1980s in video gaming

The 1980s were a decade of highs and lows for video games and it was the second decade in the industry's history. The decade began in the midst a boom in the arcade business with giants like Atari still dominating the market since the late 1970s. An over-saturation of third party games, the rising influence of the personal computer, and a lack of quality in the games themselves lead to an implosion of the North American video game market that nearly destroyed the industry. It takes home consoles years to recover from the crash, but Nintendo fills in the void with its Nintendo Entertainment System (NES), reviving interest in consoles. Up until this point, most investors believed video games to be a fad that has since passed. In the remaining years of the decade, SEGA ignites a console war with Nintendo, developers that have been affected by the crash experiment with the superior graphics of the PC, and Nintendo also releases the Game Boy, which would become the best-selling handheld gaming device for the next two-decades.

Third generation consoles
Starting in 1983 the third generation began with the Japanese release of the Nintendo Family Computer (or "Famicom"; later known as the Nintendo Entertainment System in the rest of the world). Although the previous generation of consoles had also used 8-bit processors, it was at the end of this generation that home consoles were first labeled by their "bits". This also came into fashion as 16-bit systems like SEGA's Mega Drive & Genesis were marketed to differentiate between the generations of consoles. In the United States, this generation in gaming was primarily dominated by the NES/Famicom.

Fourth generation consoles
Starting in 1987 and ending in 1996, the fourth generation of video game consoles consisted primarily of games and systems programmed for the 16-bit era. During this generation, 2D graphics had improved over the previous generation and experimentation began to occur with 3D graphics, although 3D games were more prevalent on the PC at the time. The fourth generation also was the first time compact discs were considered a viable port for video game retail sales with the CD-i. Some of the most notable systems released during this generation were the Super Famicom/Super Nintendo Entertainment System (1990), the Mega Drive & Genesis (1988), and the Neo Geo (1990). Nintendo's Game Boy was also released during the fourth generation, which would later become the most popular series of handheld gaming systems during the 1990s. A rivalry between Sega and Nintendo occurred during this generation, starting the first ever console war.

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 and the number of arcades doubled between 1980 and 1982. 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 and TRON became a cult classic.

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. Activision was the first third-party developer for the Atari 2600. Atari sues Activision for copyright infringement and theft of trade secrets in 1980, but the two parties settle on fixed royalty rates and a legitimizing process for third parties to develop games on hardware.

In the aftermath of the lawsuit, an over-saturated market resulted in companies that had never had an interest in video games before beginning to work on their own promotional games; brands like Purina Dog Food. The market was also flooded with too many consoles and too many poor quality games, elements that would contribute to the collapse of the entire video game industry in 1983.

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 went into bankruptcy. Atari reported a $536 million loss in 1983. Some entertainment experts and investors lost confidence in the medium and believed it was a passing fad. A game often given poster child status to this era, E.T. the Extra-Terrestrial had such bad sale figures that it is reported that the remaining unsold cartridges were buried in the deserts of New Mexico.

Rise of the PC and PC gaming
The brunt of the crash was felt mainly across the home console market. The personal computer and PC gaming in general actually thrived in this time period. Microsoft released MS-DOS in 1981 and the operating system was a popular outlet for playing games. Some computer companies adopted aggressive advertising strategies to compete with gaming consoles and to promote their educational appeal to parents as well. Home computers had better sound and visual capabilities than most of the consoles of the era.

Rejuvenation
By 1985, the home console market in North America had been dormant for nearly two years. The same could not be said elsewhere, however, where 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. It was released, despite the pessimism of critics, as a huge success and Nintendo is often credited with reviving the home console market.

One innovation that led to Nintendo's success was its ability to tell stories, whereas video games before lacked that ability. Nintendo also took measures to prevent another crash by creating regulations upon its third-party developers that are now observed industry-wide. Some of these regulations include 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.

Arcade
• 3

PC and console
• 3

Notes:


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