An excerpt of the cover of Atari's E.T. The Extra-Terrestrial

Excerpt of the cover of E.T. The Extra-Terrestrial, Atari 1982

The Great Video Game Crash - End Game

(Page 2 of 3)
Entire Industry, 1983-1984

Shovelling Dirt Into the Grave

Even though successful third-party game makers Activision and Imagic produce some of the better games for the 2600 in its later years, when these game-making upstarts first appeared on the scene Atari saw their grip sliding on the control of the software library for their system, and they start legal tussles with the two companies. Atari eventually loses its case in court, opening the floodgates for third-party manufacturers of games for their systems. Soon everybody and their dog has a game out, and while this does expand the machine’s library of cartridges, little concern is given to their quality. There are 50 companies publishing games for the 2600 in 1983, outfits such as 20th Century Fox, Avalon Hill, CommaVid, Froggo, Milton Bradley, Sega, Spectravision and Tigervision. To put some accomplices to the murder of the early 80’s video game industry up into a lineup for identification:

  • If you are an aficionado of B-grade schlock movies, you might recognize the name Charles Band. By 1983 he has an impressive resume built up as a film producer and director, including such classic fare as Laserblast, Tourist Trap and Parasite. It is with this pedigree that Band wades into the unsuspecting video game industry in 1983, founding Wizard Games. Game production is contracted out to a development studio started by former programmers at Games by Apollo, which had declared Chapter XI bankruptcy on Nov. 12, 1982. Wizard licenses two notorious horror movies for their first video game products for the 2600: Halloween and The Texas Chainsaw Massacre. It’s true that the violence contained within the resultant games is blockily abstract, but blocky abstract violence is all the public has at the time in video games, so after whole weeks of development time the games are released and the obligatory controversy generated. With most stores unwilling to stock the games, and those that do keeping them behind the counter on a request-only basis, sales figures are understandably low. Unfortunately, Wizard’s planned game based on soft-core porn movie Flesh Gordon never materializes.
Ad for Xonox, a home video game maker for the Atari 2600

Xonox ad, 1983


  • Game maker Xonox is a division of K-tel, infamous TV sellers of “50 Original Hits” music compilations. Their idea of innovation is to sell Double Ender cartridges for the 2600. Sold for the price of a regular cart, Double Enders have two separate 8K games accessible via edge connectors on each end. Early entries for these dual games include Spike’s Peak/Ghost Manor and Hercules vs. the Titans/Chuck Norris Superkicks. The most clever bit of this whole exercise? The palindrome company name, readable any way their cartridges are inserted.
  • CBS enters the videogame biz via a four-year partnership deal with Bally Mfg. Corp, creating CBS Video Games. This gives CBS rights to available Bally/Midway arcade games for adaptation to home consoles and computers. The cartridges are produced and marketed by Gabriel Industries, the toy arm of CBS, headed by Benjamin Ordover.  Adaptations of Gorf and Wizard of Wor are two of the bigger hits from this partnership. With a name change to CBS Electronics, the company develops 2600 cartridges with the RAM Plus power chip installed inside, adding 16K of memory. This allows games with advanced 3D graphics for the system like Tunnel Runner, as well as the unreleased first-person combat flight simulator Wings, a game within weeks of being released when CBS suddenly pulls the plug on their video game division in late 1983.
  • Another media conglomerate, 20th Century Fox, throws their hat into the crowded ring with their video game arm, Fox Video Games. Headed by former Mattel Electronics Sales and Marketing Senior VP Frank O’Connell, they crank out 20-some carts into the market. Tagged as 20th Century Fox Games of the Century, a few are licensed from computer software game company Sirius Software, and Fox also reaches into their own film library for titles like Fantastic Voyage, Porky’s, the Barry Bostwick SF extravaganza Mega Force and a game based on the 1979 smash hit SF-horror movie Alien. This tie-in is facilitated by Fox brass insisting that what amounts to merely an experiment to see if a Pac-Man clone can be created without all the flicker of Atari’s lamented version could be made, and stick the little figure running around a maze with a flamethrower. Voila! An Alien game is born! Fox’s biggest stretch might be a game based on the film M*A*S*H, where chief surgeon Hawkeye Pierce actually flies helicopters around rescuing injured soldiers and skydiving medics. At least he does get a bit of surgery in between flights. These last three games are all programmed under contract to Fox by Doug Neubauer, who probably had more fame as the creator of the excellent Star Raiders for the Atari 400/800 computers.  The initial price of the MASH cartridge for the 2600 eventually goes under the knife in 1983, from $29.99 down to $14.95. Announcing the price slashing, O’Connell paints it as a good thing for the industry, proclaiming that moves like this will clear out surplus inventory to make room for new games that gamemakers would somehow be able to charge higher prices for. He also expects the enormous software glut to be cleared out within two months.  A highly optimistic forecast, but Fox does wins the award for best video game title ever: The Earth Dies Screaming. Another thing that dies screaming is the partnership of Fox and Sirius: the later files a 20 million dollar lawsuit against Fox in the later part of 1983, containing forty counts of breach-of-contract, fraud and lack of good faith charges. Even a video game adaptation of the Robert Redford/Paul Newman classic western Butch Cassidy and the Sundance Kid is threatened by Fox, but mercifully never sees the light of day.

