This Week in Gaming History: What really killed the 1980s video arcade0 Comments
It would be an understatement to say that the reasons behind the North American video game crash of the early 1980s are misunderstood. It isn't as simple as the quality of Atari's E.T. game or the rise of other popular items in pop culture. In fact, it is lost on most that there were actually two different video game crashes in the U.S. in one short window of time. The video arcade game industry crashed first, and for different reasons than the home console market did. This article is going to go into some of that, mythbusting some of the information that is out there along the way.
Gamers of almost any age know that the heyday of Asteroids and Pac-Man was huge, but few know just how huge it was. It truly started with Space Invaders, which was first released in the summer of 1978 and into wider release late that same year. Prior to this game's release, few arcade video game machines ever sold 10,000 units in North America. Space Invaders broke that record seven time over, setting the stage for other games to sell previously unheard of numbers. By 1982, there were more video arcades in the United States than there are Starbucks Coffee locations today, and they marked only a fraction of the total arcade video game units in operation. Most of them were actually in street locations, places that are actually other types of businesses such as restaurants and donut shops. This leads us to the first - and main - reason for the arcade side of the crash.
Too Many Machines
Already mentioned is Space Invaders, which sold about 70,000 units in North America. Atari's Asteroids approached that same number shortly thereafter. Galaxian, the prequel to Galaga, saw 50,000 units produced. Then came Pac-Man, which sold an earth-shattering 100,000 copies in America. Defender did over 55,000 units, Donkey Kong did 67,000, Donkey Kong Junior did 30,000 and Galaga did 40,000. Ms. Pac-Man, released in January 1982, did between 115,000 to 119,000 units in North America. Even short-lived titles such as Bally Midway's Omega Race did huge numbers compared to previous records, with a production run of over 25,000.
Long story short, the demand for arcade video games was huge, and companies were more than willing to sell all they could to vendors and operators. Then, and only then, did various problems finally rear their ugly heads. As it turned out, video games were not like other types of coin-operated vending equipment. One could buy soda machines, jukeboxes and pool tables and expect them to generate money for years and years to follow. Most arcade video games, however, aged very quickly. Even some of the biggest titles out there only made money for a year or less. One example is Nintendo's Donkey Kong, which set a Play Meter earnings record of over $800 in October 1981. According to later Play Meter reports, those earnings were down to $75 per week less than a year later, and by January 1983, many Donkey Kong machines were earning less than $10 per week.
Not helping the situation were media reports, which would note the incredibly high earnings that games such as Pac-Man earned at their peak in busy locations. What that left out was that games such as Pac-Man were the exceptions, not the rules, and that most games never earned even a fraction as much. Between the pie-in-the-sky media reports and aging equipment, it didn't take long for the marketplace to be choking on way too much equipment. Operators were stuck with small armies of games nobody wanted to play and nobody wanted to buy.
Too Many Locations
Since arcade video games were believed to generate easy money, they literally began to pop up in every business possible. Corner stores, gas stations, donut shops, laundromats, bars, movie theaters and pizza places did okay here, but far too many other places failed to do so. There were arcade video game machines installed in flower shops, K-Mart stores, upscale restaurants and even funeral parlors. Every Denny's restaurant used to have one or two arcade video games crammed into their lobby area. Personally witnessed examples include a beachfront hotel in Florida converting their exclusive restaurant in an arcade and a Pac-Man machine installed in a wax museum.
Simple logic is that all of these games were competing with each other, especially in strip shopping centers where almost every business inside had at least a few games. Far too many of these places simply had no business installing the machines, especially to the point of sacrificing key floorspace to them. The investment didn't pay off for most of them, further flooding the marketplace with too many games.
Too Much Regulation
Hearing the same inflated media reports mentioned above, cities and states across the country wanted a piece of the pie that they were led to believe was being made. Licenses to open arcades or to even operate machines in a public place skyrocketed in price overnight. In Texas, which requires a license tag for each machine, the price jumped from $10 per year per game to $50. That's a huge increase in the modern day, and even moreso in 1982 dollars.
In addition, controversy over video games peaked with the popularity of the games. Exaggerated media reports of kids skipping school to hit the arcade began to pop up. Some cities banned the machines outright, while others restricted the operating hours of video arcades and gamerooms. In many places, arcades could no longer operate during school hours.
What those restrictions failed to take into account is that children were far from the only patrons of the video arcade. Closing those doors during school operating hours meant that college students and housewives could no longer go in and play during daytime hours, nor could various professionals that had been hitting arcades on their lunch breaks. Additionally, these locations still had to pay rent and other expenses, most of which had increased due to exaggerated earnings reports.
Home Video Games
The claim that home video games caused the 1983 era crash are more myth than fact. While the ability to play popular games on home consoles did cause some arcade hits to age more quickly, they did not impact the industry nearly as much as the reasons outlined above. One popular myth in this department comes from the founder of 1980s scoreboard Twin Galaxies, who has claimed that a poorly attended arcade tournament in 1986 was due to people playing more at home. In reality, 1985 and 1986 were two of the worst three years in history for the American home console market, while the arcade industry had actually recovered to an extent by 1986.
The Myth of the Golden Age
The pre-crash era of the 1980s arcade is often called the "golden age", with some extending that claim into the latter half of that decade. In reality, the video arcade industry experienced even greater days in the first half of the 1990s. While there were nowhere near as many video arcades and street locations as there had been in the early 1980s, this was due more to operators and companies learning their lesson before. Earnings were at an all-time high during the early-to-mid 1990s, with games such as Street Fighter II, Daytona USA and NBA Jam making more money than anything to hit the arcade before or since.
It was at this time that the home console market finally started to overtake the video arcade, as the Sony PlayStation and Nintendo 64 finally produced home console titles that look the luster off of the flashy arcade experience of yesterday. The idea of the early 80s arcades standing as a "golden age" alone is a matter of perspective. One would be hard-pressed to find people who were into the 1990s arcade scene who would concede that their era wasn't the true peak of the industry, and statistically, they have an argument.
Only The Tip of the Iceberg
This article only goes into the short-form look at this very complex industry correction. Other factors existed, including small operators and arcades who were forced into buying new games they couldn't afford in order to compete with larger operators. The royal failure of the laserdisc game era also factored in, as did the rush of clones and sequel games. Not enough room here to explore it all in one shot, but hopefully this piece can help the public understand at least some of the cause of the American arcade crash of the 1980s. More on this topic to come in time.