Beginning with the video game crash of 1983...

Video Game History

The lineage of video games is bursting at the seams with stories of mind-blowing failures, unexpected successes, and inevitable twists and turns. Below are a few of my favorite events in video game history...


The E.T. Debacle
Atari ET video game history

Developed in just six weeks prior to the 1982 holiday season, E.T. is widely heralded as the most financially disastrous video game in history, and a preamble to the video game crash of 1983. In an attempt to capitalize on the blockbuster movie that had come out in June of that year, Atari CEO Ray Kassar hired Howard Scott Warshaw (of Yars’ Revenge notoriety) to develop a corresponding video game, for compensation of $200k and an all-expenses-paid vacation to Hawaii.

Upon release, the rushed E.T. video game was met with a deluge of vitriolic criticism, and initial pent-up demand for the much anticipated title floundered quickly. According to Ray Kassar, approximately 4,000,000 game cartridges were produced, and nearly 3,500,000 were returned to Atari in a grand spectacle of corporate chagrin. Due to poor sales and expensive movie rights, it is estimated that the E.T. game was the driving force behind Atari’s loss of $536,000,000 the following year. In the end, I suppose the only real winner throughout the entire ordeal was Howard Scott Warshaw.

The final chapter in the E.T. quandary leads us to a restricted landfill in Alamogordo, New Mexico, in September, 1983. While never officially confirmed, it is broadly believed that Atari crushed and buried between 10 and 20 truckloads full of E.T. cartridges. While a few doubt this rumor, I contend the following: considering the unexpected volume of essentially non-saleable E.T. cartridges in their possession, and knowing that deep discounts could barely move the game (JC Penney discounted E.T. five times from $49.00 to less than one dollar), perhaps the best financial move would be to take the write-off, as the development cost basis must have been much higher than the potential expected revenue per unit.