4 ms·

I’ll say it simply: consumers had nothing to do with the demise of the Atari. It’s retailers, who bought cartridges without ever thinking the gravy train would

I’ll say it simply: consumers had nothing to do with the demise of the Atari. It’s retailers, who bought cartridges without ever thinking the gravy train would stop. Atari and everyone else told them consumers had an insatiable appetite for full price cartridges. But when the sales cratered, due to an oversupply, retailers were stuck with the cartridges without the ability to return them. So they turned to the measure that killed the Atari: clearance bins. When all the games you could hope to ever play are in a bin for a buck each, no one is buying anything at 30$ anymore. Nintendo’s never going to say it, but their practices with the NES were not quality control; they were doing price control.

belugacat 3y ago
Exactly this. Even to this day, Nintendo is very smart about almost never discounting their flagship games - and when they do, it’s by a small percent, sometimes with strings attached, not the crazy “90% off” tactics many other developers/publishers follow.
- doubled112 3y ago
  Playstation games being in the $15 bin while desirable N64 games never seemed to go on sale was a big reason kid me had a ton of games compared to my friends with N64s. I still see this with my kids and their Switch. PS2 and GameCube seemed to follow the same pattern.
- babuskov 3y ago
  Yes. And it teaches the consumers that there's no point in waiting. When you want their game, you just buy it at full price on launch date, because you know that waiting for discount would take years and even then it would be 20-30% off at best.
  - born2meme 3y ago
    Or in my case it taught me to not want to play the fucking thing at all. Simple as.
    - TremendousJudge 3y ago
      Well the strategy relies on the games being really good in the first place, so that many people wouldn't take that option.
- kalleboo 3y ago
  Although to continue the argument from GP: copious 90% off steam sales haven't killed PC gaming, enough people still preorder PC games at full price. It's literally a meme that people have more games than they can ever play but they still keep buying new ones.
  - djur 3y ago
    In the '80s the games were mostly being purchased by adults for children, while today PC games are mostly purchased by adults for themselves. (I also remember being encouraged to spend my allowance on clearance-bin games when my parents wouldn't buy them new.)
pjc50 3y ago
> their practices with the NES were not quality control; they were doing price control A little of both: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons Yes, restricting overall game production held up prices, but a market of uncertain quality tends to drive down prices even for high-quality goods.
whaleofatw2022 3y ago
Iirc nintendo originally allowed retailers consignment for the NES, just to get them to carry it.
- internet101010 3y ago
  This is the correct way for a retailer to do business with new, unproven vendors that do not have any leverage. Either do consignment or do half upfront. Otherwise the retailer will end up with a bunch of bad inventory.
posterboy 3y ago
Piracy of 100 in 1 cartidges for Game Boy was a thing along with Adibas bootleg. Memory was limited and the games are simple because of it. I had a 1 in 4 with space invaders and that was a comparatively shitty game but a hit on Atari (minimum viable product, worse than asteroids). So what killed Atari was extremely low quality, plain and simple. You may have a point on price control, because I saw no main titles, and I remeber more recently the Mame community held back on (highly priced) arcade titles to not compete with sales. But you present a false dichotomy because quality control is marketing.
- philistine 3y ago
  See, you're taking the point of view that it must happen through the prism of the player. That it has to be something the player has agency with, in this case, video game quality. I'll push back on that. Devs were making games for a console more akin to a tin can with a string than a computer. Most developers made their games alone, with very tight time constraints. Code quality was nowhere what it is today, due to the tooling. There were hard limits to what they could offer the player, so of course games look terrible with hindsight. You can listen to They Create Worlds. They very expertly talked about the preconceived ideas about the crash, and why they're wrong. http://podcast.theycreateworlds.com/e/the-great-video-game-crash-part-1/ http://podcast.theycreateworlds.com/e/the-great-video-game-c...
lordfrito 3y ago
> retailers were stuck with the cartridges without the ability to return them This was true when it came to dumping 3rd party cartridges, but that wasn't the case with Atari. Atari had a deal with retail that any unsold cartridges could be returned and exchanged for newer titles. So it was win/win for retailers -- just give Atari shelf space for carts and what was there would either sell or get returned. Zero risk to retailer. This combined with the 2nd problem -- oversupply. What made matters worse is that for a while Atari was struggling to meet order demand. The 2600 was so hot that they couldn't fulfil 100% of retail orders. So if a store ordered 500 of something, they got 250 units. Atari built more manufacturing capacity, but sales still rose. So now the retailers were ordering 1000 units and only getting 500. The retailers got wise and started ordering a lot more than they needed, figuring Atari would only deliver half. Overordering wasn't an issue anyways due to the return policy. The 3rd problem is that Atari expanded manufacturing enough to finally catch up with order volume. To make it worse the market had just started crashing. So now you have the makings of a perfect storm. Retail orders double what they need, because historically Atari had trouble delivering. Atari actually delivers the goods in full this time due to increased mfg. Combined with the crashing market, this means that way too many carts were made. The carts don't sell, and semi trucks full of unsold cartridges start showing back up at the Atari docks. Atari was blindsided, they didn't even understand what was happening at first. They were managed pretty chaotically anyways - like really badly -- and it hadn't mattered up until then because they were making so much money. Once Atari realized what was going on it was too late. They went from $300m profit in 1982 to $538m losses in 1983. They couldn't recover. This is why there's a landfill full of Atari cartridges -- Atari realized that if they dumped the returns back into the market at a discount, prices would crater even more. So Atari actually lost less money by destroying the unsold cartridges. What was crazy about the 1983 crash was that it took down the biggest company in that space. Usually the small companies go down but the biggest can weather it. This crash was so severe that it killed the largest company in the space. Imagine if a cratering phone market killed Apple, it was just that big of a shock.
- hbn 3y ago
  That's very interesting, and the first time I've actually heard an explanation of the 1983 crash that makes sense. It's always described as "the games were so bad that the market crashed" which never was a satisfactory answer to me.
ndiddy 3y ago
That's definitely the case. Nintendo even instituted a 5 games/year limit on publishers to limit the chances that they'd flood the market. Nintendo would have a group internally playtest games and provide feedback to publishers. Because the NES was so popular and games were cheap to develop, some publishers would submit more than 5 games per year and only publish the games that scored highest. As a result, there's tons of fully complete NES games that never got released.
- zlg_codes 3y ago
  Yes! Check out the history of Ultra Games if you want some fun trivia.
zlg_codes 3y ago
$1 video games are an unsustainable market anyway. Nintendo's practices saved the industry. They weren't suitable forever (limiting publishers per year wasn't popular to begin with) but it's undeniable that they rose the bar in game quality on home consoles and helped restore it to a respectable industry. The Seal of Quality used to mean something.

