The Atari 2600 became the most popular game console of the second generation.
Fairchild released the Fairchild Video Entertainment System (VES) in 1976. While there had been previous game consoles that used cartridges, either the cartridges had no information and served the same function as flipping switches (the Odyssey) or the console itself was empty (Coleco Telstar) and the cartridge contained all of the game components. The VES, however, contained a programmable microprocessor so its cartridges only needed a single ROM chip to store microprocessor instructions.
RCA and Atari soon released their own cartridge-based consoles.
Video game crash of 1977
In 1977, manufacturers of older, obsolete consoles and Pong clones sold their systems at a loss to clear stock, creating a glut in the market, and causing RCA and later Fairchild to abandon their game consoles. Only Atari and Magnavox remained in the home console market, despite suffering losses in 1977 and 1978.
In North America this drove most smaller game companies out of business, but in Europe it had different impact. The reduction in demand for the chips that powered first-generation consoles caused the price of those chips to drop dramatically. European manufacturers such as Hanimex, Secam, and Soundic released cartridge-based game consoles that contained no CPU. Cartridges for these consoles would contain the same chips that had powered later pong consoles.
Rebirth of the home console market
Initially, VES continued to be sold at a profit after the 1977 crash, and both Bally (with their Home Library Computer in 1977) and Magnavox (with the Odyssey in 1978) brought their own programmable cartridge-based consoles to the market. However, it was not until Atari released a conversion of the arcade hit Space Invaders in 1980 that the home console industry was completely revived. Many consumers bought an Atari console so they could play Space Invaders at home. Space Invaders' unprecedented success started the trend of console manufacturers trying to get exclusive rights to arcade titles, and the trend of advertisements for game consoles claiming to bring the arcade experience home.
Throughout the early 1980s, other companies released video game consoles of their own. Many of the video game systems were technically superior to the Atari 2600, and marketed as improvements over the Atari 2600. However, Atari dominated the console market in the early 1980s.
Video game crash of 1983
Main article: Video game crash of 1983
In 1983, the video game business suffered a much more severe crash. A flood of consoles, low-quality video games by smaller companies (especially for the 2600), industry leader Atari hyping games such as E.T. and a 2600 Pac-man that were poorly received, and a growing number of home computer users caused consumers and retailers to lose faith in video game consoles. Most video game companies filed for bankruptcy, or moved into other industries, abandoning their game consoles. A group of employees from Mattel Electronics formed the INTV Corporation and bought the rights for the Intellivision. INTV alone continued to manufacture the Intellivision in small quantities and release new Intellivision games until 1991. All other North American game consoles were discontinued by 1984.
Fairchild released the Fairchild Video Entertainment System (VES) in 1976. While there had been previous game consoles that used cartridges, either the cartridges had no information and served the same function as flipping switches (the Odyssey) or the console itself was empty (Coleco Telstar) and the cartridge contained all of the game components. The VES, however, contained a programmable microprocessor so its cartridges only needed a single ROM chip to store microprocessor instructions.
RCA and Atari soon released their own cartridge-based consoles.
Video game crash of 1977
In 1977, manufacturers of older, obsolete consoles and Pong clones sold their systems at a loss to clear stock, creating a glut in the market, and causing RCA and later Fairchild to abandon their game consoles. Only Atari and Magnavox remained in the home console market, despite suffering losses in 1977 and 1978.
In North America this drove most smaller game companies out of business, but in Europe it had different impact. The reduction in demand for the chips that powered first-generation consoles caused the price of those chips to drop dramatically. European manufacturers such as Hanimex, Secam, and Soundic released cartridge-based game consoles that contained no CPU. Cartridges for these consoles would contain the same chips that had powered later pong consoles.
Rebirth of the home console market
Initially, VES continued to be sold at a profit after the 1977 crash, and both Bally (with their Home Library Computer in 1977) and Magnavox (with the Odyssey in 1978) brought their own programmable cartridge-based consoles to the market. However, it was not until Atari released a conversion of the arcade hit Space Invaders in 1980 that the home console industry was completely revived. Many consumers bought an Atari console so they could play Space Invaders at home. Space Invaders' unprecedented success started the trend of console manufacturers trying to get exclusive rights to arcade titles, and the trend of advertisements for game consoles claiming to bring the arcade experience home.
Throughout the early 1980s, other companies released video game consoles of their own. Many of the video game systems were technically superior to the Atari 2600, and marketed as improvements over the Atari 2600. However, Atari dominated the console market in the early 1980s.
Video game crash of 1983
Main article: Video game crash of 1983
In 1983, the video game business suffered a much more severe crash. A flood of consoles, low-quality video games by smaller companies (especially for the 2600), industry leader Atari hyping games such as E.T. and a 2600 Pac-man that were poorly received, and a growing number of home computer users caused consumers and retailers to lose faith in video game consoles. Most video game companies filed for bankruptcy, or moved into other industries, abandoning their game consoles. A group of employees from Mattel Electronics formed the INTV Corporation and bought the rights for the Intellivision. INTV alone continued to manufacture the Intellivision in small quantities and release new Intellivision games until 1991. All other North American game consoles were discontinued by 1984.
