Video game crash of 1983: History and Key Facts

The video game crash of 1983 was a large-scale recession in the video game industry that occurred from 1983 to 1985 in the United States. The crash was attributed to several factors, including market saturation in the number of video game consoles and available games, many of which were of poor quality. Waning interest in console games in favor of personal computers also played a role. Home video game revenue peaked at around $3.2 billion in 1983 (equivalent to $10.34 billion in 2025), and fell to around $100 million in 1985 (equivalent to $299.35 million in 2025), a drop of almost 97%. The crash abruptly ended what is retrospectively considered the second generation of console video gaming in North America. To a lesser extent, the arcade video game market also weakened as the golden age of arcade video games came to an end; analysts of the time expressed doubts about the long-term viability of the video game industry.

The North American video game console industry recovered a few years later, mostly due to the widespread success of Nintendo's Western branding for its Famicom console, the Nintendo Entertainment System (NES), released in October 1985. The NES was designed to avoid the missteps that caused the 1983 crash and the stigma associated with video games at that time.

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