Video game crash of 1983

Part of a series on the
History of video games
Early history Early history of video games Early mainframe games
Consoles History of video game consoles Console war 1st generation (1972–1983) 2nd generation (1976–1992) Video game crash of 1983 3rd generation (1983–2003) 4th generation (1987–2004) 5th generation (1993–2005) 6th generation (1998–2013) 7th generation (2005–2017) 8th generation (2012–present) 9th generation (2020–present) Impact of COVID-19 (2023-24 layoffs)
Arcade video games History of arcade video games Golden age of arcade video games Timeline of arcade video game history
Personal computer History of personal computer games
Mobile games History of mobile games
Virtual reality History of virtual reality games
Cloud gaming History of cloud gaming
Other platforms Browser game Emulation
Genres List of genres History of East Asian role-playing video games History of Western role-playing video games History of online games History of real-time strategy games History of tactical role-playing games History of single-player video games History of multiplayer video games History of massively multiplayer online games
Lists List of video games in development
v t e

The video game crash of 1983 (known in Japan as the Atari shock)^[1] was a large-scale recession in the video game industry that occurred from 1983 to 1985 in the United States. The crash was attributed to several factors, including market saturation in the number of video game consoles and available games, many of which were of poor quality. Waning interest in console games in favor of personal computers also played a role. Home video game revenue peaked at around $3.2 billion in 1983, then fell to around $100 million by 1985 (a drop of almost 97 percent). The crash abruptly ended what is retrospectively considered the second generation of console video gaming in North America. To a lesser extent, the arcade video game market also weakened as the golden age of arcade video games came to an end.

Lasting about two years, the crash shook a then-booming video game industry and led to the bankruptcy of several companies producing home computers and video game consoles. Analysts of the time expressed doubts about the long-term viability of video game consoles and software.

The North American video game console industry recovered a few years later, mostly due to the widespread success of Nintendo's Western branding for its Famicom console, the Nintendo Entertainment System (NES), released in October 1985. The NES was designed to avoid the missteps that caused the 1983 crash and the stigma associated with video games at that time.