Making Pac-Man eat dots, rescuing the princess with Mario and Luigi, or eliminating enemies in Fortnite… video games have marked the childhood of millions of people for nearly three generations and have become one of the world’s leading entertainment industries.
Many of the classic video games that still exist today were born in the 1980s: Pac-Man (1980), Ultima (1980), Mario Bros (1983), Tetris (1984), or SimCity (1989). At the beginning of this decade, the market was flooded with countless new consoles, and a major crisis would shake the sector before Japanese companies came to revitalize it. P.S. Our MariaLand project is inspired by this era!
Video games and the reign of Atari
The success was global and allowed Atari to dominate the consumer console sector with 80% market share. In 1982, Atari’s revenue amounted to 2 billion dollars, half of Warner’s total revenue, with profits of 323 million dollars.
A third Japanese company, then specialized in playing cards but already present in the LCD electronic games sector, would take its first steps in arcade game publishing in the United States: Nintendo. Hiroshi Yamauchi, president of the Japanese firm, seeing the success of arcades, entrusted Shigeru Miyamoto with creating a game. This would be Donkey Kong (1981), introducing a character who would become legendary: Mario.
In 1982, the video game market represented 3 billion dollars and arcade games about 7 billion dollars. But competition in the console market had increased with the entry of third-generation machines. The ColecoVision propelled Coleco to the top of the American market thanks to a superior version of Donkey Kong.
Milton Bradley (MB) launched the Vectrex, a new kind of console since it integrated a built-in screen. This machine, despite its originality, would not survive the coming crisis.
The video game market was becoming saturated. Too many consoles, too many mediocre games. The quality of titles dropped drastically as publishers rushed to capitalize on the craze.
The symbol of this decline: E.T. the Extra-Terrestrial, developed in just five weeks for Atari 2600. The game was a commercial disaster and millions of unsold cartridges were buried in a New Mexico landfill.
In 1983, the American video game market collapsed. Revenue dropped from 3 billion to 100 million dollars. This crisis, known as the “video game crash of 1983,” seemed to signal the end of the industry.
The video game crash of 1983
The 1983 crash was caused by a combination of factors that created a perfect storm for the industry:
- Competition between the many manufacturers drove prices down, weakening financial returns. The industry was fragmented and no standard emerged.
- The structure of supply shattered. The success of Space Invaders and Pac-Man published by companies that did not supply consoles broke the hardware-software link that had sustained the market.
- The personal computer was becoming widespread and constituted a growing substitute market. It was dominated by the Apple IIc and the Commodore 64.
The crash devastated the American market but had less impact in Japan and Europe, where the market structure was different. This geographical difference would be decisive for the future of the industry.
1985: a new breath from Japan
While in the United States and Europe the disappearance of video games was predicted, in Japan Nintendo released in 1983 a console that would be owned by one in three Japanese households in the second half of the 1980s. In the first eighteen months, 2.1 million consoles were sold.
Nintendo’s objective was to sell the Famicom at an unbeatable price ($100) and make the project profitable through a rich game library ($50 per cartridge). This pricing strategy helped distinguish the console from the computer, which was 10 times more expensive.
In 1985, Nintendo launched an assault on the American market. The Kyoto-based company marketed the Famicom under the name NES (Nintendo Entertainment System). A $30 million campaign was organized despite a moribund market. But the product was popular and Nintendo, within a few years, revived the entire industry.
1988: Sega attacks the European market
Nintendo prioritized the American market, allowing another Japanese company to establish its products in Europe. Sega (Service Games), founded in 1964, was the result of a merger between two companies importing American arcade games to Japan.
Sega launched its first console, the SG-1000, during the video game crisis in the United States. In response to the NES launch, Sega released the Master System in 1986, which found success mainly in Europe and Brazil.
In 1988, Sega launched the Mega Drive (Genesis in North America), a 16-bit console that would directly compete with the Super Nintendo. The console war between Sega and Nintendo defined the late 1980s and early 1990s gaming landscape.
The Game Boy, released by Nintendo in 1989, revolutionized portable gaming. With Tetris as its flagship title, it became one of the best-selling consoles in history and proved that technical power was not everything—gameplay and accessibility mattered more.
The portable console revolution
The portable gaming market became a new battleground. Nintendo dominated with the Game Boy while competitors struggled to gain a foothold.
Several companies tried to compete with Nintendo. NEC and Atari offered their high-end consoles with color screens (GT Turbo and Lynx respectively). But their prices remained high and sales never reached those of the Game Boy.
1989: the PC enters households
Video games on personal computers would see the beginning of a prosperous period thanks to the numerous technological advances of the 1980s.
At the beginning of the decade, IBM entered the microcomputer market, the Commodore 64 was a success, the Amiga adventure began, Microsoft experienced rapid success with its operating system and software. The PC gradually became an essential gaming platform.
Given the growing power of machines, their graphical capabilities, and especially their level of penetration into households, game publishers made significant development efforts. Classic genres like adventure, strategy, and simulation found their definitive home on PC.
In 1993, Doom (ID Software) left its mark on the gaming world.
Inspired by Wolfenstein 3D, Doom was a shoot-them-up that renewed the genre with its immersive 3D graphics and innovative multiplayer mode. It became one of the most influential games of all time.
The 1980s were a decade of upheaval for the video game industry. From the heights of Atari’s dominance to the depths of the 1983 crash, and then the remarkable resurgence led by Japanese companies, this period shaped the foundations of modern gaming.
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