The "video game crash" was a drop in capital, not revenue. Sales of Atari games continued to grow up until the introduction of the NES in 1984. But investors lo

The "video game crash" was a drop in capital, not revenue. Sales of Atari games continued to grow up until the introduction of the NES in 1984. But investors lost faith in the industry because sales didn't meet the wildly overstated forecasts made in 1982. Atari saw a lot of unsold inventory returned to them and orders cancelled at the end of 1982 because of overproduction. This is what Nintendo was trying to avoid with their licensing requirement. Retailers were promised that they wouldn't have to overbuy game stock. Nintendo introduced artificial scarcity into the gaming business, something they probably already knew from their card game history. If you limit the supply it creates increased demand which keeps prices high.