belugacat 3y ago

Exactly this. Even to this day, Nintendo is very smart about almost never discounting their flagship games - and when they do, it’s by a small percent, sometimes with strings attached, not the crazy “90% off” tactics many other developers/publishers follow.

doubled112 3y ago
Playstation games being in the $15 bin while desirable N64 games never seemed to go on sale was a big reason kid me had a ton of games compared to my friends with N64s. I still see this with my kids and their Switch. PS2 and GameCube seemed to follow the same pattern.
babuskov 3y ago
Yes. And it teaches the consumers that there's no point in waiting. When you want their game, you just buy it at full price on launch date, because you know that waiting for discount would take years and even then it would be 20-30% off at best.
- born2meme 3y ago
  Or in my case it taught me to not want to play the fucking thing at all. Simple as.
  - TremendousJudge 3y ago
    Well the strategy relies on the games being really good in the first place, so that many people wouldn't take that option.
kalleboo 3y ago
Although to continue the argument from GP: copious 90% off steam sales haven't killed PC gaming, enough people still preorder PC games at full price. It's literally a meme that people have more games than they can ever play but they still keep buying new ones.
- djur 3y ago
  In the '80s the games were mostly being purchased by adults for children, while today PC games are mostly purchased by adults for themselves. (I also remember being encouraged to spend my allowance on clearance-bin games when my parents wouldn't buy them new.)

pjc50 3y ago

> their practices with the NES were not quality control; they were doing price control A little of both: https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons Yes, restricting overall game production held up prices, but a market of uncertain quality tends to drive down prices even for high-quality goods.

whaleofatw2022 3y ago

Iirc nintendo originally allowed retailers consignment for the NES, just to get them to carry it.

