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The Great Crash 1982-1984
1982
 |  The Colecovision. |
Coleco releases the Colecovision, a cartridge-based game console buoyed not only by superior graphics and sound, but also by support from a growing game company: Nintendo. Nintendo licenses Donkey Kong and Donkey Kong Junior to Coleco, which releases excellent translations for the Colecovision and ports reasonable versions to the Atari VCS and Intellivision. Coleco also releases an adapter that lets VCS cartridges be played on the Colecovision. Realizing that Atari has firm support from Namco, creator of Pac-Man, Coleco involves itself heavily with Sega, Konami, and Universal (Mr. Do!).
Magnavox Does It Better
Magnavox releases a game called K.C. Munchkin for the Odyssey2. Atari deems K.C. Munchkin to be very similar to Pac-Man and sues. Atari wins the lawsuit, and Magnavox must remove K.C. Munchkin from the market.
Pac-Man Clone?
Atari releases its highly anticipated 2600 version of Pac-Man, which unfortunately doesn't resemble the arcade game at all. The public quickly becomes disenchanted with the company.
E.T. Goes Home
Atari releases E.T. for the VCS, a game Howard Scott Warshaw programmed in six weeks. Expecting a sellout, Atari reportedly manufacturers more E.T. cartridges than there are 2600 consoles in use. As was the case with Pac-Man, the public is disappointed by the game. Massive numbers of both Pac-Man and E.T. games end up in a huge landfill in New Mexico, along with millions of other unsold and unwanted game cartridges. Original games such as Activision's Pitfall (by David Crane) sell well.
|  The Atari 5200. |
Atari releases the 5200 game console to compete with the Colecovision, although it had originally been designed to compete with the Intellivision. Based on the graphics and audio chips found in Atari home computers, 5200 games are essentially aesthetically improved rereleases of VCS games (the VCS was renamed 2600). The machine is incompatible with 2600 game cartridges until Atari belatedly introduces an adapter so 2600 games can be used on the 5200. A major strike against the system is its controller, which features a noncentering joystick.
|  The Vectrex. |
General Consumer Electronics (GCE) releases the Vectrex, the first and only home console based on vector graphics technology. The Vectrex includes a built-in game (Minesweeper, an impressive Asteroids clone) and one four-button analog joystick controller.
Pac-Man Fever
Midway creates Ms. Pac-Man in-house. It becomes the biggest arcade game in American history, with more than 115,000 units sold in the United States, but Namco, which is not involved with Ms. Pac-Man, develops the improved, but radically different, Super Pac-Man for Japanese consumers. A number of Pac-Man "enhancement chips" arrive on the market to speed up the original Pac-Man and change its characters and mazes. The most popular enhancement, Pac-Man Plus, replaces the generic fruits and other bonus items in Pac-Man with popular American items such as Coke cans.
Stock Drop
On December 7 (3:04pm Eastern Standard Time), Atari announces that VCS sales did not meet predictions. Warner Communications stock drops 32 percent in a single day.
1983
New Bushnell Company
Nolan Bushnell becomes eligible to enter the video game industry again. He joins Videa and renames the company Sente Games, another Go reference (this time to "checkmate"). Sente forms a partnership with Midway games and releases arcade titles such as the simple but addicting hockey game Hat Trick. Unfortunately, the partnership never finds a niche in the market.
Atari Top Secret
In March, Atari announces a new top-secret project code-named the Falcon Project. The Falcon Project turns out to be a new Atari division called Ataritel, which is Atari's attempt to enter the telecommunications market.
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