In 1982, Atari controlled eighty per cent of the video-game market. A year later, as its C.E.O. stood accused of insider trading, demand for video games had fallen so much that the company dumped fourteen trucks’ worth of merchandise in a New Mexico landfill and poured cement over the forsaken games to prevent local children from salvaging them.
It’s been more than thirty years since what’s known as the video-game crash of 1983, and the children of that era have grown up, a lingering passion for video games notwithstanding. On Saturday, several hundred of them returned to the landfill in New Mexico with heavy machinery and a team of archaeologists to excavate the site and revisit a defining moment in video-game history.
The landfill in Alamogordo, New Mexico, about ninety miles north of El Paso, is the gaming world’s Roswell. This is partly, perhaps, because of its proximity to the real Roswell, but also because they’re both rumored to be hiding aliens: the dump was said to hold more than three million copies of the famously awful Atari adaptation of Steven Spielberg’s “E.T.: The Extra-Terrestrial.” Unwanted products routinely end up in landfills, but the sudden desert burial of countless games, associated with an iconic movie and adapted for an iconic console, was material colorful enough for a legend. Saturday’s dig confirmed that the legend is true, although the archaeologists on hand estimated that the E.T. cartridges numbered in the thousands, not the millions.
“It was pretty tense right up until we found the cartridges,” Mike Burns, the C.E.O. of the marketing company Fuel Entertainment, told me after the dig. The excavation project was Burns’s brainchild, and his staff spent eighteen months securing permits from local officials and funding from Microsoft’s Xbox Entertainment Studios, which in turn hired the producers Simon and Jonathan Chinn to make a documentary about the dig.
Until Saturday, no one knew for sure what was buried in Alamogordo. The Times and local media recorded fourteen trucks dumping merchandise from Atari’s El Paso factory in September, 1983, but Atari representatives didn’t allow anyone to get close enough to see exactly what was being buried. The E.T. guess was a good one, though, because Atari had produced many more copies of the game than people wanted. The fans who traveled to Alamogordo to witness the excavation clearly wanted the games to be there. They cheered when workers unearthed the first Atari artifact of the day, a joystick, and they cheered more loudly when Zak Penn, who is directing Microsoft’s documentary, approached the crowd, held up an E.T. cartridge, and announced, “We found something.” The crew filled bucket after bucket with games—yes, some copies of E.T., but also more commercially successful titles like Centipede, Space Invaders, and Asteroid. Planners had hoped to insert a recovered game into a preserved Atari console and play it on site, but a dust storm during the dig convinced them to save that experiment for a more sterile environment than an open landfill in the desert.
Alamogordo is a symbol of the crash of ’83, but Atari’s troubles began a year earlier. The company had been a classic Silicon Valley startup. It even employed Steve Jobs for a time (although, according to Walter Isaacson’s biography of Jobs, he was asked to work the night shift after his co-workers complained about his abrasive personality and body odor). But Atari hadn’t yet figured out the precise timing required to successfully transition from one generation of consoles to the next. Today’s console makers have settled into a predictable rhythm, typically releasing new machines every five or six years, enough time for customers to trust that a “next-generation” system will be genuinely superior to the one it replaced. In the early eighties, the process was far less orderly: manufacturers issued new systems much more frequently, and their newness often hinged on gimmickry, such as a built-in screen or a different kind of controller, rather than major technical milestones. The Atari 5200 console, released in 1982, thus cannibalized sales of the older Atari 2600 but didn’t offer enough technical improvements to persuade many people to trade up. Even as Atari promoted the 5200, it flooded the market with games for the 2600. In addition, company executives were overly optimistic, producing, for instance, twelve million copies of a Pac-Man game for the 2600 even though only ten million people owned that console. They ended up selling seven million copies, making it the best-selling video game in history at the time, but the unsold five million copies were an embarrassment. Worse still, the game was ridden with glitches; many customers demanded refunds.
The E.T. game, also built for the 2600 console, fared even worse: Atari sold just one and a half million copies of the five million it had shipped to stores. At the time, Atari was a subsidiary of Warner Communications, which also owned Warner Bros. Pictures and a number of other media properties. As Ray Kassar, then Atari’s C.E.O., recounts in Steven Kent’s “The Ultimate History of Video Games,” Warner’s C.E.O., Steve Ross, insisted that the game be on shelves in time for Christmas, 1982, which meant it had to be designed in just six weeks (compared to a typical lead time in those days of six months or more). The resulting game was primitive, despite the best efforts of its programmer, Howard Scott Warshaw, who attended Saturday’s excavation to explain to fans exactly why the game was so bad.
Neither of these failures appeared in Warner’s earnings reports until December 7, 1982, when Atari announced that it expected a ten- to fifteen-per-cent increase in sales in its fourth quarter, rather than the fifty-per-cent increase it had predicted earlier in the year, which video-game historians have attributed in large part to the failure of the two games. The next day Warner’s stock tumbled, and Kassar was accused of insider trading when it was revealed that he had sold five thousand of his shares just minutes before releasing the bad news. (He was later cleared by the Securities and Exchange Commission.) Atari’s resulting collapse formed the core of the industry-wide crash of ’83. Warner broke Atari into three units—home computing, game consoles, and arcade gaming—and sold them off in 1984 and 1985. What was left of Atari’s once-mighty video-game division limped along from owner to owner for another two decades, before finally declaring bankruptcy last year. The company’s later incarnations never came close to regaining the market dominance of the early eighties.
It’s often said that video games might have died forever with Atari, remembered only as a short-lived fad, if Nintendo hadn’t come to the United States to rescue them two years later. But video games are no more a fad than the Internet is; the crash lasted as long as it did only because none of Atari’s competitors in the U.S. console market—including Coleco, Mattel, and a half-dozen others—offered sufficiently diverting hardware or games to fill the void. Instead of stepping up to claim Atari’s former market share, they were dragged down with the company to ruin, and it wasn’t until Nintendo’s arrival, in late 1985, that the industry began to show new signs of life. Nintendo, which had been planning before the crash to offer Atari worldwide distribution rights outside Japan for its Famicom console (later known in the United States as the Nintendo Entertainment System), now saw that it could compete with the diminished Atari. The company came to dominate the video-game world for the rest of the eighties and much of the nineties. Both of its major challengers—Sega and Sony—were Japanese, too.
After Atari’s collapse, its successors released new consoles at a slower pace, finally settling into a five-to-six-year cycle by the time the sixth generation of hardware was released, in the early aughts. This generation included Nintendo’s GameCube, Sony’s PlayStation 2, and Microsoft’s Xbox—the first American-made console to gain significant market share since the days of Atari. Perhaps it’s appropriate that Microsoft is the one to be excavating in Alamogordo, like a young man visiting his grandfather’s grave.
Photograph: Fuel Entertainment.