    Doug Neubauer, video game creator

    Doug Neubauer, creator of games for 20th Century Fox’s game unit.

JUMP: A closer look at the M*A*S*H video game, during TDE’s Oscar Week

Marvel founder Stan Lee plays Spider-Man on the Atari 2600, accompanied by the Green Goblin and Spider-Man, 1983

Stan Lee and creations, playing Parker Brothers’ Spider-Man for the 2600, 1983


  • Board game giant Parker Bros., having entered a new era with electronic games such as Merlin in the late 70’s, make their move into the video game market via a series of lucrative licenses. While their releases are made for the Atari 2600, Parker Brothers had originally approached Mattel in 1981, offering to make games for the Intellivision if the company would forward technical specs for the machine to speed game design. Mattel passes on the proposal, so Parker Brothers jumps into the rapidly crowding Atari pool. Their strategy for an early boost in the market is aggressive licensing, including a valuable deal with Lucasfilm to make console games based on the Star Wars franchise. Their first game, released in June of 1982, is based on the second Star Wars film The Empire Strikes Back. Parker Bros. also produces an adaptation of the hit arcade game Frogger. Together, both of these initial 2600 games sell over three million cartridges, helping the company pull in $115 million in sales for 1982. Empire alone accounts for over thirty millions dollars of that figure. Parker Brothers would later release Star Wars: Jedi Arena, and titles such as Return of the Jedi: Death Star Battle. The mouthful-of-a-title Star Wars: Return of the Jedi: Ewok Adventure is put in the development pipeline but never released. In 1983 the company is responsible for the highly promoted and anticipated Spider-Man, featuring Marvel’s iconic web-slinging superhero, for the Atari 2600. Parker Brothers also makes the largest bid yet for an arcade game license, paying Nintendo $2 million for the rights to the hit Popeye, plus a promise of $4 in royalties for every cartridge they sell. They also put out product based on Strawberry ShortcakeG.I. Joe and James Bond.  Backed by a $30 million ad campaign, Parker Brothers has a slate of 16 new video games, for various platforms, scheduled for release through 1983.
  • Quaker Oats, known more for breakfast cereals than high-technology, enters the market via its acquisition of game maker U.S. Games, Inc. The company quickly builds a library of titles by contracting out to game development company James Wickstead Design Associates, of which Garry Kitchen is an employee. There he makes the shooter Space Jockey, probably U.S. Games’ most popular title out of a bunch of other fairly forgettable games. One U.S. Games release bears the mouthful of a title Name This Game and Win $10,000, designed by Ron Dubren and tied to a contest asking people to submit their own title for the game. U.S. Games goes out of business before the contest’s April 30th, 1983 deadline. Garry Kitchen eventually leaves JWDA to join his brother Dan at the greener climes of Activision.
Ron Dubren, designer of Name This Game, a home video game by U.S. Games, 1983

Ron Dubren, designer of Name This Game, 1983

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Comments >>

  1. avatarSawdust

    Enjoying reading your video game history. What is the “one special exception” mentioned in the shutdown of Atari game development?

  2. avatarThomas

    Hello, I’m currently writing a paper on the topic of the Atari video game crash. I was wondering if you wouldn’t mind emailing me some of your sources/information regarding this topic? I definitely enjoy researching this idea, but there does not seem to be enough information online for me to write an effective paper.

    Thank you.

    1. avatarWilliam

      You can find all the sources at the bottom of the final page of the article, by clicking the Sources tab. Glad you find the site useful, and I wouldn’t mind reading your paper when it’s finished.

  3. avatarmm

    Console sales numbers are not quite right. If it’s total sales through mid 1982, 12M Atari and 1.5M coleco vision might be okay but Intellivisions should be about 2.5 million.

    There’s no evidence that any Atari 7800 were sold in 1984.


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