In recent months, I have come across a claim that I found a bit distressing – that the video game “crash” of 1983/84 was confined to home video games and didn’t really effect the coin-op industry. I first heard this claim on podcast about the crash. The podcast in question is normally quite excellent, so I was a bit surprised but didn’t think too much of it. I’ve heard the claim in a couple of other places since then, however. In the talk section for the Wikipedia article on “The Golden age of arcade video games”, for instance, one editor commented (though the comment is several years old) “The video game crash of 1983 was all about the glut in the home market - I don't see that it had any influence on arcades. I don't think it had anything to do with the end of the arcade golden age…” It appears that the article was revised based on this comment.
I’m not sure exactly what the commentator is trying to say here, but if he is implying that there was no crash in the U.S. coin-op video game market in 1983 and 1984, he’s not only wrong, but very wrong. From reading industry mags and looking at statistics, I can assure you that the industry itself (and the operators in particular) was convinced there was a crash. Perhaps he was thinking that the decline suffered by American arcade video games was more than compensated by Japanese games, which (in his mind) weren’t affected by the crash. This might work if we were only looking at manufacturers (though U.S. manufacturers were certainly affected – not sure about the Japanese). In terms of the coin-op/arcade video game industry, however, what matters is whether or not the arcades and operators were affected since they were the real bedrock of the "industry".
In any event, let’s look at a bit of the evidence. Both RePlay and Play Meter published annual industry surveys and year-end reviews. Here are some typical quotations from Play Meter (I could include similar quotes from RePlay, but they would be redundant). And remember that these magazines covered the coin-op industry, not the consumer industry.
From the November 1, 1983 “State of the Industry” survey:
“It has previously been a pleasure to present the Annual Subscribers' Poll results in our State of the Industry issue. But, for the first time, the task of reporting our findings is one of pain rather than pleasure. As everyone suspected, 1983 hit hard at all industry levels.”“Average weekly collections at the operator level plummeted nearly 30 percent. Consequently, some 2,000 operators went out of business last year. Although there were just as many or more machines and locations this year as last year, just one thing was missing - about 2.5 billion dollars. That's a total of 10 billion quarters that found their way to other forms of entertainment.”
“Had those 10 billion quarters found their way back into the cash cans of our nation's operators, enough money would have been available to purchase as many or more new games than last year. But that didn't happen, and as a result, the whole industry suffered.”“As it is now, home video games have all but closed the gap that once existed between the coin-op and home games. You can now play BurgerTime on your home TV set although the coin-op game was released less than 12 months ago. If the manufacturers fail to reinterest the young adult market, our Subscribers' Poll findings may be worse next year.”
“Like an inconstant lover, the video game spread heartache throughout the coin-op amusement industry during 1983”“Video game operators who sought refuge in other type of equipment found little solace. As unproductive as video games were, they accounted for 85 percent of operator income. Earnings of all major type of equipment were depressed in 1983.”
“The lack of general public interest in this year's crop of new video games and home games hacked away at overall industry earnings. Leaving the national gross take for 1983 at $6.4 billion, off a whopping 28 percent, or $2.5 billion short of the $8.9 billion Americans put into coin-operated amusement in 1982.”
“The dismal returns marked 1983 as the first year since Play Meter started tracking statistics in 1976 that more operators reported profits falling instead of rising”
As bad as 1983 was for the coin-op video game industry 1984 was much worse - at least for video games (unlike in 1983, the bad times in 1984 were largely confined to video games)From the November 1, 1983 issue
First, a comment from the editorial (titled “The Rape of an Industry” – though the “rape” in question primarily refers to the appearance of video lottery games).“For the first time in the history of the State of the Industry report, we are not pleased to present the results of the survey. This year's findings are disappointing to say the least. With a few small exceptions, it was a very bad year all the way around. For the operators it was a bad year, for the distributors it was even worse, but for the video game manufacturers it was devastating.”
