The North American video game market crashes
A rushed E.T. tie-in becomes the symbol of an industry drowning in its own cartridges
Quick facts
- E.T. developer
- Howard Scott Warshaw
- E.T. development time
- About 5.5 weeks
- Landfill location
- Alamogordo, New Mexico
- Crash period
- 1982-1985
What happened
By 1982, Atari's home console business was under pressure from Mattel's Intellivision and Coleco's ColecoVision, and a flood of third-party developers, some skilled, many not, was saturating store shelves with new cartridges. Trying to license Steven Spielberg's E.T. the Extra-Terrestrial for a Christmas 1982 release, Atari gave developer Howard Scott Warshaw only about five and a half weeks to build the game rather than the usual six to nine months, and the rushed result sold roughly a million of the four million cartridges Atari needed to break even, with many buyers returning it as unplayable. In September 1983 Atari buried a large stock of unsold cartridges, later confirmed at about 728,000, in a landfill near Alamogordo, New Mexico. Atari lost hundreds of millions of dollars, and Mattel and Coleco both exited the console business by 1985.
Why it matters
The crash wiped out the dominant American console makers and opened the market to Japanese companies, above all Nintendo, whose 1985 relaunch strategy was built explicitly to avoid repeating the quality-control failures that caused the collapse.
How we know
The Smithsonian's National Museum of American History acquired an E.T. cartridge recovered from the 2014 excavation of the actual Alamogordo landfill, verified by its city serial number, and its own published account lays out the licensing deal, Warshaw's development timeline, and the causes historians attribute to the crash. The Strong National Museum of Play's own retrospective adds that the crash stemmed from broader market saturation, not the E.T. cartridge alone.
Sources
- Smithsonian National Museum of American History. From landfill to Smithsonian collections: "E.T. the Extra-Terrestrial" Atari 2600 game · Primary source (author-declared)americanhistory.si.edu · Cited as a "primary" source (no stronger domain match).
- The Strong National Museum of Play. What Video Game Crash? · Reputable sourcemuseumofplay.org · The domain "museumofplay.org" is on our Reputable source registry. · Link is live and its text matches the event's key terms (Jul 2026)
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