the industry began to recover, and in 1985 about 1 million Atari 2600 consoles were sold. Market size in 1988 is estimated at $ 2.3 billion, 70% of which was the share of one Nintendo. ^[20] In 1986, Nintendo President Hiroshi Yamauchi noted: “The fall of Atari was due to the fact that they gave too much freedom to third-party developers who swamped the market with garbage games.” To prevent this, Nintendo introduced restrictions for third-party companies on the number of games annually released on their system, and also introduced the so-called. The “Quality Seal”, which was allowed to be applied only to equipment and games that met Nintendo’s quality standards. ^[21]

Long-Term Effect

The collapse of the gaming industry has had long-term consequences.

The first of these was the transition of leadership in the market of game consoles from US companies to Japanese manufacturers, primarily Nintendo and its Nintendo Entertainment System game console. By the end of the 1980s, when the North American home console market recovered from collapse, Nintendo controlled most of it - over 35 million Nintendo Entertainment System were sold in the USA alone, which far exceeded the sales of other consoles and computers ^[22] . Later, other Japanese manufacturers appeared on the North American market: in 1989, Sega's Mega Drive and NEC's PC Engine / TurboGrafx 16 were launched. After the Atari 7800 , released in 1986 and losing the competition to the Nintendo Entertainment System , and before the release of 3DO in 1993, not a single game console released by American companies could even reach the bar of 1 million devices sold, and not a single company producing game consoles , could not become one of the leading players in the market before Microsoft with its Xbox in 2001 .

The second visible consequence was measures taken to control third-party software development. Secrecy did not protect leaders from industrial espionage . The competing companies have used reverse development of Atari and Mattel products, as well as hired their former qualified game designers . Если Mattel и Coleco использовали в своих системах средства проверки подлинности для контроля над сторонними разработчиками (BIOS приставки Colecovision проверял переменные с данными об авторских правах при включении), то Atari 2600 не была никак не защищена, поэтому как только информация об аппаратном обеспечении стала доступной, ничто не могло остановить сторонние компании от эксплуатации этой платформы. При создании NES Nintendo учла этот опыт, установив жёсткие правила лицензирования, по которым каждый экземпляр игры и приставки снабжался специальными чипами блокировки, отличающиеся в разных регионах. Данные чипы должны совпадать, чтобы игра могла запуститься. В дополнение к этому применялась политика борьбы с пиратством, которое не было заметной проблемой в США или Европе , но процветало в Восточной Азии . У Atari также была разработана аналогичная технология, реализованная программным способом.

Несколько позже Accolade одержала техническую победу в суде над Sega в деле, оспаривающем подобную политику, несмотря на то, что в конечном итоге согласилась с требованиями Sega и заключила лицензионное соглашение. Некоторые издатели, из самых заметных Tengen , Color Dreams и Camerica, наносили ущерб системе контроля Nintendo во времена 8-битной эры, выпуская нелицензированные игры для NES. Общие идеи подобных систем контроля не изменились и на современных основных консольных продуктах, несмотря на значительно меньшее число систем, основанных на картриджах , нежели в 8-битную или 16-битную эпохи. Заменой специальных чипов в современных консолях стали особым образом закодированные оптические диски , которые в нормальных условиях не могут быть скопированы обычными пользователями, и читаются только на оригинальном оборудовании.

Nintendo оставляла себе основную часть прибыли с игр для NES, ограничивая большинство сторонних издателей выпуском пяти игр в год (впрочем, некоторые компании успешно обходили это ограничение, создавая дополнительные издательские подразделения, такие как Ultra Games у Konami или LJN у Acclaim ). Также все картриджи должны были производиться силами самой Nintendo, причем с полной предоплатой всего выпускаемого тиража. Произведенные картриджи не принимались назад, поэтому издатели должны были действовать на свой страх и риск. В результате некоторые издатели в конце эпохи NES потеряли больше денег на болезненных продажах игр для уходящей с рынка платформы, нежели заработали. Это также существенно навредило Atari 7800 , которая после 1988 года лишилась поддержки.

Сама Nintendo пропагандировала эту систему как защиту общественности от плохих игр, и внедрила «золотой знак качества», который помещался на все лицензированные игры для их системы. Эти серьёзные ограничения привели к тому, что Nintendo стала ответчиком по делу о нарушении антитрестовского законодательства. ^[23] В перспективе, однако, многие издатели типа Electronic Arts начали активно поддерживать конкурирующие платформы, например, Sega Mega Drive . Многие из ограничений Nintendo впоследствии были заимствованы Sony , Sega , Microsoft , хоть и не в столь строгой форме. Несомненно, консоли конкурентов всегда пользовались широкой поддержкой сторонних издателей, тогда как Nintendo всегда делала ставку в основном на собственные игры.