From the actual operator survey (titled “The Year of the Crunch”)
“On the brighter side of the coin, all other amusement machines performed surprisingly well despite declining video game revenues. The gross annual collections from all other coin-op amusement devices increased by $400 million in 1984.”
“For the second year in a row and for the second time in the history of this survey, operators reported a decrease in net profits for 1984. Sixty-seven percent of the operators responding to the survey indicated that their net profits decreased since 1983.”
“The remaining operating concerns found themselves with fewer new video machines on location and considerably more non-video, electromechanical machines that require more service and attention. Likewise for the first time in the history of this survey, the total number of units on location dropped dramatically in 1984. The total number of amusement machines on location in the U.S. fell a staggering 12 percent from last year's record level. A net total of 224,065 amusement machines vanished from the streets of America in 1984. Had it not been tor a resurgence of pinballs, phonographs, and pool tables, that number would have been nearly doubled. Video games were undoubtedly, the hardest hit equipment type. There are slightly more than 400,000 fewer video games on location now than there were one year ago.”“In 1981, when video games were averaging $140 per week in gross collections, 60 percent of all the video games on location were new games. Since that time, this percentage has dwindled rapidly. Today only a mere 15 percent of all video games on location are new games purchased within the past 12 months…”
“The video game glut of '82 and '83 has finally taken its toll on the industry's manufacturing community. Sales of new video games (including lasers) plummeted 44 percent down to 168.508 units in 1984. Comparing that figure to the industry’s high water mark of 563,000 units set in 1982, results in a 70 percent decline in new video game purchases over the past two years…”
Finally, the December 15, 1984 issue included an article reviewing the year titled (significantly) “1984 – Even Orwell Couldn’t Predict How Bad it Was”The article opens:
“1984 - the year of the crunch. Much worse than the devastation of 1983, the crash penetrated not only the operating sector but the distributing and manufacturing as well.”Quotes are one thing - let’s look at some statistics:
First, some statistics on the industry in general.
CAVEAT: Bear in mind that these stats mostly come from the RePlayand Play Meter operator surveys, which were usually published in the November issues. Thus, they usually covered the period from late summer/early fall of one year to late summer/early fall of the next rather than coinciding with the calendar year.
Total Coin-Op video game dollar volume (in millions – Vending Times)1978: 308
1979: 968
1980: 2,811
1981: 4,862
1982: 4.363
1983: 2,900
1984: 2,500
1985: 2,350
1986: 2,340
1979: 968
1980: 2,811
1981: 4,862
1982: 4.363
1983: 2,900
1984: 2,500
1985: 2,350
1986: 2,340
Note the huge drop from 1982 to 1983
Overall coin-op amusement industry dollar volume (in billions - Play Meter)
1980: 7.15
1981: 8.2
1982: 8.9
1983: 6.4
1984: 4.5
1985: 4.5
1986: 4
1981: 8.2
1982: 8.9
1983: 6.4
1984: 4.5
1985: 4.5
1986: 4
The 1982-83 drop isn’t quite so bad as the previous list, but the 1983/84 drop is similar.
# of video games on location (in thousands)
1978: VT 164.6
1979: PM 430.65, VT 232.8
1980: PM 540, VT 540.6
1981: PM 780, VT 1,100
1982: PM 1,375, VT 1,200
1983: PM 1,491.4, VT 1,150
1984: PM 1068.5, VT 1,001.6
1985: PM 1,095.4, VT 980
1986: PM 971.5, VT 920
1979: PM 430.65, VT 232.8
1980: PM 540, VT 540.6
1981: PM 780, VT 1,100
1982: PM 1,375, VT 1,200
1983: PM 1,491.4, VT 1,150
1984: PM 1068.5, VT 1,001.6
1985: PM 1,095.4, VT 980
1986: PM 971.5, VT 920
This list, doesn’t look quite so bad (the total actually increased in 1983), but remember that this includes all video games – even old ones that weren’t making the distributors or manufacturers any money (and, as we shall see, operators probably weren't making much money either).
