In the last 50 years, the gaming industry has come a long way as a growing network of gamers become engrossed in the digital world. With modern video games exploring every imaginable genre from nerve-wracking shoot ‘em ups to strategic role-play adventures, there is virtually something for every gamer. Although Sony, Microsoft and Nintendo are the biggest players at present, throughout the late 70s and early 80s the industry was dominated by the legendary Atari Inc.
Through developing the Atari 2600 games console, the technology superpower made it possible for gamers to enjoy the joys of the arcade in the comfort of their own homes. As titles including Pong, Space Invaders and Frogger quickly became cult classics, Atari controlled 80% of the games market at its peak. While the simplistic 8-bit approach to video-gaming captivated a new generation of players, Atari was eventually suffocated by its own ambition.
At the start of the 80s, the industry was booming as crowds of people battled to join the gaming community. In a rush to get games on the shelves, many games firms started cutting out vital phases from the development process. Whereas in the past games typically took a considerable amount of time to develop and test, during the boom period businesses were turning out new titles in just a matter of months. At this point in time Atari had grown to become the most prominent brand thanks to the release of the infamous arcade classic Pac-man and blockbuster hit ET: Extraterrestrial.
Atari had huge hopes for both games and projected that the launches would enable them to achieve 50% growth. In order to meet the anticipated demand, Atari produced over 5 million ET cartridges in addition to 12 million Pac-man cartridges. Given that only about 10 million compatible Atari game consoles were in circulation, the gaming giant had placed a huge bet that the new titles would not only be bought by everyone who owned an Atari 2600, but also compel millions more new customers to invest in an Atari console just so that they too could play these highly anticipated games.
However, despite Atari’s optimism, the games industry was on the brink of a great crash. As a consequence of cutting vital development phases, both ET and Pac-man were condemned by critics and gamers alike. Over 40 years later and ET: Extra Terrestrial is still considered one the worst titles ever made, if not one of the biggest commercial failures in history.
By 1983, frustration over poor graphics and shoddy gameplay had triggered a collapse across the North American Games Industry. The sector faced unprecedented challenges as the plunge in demand created an impossible environment in which to operate. Numerous organizations filed for bankruptcy and many feared that the industry would be unable to re-spawn to its former glory. Despite the staggering setbacks in the industry, Atari did not veer from its ambitious plans.
As the gaming legend failed to meet ambitious sales targets, Atari was left with vast quantities of surplus stock. This inventory issue was further exacerbated by an extensive number of product returns from disgruntled customers. In a botched attempt to save themselves from embarrassment, the games company allegedly buried millions of ET and Pac-man game cartridges in a landfill site in El Paso, Texas. As news of this unusual solution to surplus stock built into a media frenzy, many question what other secrets Atari had buried along with its redundant stock.
Although, the exact contents of the landfill site remains a mystery, perhaps if Atari had access to some of the tools and technology available today, they could have avoided this whole debacle all together. Through adopting intelligent tools that provide greater transparency across the supply chain, Atari would have had greater access to more detailed demand information. In addition, modern supply chain technologies support forecasting functions, enabling businesses to better prepare for shock events such as the North American Games Industry crash. As a result the games giant could have more accurately planned for demand and thus prevented millions of surplus games going to waste.
While nothing makes for a great gaming experience quite like a bit of action, in order to prevent such dramas from becoming a reality, modern businesses should learn from Atari’s mistakes and thus protect themselves from challenges which may lie ahead.