На рынке компьютеров в США крах индустрии ознаменовал конец 8-битной эпохи и переход к 16-битным вычислениям, что хорошо видно по уходу с рынка всего разнообразия архитектур, за исключением IBM PC и продуктов Apple. Среди игровых жанров произошел отход от классических аркад в сторону ролевых , спортивных , стратегических и приключенческих игр.

Последствия кризиса вне США

В Европе ранние года домашней компьютерной техники (1981—1985) ознаменованы очень агрессивным маркетингом недорогих домашних компьютеров с общей темой «Зачем покупать ребёнку приставку и отрывать его от школы, когда можно купить домашний компьютер, который поможет ему подготовиться к поступлению в университет?». ^[24] Исследования как представителей индустрии консольных игр, так и индустрии домашних компьютеров отображали, что настроения миллионов покупателей изменились с игровых приставок в сторону недорогих домашних компьютеров начального уровня, продававшихся по сопоставимым ценам, но позволявших играть в сравнимые игры и обладавших возможностями работы с текстами, проведения вычислений и программирования. Это привело к тому, что к 1984 году консольные игры были обособлены в Европе, так что крах этой индустрии незначительно отразился на европейском рынке. Следует отметить, что в то время единственной игровой системой, занимавшей значительный процент рынка среди компьютеров, была Sega Master System .

Несмотря на то, что компьютерный рынок в Европе образовался несколько позже, чем в США, он очень быстро развивался. Commodore 64 стал продаваться в Европе в 1983 году, тогда же вышел на рынок Великобритании ZX Spectrum . Поскольку здесь гибкие диски были дорогой технологией, практически всё программное обеспечение распространялось на магнитных лентах. Однако, Германия и другие страны континентальной Европы довольно быстро перешли на использование дискет для домашних компьютеров.

Уничтожив рынок дешёвых компьютеров начального уровня в США, Commodore позиционировал свои C64 и Amiga как нишевый продукт для продвинутых игроков. Тем не менее, основные усилия компании теперь были направлены на Европу, где он стал лидирующим производителем, пока серия неудачных бизнес-решений не привела к банкротству в 1994 году.

Если в США 8-битные вычисления и технология хранения информации на магнитных лентах ушли в прошлое в середине 1980-х годов, то в Европе развитие технологий происходило медленнее, и IBM PC-совместимые компьютеры ещё не могли нащупать твёрдую почву. Консольные игры были на периферии европейского рынка, так что в Европе установилась традиция компьютерных игр, поэтому Nintendo со своей NES не смогла оказать на этот рынок существенного влияния, хотя Sega смогла достичь некоторого успеха со своими Master System и Mega Drive . В целом, консольные игры так и не смогли стать в Европе таким же популярным явлением как и компьютерные игры, а PC-совместимые системы не могли вытеснить вплоть до банкротства Commodore в середине 1990-х годов, на что также оказало влияние наличие большого количества программного обеспечения, выпущенного не на английском языке.

Японский рынок в то время был хорошо защищён от остального мира, но крах индустрии компьютерных игр оказал на местный рынок немного большее влияние, чем в Европе. Высокие цены на недвижимость и небольшие её размеры предопределили ограниченное распространение персональных компьютеров, поэтому консольные игры стали основной формой компьютерных игр. Вместе с тем многие японские машины достигли заметного успеха как, например, компьютеры NEC, Sharp X68000 и Fujitsu FM-Towns, однако большинство выходящих здесь игр были ориентированы на взрослую аудиторию, которые бы не прошли цензуру Nintendo или других производителей. Хоть японские производители не стремились выйти на рынок США, некоторые из них вышли на европейский рынок с разной степенью успеха.

В конце кризиса индустрии компьютерных игр 1983 года были предприняты некоторые шаги, чтобы не допустить подобные события впредь. Например, Nintendo разработало политику для разработчиков игр. Был установлен годовой лимит в пять выпущенных на NES игр. Данное правило предназначалось для борьбы с переполнением рынка играми. Это правило обходилось по-разному, например, Konami , стремясь выпускать больше игр, создала Ultra Games , а позднее — Palcom, выпуская игры технически от лица другой компании. Это наносило ущерб Sega и Atari 7800 , так как они теряли поддержку по мере восстановления индустрии вместе с Nintendo в 1986 году. Через несколько лет подобные правила были признаны незаконными. Эти правила также снижали конкурентоспособность небольших издателей, которые не могли себе позволить открыть дополнительное юридическое лицо. С другой стороны для компании Square (ныне Square Enix ) стоимость производства игр для Nintendo 64 , ограничения и цензорская политика Nintendo стали одними из причин переноса своих эксклюзивных для каждой платформы игр на приставки PlayStation от Sony.

• Alexey Arkanov. The death of the gaming industry. A story that teaches nothing to anyone (neopr.) . Gambling (magazine) (July 4, 2006). Date of treatment August 29, 2011.
• Article at The Dot Eaters
• The Golden Age of Video Game Arcades
• Classic Gaming Expo site
• Official IntelliVision History Site
• The History of Computer Games: The Atari Years
• Detailed C64 Chronology