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History of Video Games: Changing of the Guard (1983-1988)

History of Video Games: Changing of the Guard (1983-1988) - Article

by Taneli Palola , posted on 17 February 2016 / 7,133 Views

The previous part of this look at the history of video games ended with the industry standing on a razor's edge without even really knowing it. The second console generation had led to an unprecedented period of growth for the industry, but the lack of any kind of restraint and quality control for the games that were being released, especially in the last few years, would soon spell doom for everyone involved. The huge influx of bad games from new developers looking to cash in on the video game boom had an adverse effect on people's interest and trust in those making games, even quality ones.

During the holiday season of 1982 one of the most hyped games ever made up to that point in time, E.T. the Extra-Terrestrial, was released on the Atari 2600. The game itself isn't actually as bad as its reputation would have you believe. It was simply the final straw for an already disillusioned audience that had grown tired of being disappointed by a constant stream of bad games. E.T. was the game that was expected to carry Atari through the holidays into a new year, and the marketing reflected that. People's expectations were built up by a barrage of commercials hailing it as the greatest game ever, which it obviously wasn't. So when the game turned out to be mediocre at best, a lot of people decided they'd had enough.

As 1983 came along the industry had backed itself into a corner. The flood of poor quality games, combined with the failure of many of Atari's recent high profile releases, had damaged the reputation of the industry, both in the eyes of consumers and retailers alike. The huge number of competing consoles was also adding to these problems and the birth of home computer gaming was beginning to dwindle the potential audience interested in home consoles. So there were a lot of different factors at work in conjunction that led to the event that is now known as the video game crash.

Revenues were still very high for everyone involved, with arcade and home video game sales in the U.S. bringing in a total of over $6 billion combined, but this was already down on the previous year's all-time high of $8.1 billion and would signal a downturn for the industry in North America.

It wasn't all bad news, though. 1983 featured many landmark titles from a variety of developers, including Nintendo's Mario Bros, in which Luigi made his very first appearance. Other notable games from 1983 included Bomberman, M.U.L.E, and Ultima III: Exodus, which featured one of the first instances of turn-based combat in a video game and would influence many later series such as Dragon Quest and Final Fantasy. Dragon's Lair also gave arcades a much-needed life extension at a time when business was beginning to slow down. The novelty of a video game that looked like an animated film attracted a lot of people to the arcades.

This was also the year in which Nintendo's Famicom was released in Japan. It got off to a bit of a shaky start when reports of the console's instability came to light, prompting Nintendo to recall the system and re-release it with a new motherboard. The console would release a few years later in the west as the Nintendo Entertainment System. Interestingly, Sega also entered the home console market on the exact same date as the Famicom - July 15th. They released the SG-1000, which would later serve as the basis for their much more successful follow-up consoles.

1984 saw the effects of the crash taking form. Both Magnavox and Coleco had already abandoned the console business, and as a result of shrinking returns from video game sales retailers were abandoning the industry in droves, generally deciding that the video game had been a simple fad. Of course, outside of North America the industry was still doing perfectly fine; home consoles were still growing in popularity in Japan and home computers had found great success in Europe.

Arcades were beginning to suffer at this point. The novelty of laserdisc games like Dragon's Lair had wore off and very few new interesting games were released during the year. Punch-Out! helped briefly, but the downward spiral was already in full swing.

Outside of the arcades a number of significant games were released, but out of all of them only one could be argued as being amongst the most impactful games of all time. That game is Alexei Pajitnov's Tetris. Even with other games like Ice Climber and Boulder Dash coming out, Tetris was in a league of its own as far as importance to the development of video games was concerned.

The following year the video game crash continued on its merry way, leaving behind an industry that was barely functioning. In the span of three years, from its peak in 1982, home video game revenue in the United States fell from over $3 billion to around $100 million in 1985, a staggering drop of almost 97%. At this point the dominance of the home console market had almost completely shifted from the U.S. to Japan.

Despite the awful situation the industry was in at the time, new gaming companies were still being founded, even in North America. Developers like Westwood Studios, Code Masters and Square all started up in 1985, all of which would go on to create numerous landmark, genre-defining titles in the future.

