1980s in video games

Golden age of arcade games

In the early-1980s, arcade games were a vibrant industry. The arcade video game industry in the US alone was generating $5 billion of revenue annually in 1981^[12] and the number of arcades doubled between 1980 and 1982.^[13] The effect video games had on society expanded to other mediums as well such as major films and music. In 1982, "Pac-Man Fever" charted on the Billboard Hot 100 charts^[14] and Tron became a cult classic.^[15]

Third-party development and an oversaturated market

Following a dispute over recognition and royalties, several of Atari's key programmers split and founded their own company Activision in late 1979.^[16] Activision was the first third-party developer for the Atari 2600.^[17] Atari sued Activision for copyright infringement and theft of trade secrets in 1980,^[18] but the two parties settled on fixed royalty rates and a legitimizing process for third parties to develop games on hardware.^[19]

In the aftermath of the lawsuit, an oversaturated market resulted in companies that had never had an interest in video games before beginning to work on their own games and acquire software houses, for instance, Parker Brothers, the board game giant owned at the time by General Mills, developed video games, which spurred the acquisition of U.S. Games by Quaker Oats to compete.^[20] The market was also flooded with too many consoles and what were seen as too many poor quality games,^[21] elements that would contribute to the collapse of the entire video game industry in 1983.

American video game crash of 1983

By 1983, the video game bubble created during the golden age had burst and several major companies that produced computers and consoles had gone into bankruptcy.^[22] Atari reported a $536 million loss in 1983.^[23] Some entertainment experts and investors lost confidence in the medium and believed it was a passing fad.^[24] A game often given poster child status to this era, E.T. the Extra-Terrestrial had such bad sale figures that the remaining unsold cartridges were buried in the deserts of New Mexico.^[25][26]

Rise of computer gaming

The brunt of the crash was felt mainly across the home console market, localized within the United States. Home computer gaming continued to thrive in this time period, especially with lower-cost machines such as the Commodore 64, ZX Spectrum and IBM Personal Computer. Some computer companies adopted aggressive advertising strategies to compete with gaming consoles and to promote their educational appeal to parents as well.^[27][28] Home computers also allowed motivated users to develop their own games, and many notable titles were created this way, such as Jordan Mechner's Karateka, which he wrote on an Apple II while in college.^[29]

In the late 1980s, IBM PC compatibles became popular as gaming devices, with more memory and higher resolutions than consoles, but lacking in the custom hardware that allowed the slower console systems to create smooth visuals.^[30]

American rejuvenation

By 1985, the home market console in North America had been dormant for nearly two years. Elsewhere, video games continued to be a staple of innovation and development. After seeing impressive numbers from its Famicom system in Japan, Nintendo decided to jump into the North American market by releasing the Nintendo Entertainment System, or NES for short. After release it took several years to build up momentum, but despite the pessimism of critics it became a success. Nintendo is credited with reviving the home console market within the United States.^[3]

One innovation that led to Nintendo's success was its ability to tell stories on an inexpensive home console; something that was more common for home computer games, but had only been seen on consoles in a limited fashion. Nintendo also took measures to prevent another crash by requiring third-party developers to adhere to regulations and standards, something that has existed on major consoles since then. One requirement was a "lock and key" system to prevent reverse engineering. It also forced third parties to pay in full for their cartridges before release, so that in case of a flop, the liability will be on the developer and not the provider.^[31]

Arcades

Consoles and home computers

Notes:

• ¹Game franchises that also accompany major film or television franchises.
• ²Game franchises that are considered spin-offs of previously established franchises.

Highest-grossing arcade games of the decade

The following titles were the highest-grossing arcade video games of each year in the 1980s, in terms of coin drop earnings.

Best-selling home video games of the decade

The following table lists the top 20 best-selling home video games of the 1980s. Note that video game sales numbers were not as widely reported during the 1980s, with the exception of titles published by Nintendo and Atari, Inc.

Best-selling home systems of the decade

The following table lists the top 20 best-selling home systems in the 1980s, including home video game consoles, handheld game consoles, handheld electronic games, and personal computers.