internet101010 3y ago
This is the correct way for a retailer to do business with new, unproven vendors that do not have any leverage. Either do consignment or do half upfront. Otherwise the retailer will end up with a bunch of bad inventory.

posterboy 3y ago

Piracy of 100 in 1 cartidges for Game Boy was a thing along with Adibas bootleg. Memory was limited and the games are simple because of it. I had a 1 in 4 with space invaders and that was a comparatively shitty game but a hit on Atari (minimum viable product, worse than asteroids). So what killed Atari was extremely low quality, plain and simple. You may have a point on price control, because I saw no main titles, and I remeber more recently the Mame community held back on (highly priced) arcade titles to not compete with sales. But you present a false dichotomy because quality control is marketing.

philistine 3y ago
See, you're taking the point of view that it must happen through the prism of the player. That it has to be something the player has agency with, in this case, video game quality. I'll push back on that. Devs were making games for a console more akin to a tin can with a string than a computer. Most developers made their games alone, with very tight time constraints. Code quality was nowhere what it is today, due to the tooling. There were hard limits to what they could offer the player, so of course games look terrible with hindsight. You can listen to They Create Worlds. They very expertly talked about the preconceived ideas about the crash, and why they're wrong. http://podcast.theycreateworlds.com/e/the-great-video-game-crash-part-1/ http://podcast.theycreateworlds.com/e/the-great-video-game-c...

lordfrito 3y ago

> retailers were stuck with the cartridges without the ability to return them This was true when it came to dumping 3rd party cartridges, but that wasn't the case with Atari. Atari had a deal with retail that any unsold cartridges could be returned and exchanged for newer titles. So it was win/win for retailers -- just give Atari shelf space for carts and what was there would either sell or get returned. Zero risk to retailer. This combined with the 2nd problem -- oversupply. What made matters worse is that for a while Atari was struggling to meet order demand. The 2600 was so hot that they couldn't fulfil 100% of retail orders. So if a store ordered 500 of something, they got 250 units. Atari built more manufacturing capacity, but sales still rose. So now the retailers were ordering 1000 units and only getting 500. The retailers got wise and started ordering a lot more than they needed, figuring Atari would only deliver half. Overordering wasn't an issue anyways due to the return policy. The 3rd problem is that Atari expanded manufacturing enough to finally catch up with order volume. To make it worse the market had just started crashing. So now you have the makings of a perfect storm. Retail orders double what they need, because historically Atari had trouble delivering. Atari actually delivers the goods in full this time due to increased mfg. Combined with the crashing market, this means that way too many carts were made. The carts don't sell, and semi trucks full of unsold cartridges start showing back up at the Atari docks. Atari was blindsided, they didn't even understand what was happening at first. They were managed pretty chaotically anyways - like really badly -- and it hadn't mattered up until then because they were making so much money. Once Atari realized what was going on it was too late. They went from $300m profit in 1982 to $538m losses in 1983. They couldn't recover. This is why there's a landfill full of Atari cartridges -- Atari realized that if they dumped the returns back into the market at a discount, prices would crater even more. So Atari actually lost less money by destroying the unsold cartridges. What was crazy about the 1983 crash was that it took down the biggest company in that space. Usually the small companies go down but the biggest can weather it. This crash was so severe that it killed the largest company in the space. Imagine if a cratering phone market killed Apple, it was just that big of a shock.

hbn 3y ago
That's very interesting, and the first time I've actually heard an explanation of the 1983 crash that makes sense. It's always described as "the games were so bad that the market crashed" which never was a satisfactory answer to me.

ndiddy 3y ago

That's definitely the case. Nintendo even instituted a 5 games/year limit on publishers to limit the chances that they'd flood the market. Nintendo would have a group internally playtest games and provide feedback to publishers. Because the NES was so popular and games were cheap to develop, some publishers would submit more than 5 games per year and only publish the games that scored highest. As a result, there's tons of fully complete NES games that never got released.

zlg_codes 3y ago
Yes! Check out the history of Ultra Games if you want some fun trivia.

zlg_codes 3y ago

$1 video games are an unsustainable market anyway. Nintendo's practices saved the industry. They weren't suitable forever (limiting publishers per year wasn't popular to begin with) but it's undeniable that they rose the bar in game quality on home consoles and helped restore it to a respectable industry. The Seal of Quality used to mean something.