Arcades were also being dominated by Japanese developers. The only real exception to this was Atari, which was still making an effort and actually released a pair of influential games in Paperboy and Gauntlet. Japanese arcade developers on the other hand released Gradius (Konami), Ghosts 'n Goblins (Capcom), Space Harrier and Hang-on (both Sega), and more.

Nintendo, meanwhile, was turning its focus away from the arcades and towards the home console market that now had a significant power vacuum. At the tail end of the year Nintendo would release two highly impactful titles for the Famicom, one of which would go on to define the face of the entire industry for years to come. The less influential of these two was Duck Hunt, a hugely important game by itself, but the other one was, of course, Super Mario Bros. which probably doesn't require much of an introduction.

On the hardware side of things there were also some important releases. Nintendo would begin a test run in the U.S. with the NES, in preparation for a much wider release the following year. They also released the R.O.B peripheral along with the console in order to attract toy retailers to their console, as video games still carried the unfortunate stigma of the crash with them. By doing this, as well as by naming it the Nintendo Entertainment System, rather than calling it a video game console, Nintendo was hoping to avoid the bad reputation video games had in the U.S. As it would turn out, they were successful with this strategy.

However, the NES wasn't the only notable new piece of hardware in 1985. In Japan, Sega would launch the Sega Mark III, better known today as the Master System. Curiously, the Master System is actually the system with the longest lifespan out of any video game console, as it is still alive in Brazil, over 30 years after its original launch. By the end of the decade the console sold between 10 to 13 million units, which while reputable at the time, fell far short of the NES install base. In addition to these consoles, Commodore would also release the Amiga personal computer the same year.

1986 would become arguably the most important year in the history of video games up to this point. Not only was this the year during which both the NES and the Master System received wide releases in the United States - reigniting the console market in the process - but several hugely influential video game franchises would also be born this year, in numbers that have rarely been repeated since.

These games include, but are not limited to, The Legend of Zelda, Castlevania, Metroid, Kid Icarus, Bubble Bobble, Dragon Quest, Adventure Island and Alex Kidd in Miracle World. Although many of them would not see western releases for some time, every single one of these games would become successful and would go on to spawn sequels. Not all of them have retained their popularity over the years, but their overall importance in making 1986 such a landmark year for the industry cannot be understated. Naturally, with games like Zelda, Metroid and Dragon Quest on their console, Nintendo was quickly beginning to dominate the console market around the world. Sega would put up a fight, but everyone else was pretty much just a bystander at this point.

Atari did make another attempt at a comeback in 1986 by releasing the 7800, but at this point it was too late for the system to make much of an impact on the market. It didn't help that it was already technologically outdated when it was released after being shelved for two full years following the sale of Atari. The new owners of the company didn't put much weight or trust in the console and as a result it withered away on the sidelines until it was officially discontinued without much fanfare on January 1st, 1992.

The year also gave birth to a number of important new companies including Bethesda, Ubisoft, and Acclaim. All of this combined to create a perfect environment for the industry to once again thrive. Now all that was needed was to build upon the foundation that had been set in the last two years, and 1987 would very much deliver in that respect.

Although the crash of the video game market had at this point largely subsided and the industry was on the way to making a full recovery, the effects of the crash were still being felt in another way entirely. Fearing a repeat of the conditions that led to the crash prior to 1983, Nintendo had instituted very strict licensing policy that all third party developers had to follow if they wished to make games for the NES. These included a limit on the number of games a developer could release on the system each year (five games) and integrating a specialized chip in each game cartridge to prevent the creation of unlicensed games. Nintendo also demanded that all cartridges were to be manufactured by them and be paid in full in advance. Sold cartridges could not be returned back to Nintendo, which effectively meant that third party developers assumed all the risk in the exchange. 

These kinds of tactics would eventually cause numerous problems between Nintendo and other developers, but for now Nintendo made the rules for others to follow. Despite this strain in relationships, there was no doubt that everyone wanted to take advantage of the NES's success. As a result, 1987 would once again be a huge year for games, both on consoles as well as home computers. Even arcades saw a few important releases over the year, the most notable debuts being Konami's Contra and Capcom's original Street Fighter, which while fairly unremarkable by today's standards, would eventually spawn a sequel that revolutionized the fighting game genre.

