WhereIsAtlas · Video games

What Happened to Atari?

The company that invented the home video game boom - then helped trigger the 1983 crash that nearly killed the industry.

Atari invented the home video game market, then oversupplied it, helping cause the 1983 crash that nearly killed the industry it created - a cautionary tale in how a boom collapses under its own excess.

The company that started it all

Atari didn't just make early video games - it invented the industry. In 1972 it launched Pong and turned the arcade into a national obsession, then with the Atari 2600 in 1977 made video games a home activity for millions.

Within a decade it had gone from a few game cabinets to a sprawling, chaotic empire - and then the whole thing collapsed, taking the industry down with it.

Pong to the 2600

Nolan Bushnell founded Atari in 1972, and Pong became a phenomenon. More than a game, it was the proof that a machine could be a mass-market entertainment product. Atari kept pushing, and in 1977 the Atari 2600 brought cartridge-based gaming into the living room.

For a few years it was chaos in the best way - growth, innovation and the excitement of an industry inventing itself in real time.

Too many games, too little quality

Success invited a flood. By the early 1980s, third parties were shipping an avalanche of cartridges, many of them nearly unplayable, into a market that had over-expanded. The 1982 release of E.T. - rushed to hit a holiday deadline and widely panned - became the symbol of the glut.

Retail shelves were full of games nobody wanted, and the demand that had looked inexhaustible evaporated.

The 1983 crash

In 1983 the bottom fell out. The video game market cratered, hurting everyone. Atari's own collapse is legendary: it reportedly buried unsold E.T. and other cartridges in a New Mexico landfill rather than try to sell them - a story (later verified in part) that became the industry's defining image of failure.

The crash all but ended the first era of home consoles and nearly killed the industry before Nintendo's NES revived it a few years later.

Where is Atari now?

Atari itself was broken up and resold, passing through the hands of Jack Tramiel and others before becoming a shell that licenses its name for retro hardware and nostalgia products. The brand lives on, but the company that invented the video game console is effectively gone.

The lesson is one the industry learned the hard way: a hit product creates its own competition, and if you flood the market with junk, you'll crash it.

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