Copyright (c) 1996, 1997, 1998, 1999, 2000 Samuel N. Hart
All Rights Reserved
Third Generation Systems, 1981-1984
The third Generation is often referred to as "the dark ages"6 because of the crash of the video game market during these years. At the peak of the previous generation, the video game industry was grossing upwards of $3 billion in America alone. However, in 1985, at the end of the Third Generation, video game sales would only reach $100 million worldwide. 4
There has been a great deal of speculation as to exactly what caused this dramatic decline in gaming popularity. Cohen suggested that Atari spread themselves too thinly in their attempt to diversify, and flooded the market with too much product.13 This, however, is not the theory I subscribe to. In all fairness to Cohen, his research was concluded during 1983 and 1984, and was a good year away from witnessing the complete ruin that became of the industry.
The theory I believe to be accurate is based primarily upon my personal experience with the video game industry since 1977, and has been validated by several publications over the years. (The Vidiot's Club, Electronic Gaming Monthly, GameFan, Game Over-by David Sheff.)
During the Second Generation, magnetic mediums were implemented in the data storage used in Arcade machines. These mediums (usually variations on the floppy disk) allowed for a higher memory capacity than conventional ROM cartridges. (At that time, ROM cartridges were averaging around 4-16 kilobytes as opposed to computer disks that could store upwards of 180 kilobytes per side.) In 1982, Atari had the option to include a disk drive built into the 5200 game console. The price difference would have been nominal, but the memory capacity allowed would have been significant.6 Atari was also in the process of acquiring diskette manufacturing equipment for their upcoming computer line.13 Thus, the leap to a magnetic medium for video games would not have been a great difficulty for them. Internal pressures from the industry and external pressures from the consumer were in favor of this higher capacity storage, and many speculated that it would be implemented in the Third Generation systems.7
Atari, however, had different views. In a 1982 press release Atari stated, "[Magnetic] media is entirely too fragile for the consumer to adequately handle."7 Because Atari dominated the industry so completely at the time, few companies opposed this decision publicly. Those that did would not survive for long. For example, Coleco would bring out the Coleco Vision with its tape drive, but it would be forced out of the market due to lack of sales.
However Atari's "concern" for the customer backfired on them. In the previous years, there had been a very fine line separating arcade game quality from home game quality. With arcades utilizing storage capacities ten to forty-five times larger than home systems, that fine line became a chasm. Arcade games seemed to be evolving exponentially, while home systems seemed "stuck in a time warp."6
The public quickly became uninterested in video game specific consoles, and sales plummeted.
This would mark the end of Atari's reign of the video game market. To this day, Atari has not produced any significantly popular systems apart from their original Pong and the VCS/2600. Since 1985, they have slowly been picked apart by the industry. Splinter companies can be seen everywhere. One of which, known as Tengen, would play a crucial role in the Fourth Generation during some heated legal actions involving Nintendo of America.
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Copyright (C) 1996-1997, Sam Hart, email@example.com