The NES was firing on all cylinders, with the western release of The Legend of Zelda, as well as the Japanese release of Zelda II: The Adventure of Link. Nintendo also developed Mike Tyson's Punch-Out!! for the console. In addition to Nintendo's own offerings several third party developers also released their own heavy hitters on consoles. Hideo Kojima introduced Metal Gear to the world on the MSX2, Square found success with Final Fantasy, Capcom gave birth to Mega Man, and Castlevania 2: Simon's Quest continued the story of the Belmont family. Finally, Sega would release the sci-fi fantasy RPG Phantasy Star on the Master System.

Final Fantas US boxart

On computers the adventure game genre took a leap forwards with the release of Leisure Suit Larry in the Land of the Lounge Lizards and Lucasart's Maniac Mansion, which was the first game to use the SCUMM engine, allowing for the game to be controlled with a mouse. Beyond adventure games, Dungeon Master gave the RPG crowd something to play on their computers.

Finally, on the hardware side of things NEC released the TurboGrafx-16 in Japan as the PC Engine. This would cap off yet another huge year in the industry, continuing on the trend of the last few years and setting the stage for an even bigger year to come.

PC Engine

1988 was the year when the North American market finally recovered completely from the crash of 1983. The last few years had already been a period of great growth, but it wasn't until 1988 that revenue from video game sales reached pre-crash levels. Nintendo controlled the vast majority of the market, as its only real competition was Sega's Master System, which couldn't really hold its own against the NES except in Europe, Brazil, and a few other markets where the Master System rivalled or even surpassed Nintendo's grey box in popularity.

This would be yet another great year for gamers too. As with the previous two years, several genre-defining franchises would be born and a lot of big games from previous years received sequels. In addition, Nintendo Power was born in 1988, becoming the go-to magazine for Nintendo fans for over two decades. Things were fairly quiet on the hardware side, but the games more than made up for it.

Franchise debuts during the year included Capcom's Bionic Commando, Altered Beasts from Sega, Ninja Gaiden from Tecmo, and SSI created the first of their “Gold Box” games based on Advanced Dungeons & Dragons - Pool of Radiance. Many game series also got new installments during the year, some of which are still often considered among the best in their respective series. Enix continued the Dragon Quest-series with its third entry, which became so successful in Japan that Enix decided to hold off on releasing future games in the series until weekends so as to not cause people to skip school or work.

Original Japanese box art for Dragon Quest III

Ultima V: Warriors of Destiny introduced day/night cycles to the series, while Super Mario Bros. 3 further cemented Nintendo's dominance in Japan. Final Fantasy II would experiment with the formula established in the first game to a decidedly mixed response. On the other hand both Mega Man 2 and Double Dragon 2: The Revenge built upon their predecessors, becoming two of the most beloved entries in their franchises.

All in all, these last three years were among the most productive in the history of video games, giving birth to a huge number of long-running franchises and bringing the video game market back from the brink of extinction in the U.S. This was also the start of the long-standing rivalry between Nintendo and Sega, effectively becoming a prelude to the real battle between the two console manufacturers that was to begin very soon.

The market was growing by leaps and bounds, and this time there were no signs of a slowdown anywhere in sight. However, change was already in the air, as a new generation of consoles was fast approaching and Nintendo's position as the market leader would be seriously challenged for the first time ever.

This is a good place to stop this part of our look at the history of video games. I hope you enjoyed reading, and join me again next time when we witness the beginning of the first real console war between Sega and Nintendo.


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3 Comments
NightDragon83 (on 16 February 2016)

Great series! One minor typo... the last Atari console released in the 80s was the 7800, not the 7200 (I know, it gets super confusing lol). Speaking of Atari, here's a fun fact... after Nintendo launched the Famicom in Japan, they originally started negotiating with Atari of all companies to bring the console to North America. Supposedly the console would've been released under Atari's brand as the "Nintendo Advanced Video Gaming System." Of course the deal never actually happened as we all know, but it does make you wonder what if... what if the console that single-handedly turned the industry around after the crash and took it to new heights displayed the Atari brand name instead of Nintendo's in one of the biggest gaming markets in the world??

  • +6
Darashiva NightDragon83 (on 16 February 2016)

Oh yeah, apparently I wasn't concentrating on the name when I wrote it. Thanks for pointing it out. Glad you like the series.

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Machina (on 16 February 2016)

Great read as always with this series. Look forward to the next entry.

  • +4