The manic depressive nature of the video game market

Posted by David Konow

I’ve always been surprised by the relatively manic depressive nature of the video game market.

It seems like only yesterday Guitar Hero was the wave of the future, and it even managed to keep what was left of the music business alive, albeit for a little while. Then, when everything was swimming along just fine, all the water drained out of the pool and everything crashed to the cement.

The manic depressive nature of the game marketFast forward to 2011, when gaming hit a four year low this May - the lowest since October 2006.

Obviously, this isn’t the first time the industry has experienced such a steep plunge. 

I can still recall the Atari/Coleco home gaming explosion, when I was blowing mountains of quarters at the local arcades just like most kids my age.

After a while I just got bored with it all and left games behind me, although certainly many people I know haven’t outgrown them.


Getting back to the glory days of gaming, at least one mogul had the foresight to know it wasn’t going to last, and I found this out reading the biography of Steve Ross, Master of the Game. Ross was the mogul who brokered the Time Warner merger, and Atari was under the Warner Communications umbrella.

As you may recall, Atari went from turning a profit of $6 million in 1979 to a profit of nearly $70 million in 1981. 

Although the company was going like gangbusters, Ross was the one naysayer who said nothing’s a goldmine forever.

Ross’s biographer even speculated that probably no business had grown as fast as Atari, which is enough to make a lot of people nervous because what goes up must come down, and if a business goes up that fast, it’s probably gonna crash pretty hard as well.

Although it didn’t completely destroy the company, Atari hit a big iceberg with E.T., one of the biggest disasters in gaming history. Seriously, how could you lose creating a game around what became the phenomenon of 1982?! 

Still, 4 million copies of the game were made, and 3.5 million were returned. (Many of the cartridges were buried in a landfill, although you can find plenty on Ebay if you want one.)

There was also speculation that Ross put the game into production to get Steven Spielberg, who looked to Ross as a father figure, to make his next movies at Warner Brothers, and he did with The Color Purple, and Empire of the Sun. (Spielberg also made the first Amblin films, Gremlins and Goonies, at Warners as well.) 


Whether people saw it coming or not, the decline of gaming felt abrupt then, just as it may feel somewhat abrupt now. 

A new generation discovered gaming of their own desire, with their own generation of games to enjoy, and perhaps we’ll have to wait a generation again for it to come back strong, or perhaps another gaming comeback is just around the corner. 



Of course, if anybody could predict this ahead of time, we’d probably keep the consoles and cartridges in a bomb shelter somewhere, waiting for the right time to bring them back out of the dark.