The crash of the entire video game industry is often blamed on the failure of one game. A game that cost video game giant Atari millions.
The crash of the entire video game industry in 1983 is often blamed on the failure of a single game. A game that cost gaming giant Atari millions in licensing fees and pushed the industry dangerously above the precipice.
The game is ET the Extra-Terrestrial, a tie-in movie being developed by Atari in hopes of building on the film’s major success.
Following the North American release of Steven Spielberg’s classic and its subsequent popularity, Atari reportedly paid nearly $31 million in fees for the rights to use the ET name. The problem was that the movie was released in June 1982, and Atari hoped to release a tie-in game ready for the holiday season.
The time between the acquisition of the rights to ET by Atari and the release of the game in stores was only three months. The company assigned a man to develop the entire game and told him he only had five weeks to do it. As such, Howard Scott Warshaw is often unfairly blamed for the downfall of this multi-million dollar industry.
The game Warshaw created bore little resemblance to the film it was named for. In it, you play as ET collecting various phone components with which he has to call home. In his quest he is aided by Elliot in exchange for Reese’s Pieces, a leftover product placement from the film, and thwarted by an FBI agent who will stop at nothing to capture our alien friend.
More frustrating than the agent are the holes on each screen that ET can fall into at any time. A bug also meant that if ET tried to exit the pit from anywhere but the exact center, he would fall back into it.
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ET the Extra-Terrestrial is often described as frustrating and difficult due to a complete lack of in-game tutorial, but it was no more difficult than the majority of Atari games. However, due to the time constraints imposed on Warshaw, along with game cartridge limitations, all game mechanics were explained in the manual.
Due to the cost and popularity of the license, Warshaw had to produce a game as big as the film, which meant that it was impossible to explain all of his ideas in the game.
Children and parents were as opposed to reading the textbooks as they are now, and the game was returned to stores en masse by disappointed families. Word of mouth spread and sales numbers dropped sharply just weeks after the game was released.
Rarely do publishers go bankrupt these days from the financial failure of a single game, but back in the 80s, when the industry was just getting started, that wasn’t the case.
The situation was a self-perpetuating Ponzi scheme. Developers often took the huge profits from their latest release and funneled all the cash into developing their next big game. That was, of course, while paying themselves handsomely along the way.
Following the critical and commercial failure of Atari’s multimillion-dollar game, the company folded. People who had made millions in the industry found themselves unemployed almost overnight.
Games journalist Julian Rignall, who reported on the industry at the time, best described the situation, saying in an interview: “They (the games) were really ambitious projects and the production costs went up. keep on going. Obviously they (the game developers) had promised the distribution channel that they would arrive in time for Christmas and that never happened. Very quickly, businesses ran out of money and everything fell apart.
One of the most fascinating parts of the story is what happened to all the games Atari left behind. Reports from 1983 indicated that returned and overproduced copies of ET were not sold cheaply for a quick profit as the company went bankrupt.
Instead, they had all been secretly buried in a landfill in New Mexico and covered in concrete, never to be found again.
However, in 2014, 30 years after the industry collapsed, an investigation began to recover the buried tapes.
Former Atari director James Heller confessed that 728,000 games were actually buried on the site, although not all of them were ET. The team discovered only 1,300 games, a tiny fraction of those that would have been there. Of the games found, only about 100 were copies of ET
While ET the Extra Terrestrial’s huge licensing costs and rushed development are often blamed for crashing the then-burgeoning video game industry, its failure is only part of the puzzle.
The way businesses operated back then ensured they were doomed to collapse at some point, and our bug-eyed alien friend was just the straw that broke the camel’s back.
— written by Georgina Young on behalf of GLHF