A better gauge is the number of NEW video games purchased:# of new video games purchased per operator (Play Meter)
1981: 521982: 47
1983: 29
1984: 19
Here again, we see a huge drop-off.
Here are a couple of other lists that don’t seem so bad:
# of arcades (Play Meter – note that Play Meter defines an “arcade” as any location with 10 or more coin-op games)
1982: 23,6871983: 25,092
1984: 19,565
# of street locations (Play Meter)
1982: 385,4941983: 392,175
1984: 358,899
Here, we again see a rise in 1983, followed by a somewhat modest decline in 1984, but this does not tell us whether the locations were actually making money on their games.
Bear in mind that the coin-op business was largely an operator’s business. They were the “front line” troops and whether or not there was a “crash” from the industry’s perspective, largely depended on whether or not operators could money.So here are some more operator stats:
Weekly Earnings Per Game – Video Games (R=RePlay, PM=Play Meter, VT=Vending Times)1975: R $43
1976: PM: $40, R $42 (arcade), $35 (street)
1977: PM $44 (arcade games), R $54, VT $37
1978: PM $50 (arcade games), R $44, VT $36
1979: PM $64, R $58, VT $80
1980: PM $102, R $128, VT $100
1981: PM $140, R $110, VT $85
1982: PM $109, R $108 (arcade), $86 (street), VT $70
1983: PM $70, R $62, VT $48
1984: PM $53, R $60, VT $48
1985: PM $57, VT $46
1986: PM $57, VT $49
Note again, the huge drop from 1982 to 1983.1976: PM: $40, R $42 (arcade), $35 (street)
1977: PM $44 (arcade games), R $54, VT $37
1978: PM $50 (arcade games), R $44, VT $36
1979: PM $64, R $58, VT $80
1980: PM $102, R $128, VT $100
1981: PM $140, R $110, VT $85
1982: PM $109, R $108 (arcade), $86 (street), VT $70
1983: PM $70, R $62, VT $48
1984: PM $53, R $60, VT $48
1985: PM $57, VT $46
1986: PM $57, VT $49
Estimated # of operators (Play Meter)
1977: 6,0001978-1980: 7,500
1981: 9,000
1982: 12,000
1983: 11,000
1984: 9,000
1985: 6,000
1986: 4,000
Here, the decline in 1983 is modest and is followed by a much sharper drop from 1983-1986. Again, however, remember that these numbers do not mirror the calendar year.
Finally, from a different source, let’s look at the effects of the crash on three of the largest U.S. manufacturers.
Warner/Atari’s losses for 1983 and 1984 are quite well known, but I omit them because they were largely the result of the performance of the consumer division.For Bally, Williams, and Centuri, however, home games comprised a very small percentage of their business.
For each company, the numbers given are revenues to the left of the slash and income (i.e. profits) to the right. Figures are in millions and the source is company annual reports.NOTE that negative numbers (i.e. losses) are in parenthesis.
First, let’s look at Bally (fiscal year ended 12/31)
1980: $690/$54 1981: $885/$82
1982: $1,285/$91 – video game and pinball revenue: $435
1983: $1,176/$5 – video game and pinball revenue: $99
1984: $1,349/($100) – video game and pinball revenue: $67
I don’t know about you, but I’d call going from a $91 million profit to a $100 million loss (their first loss since they went public in 1969) in two years a “crash” if there ever was one. Yes, Bally had other product lines, but video games were largely responsible for their losses. You can see why Bally president Robert Mullane said in a January 1985 interview in the Chicago Tribune"The industry didn't decline. It fell off the cliff."
How about Williams (the #3 U.S. manufacturer of the early 1980s) – Fiscal Year ends September 30
1980: $80/$4.81981: $149/$19
1982: $136/$16
1983: $92/$9.8
1984: $57/($14)
Once again, note the huge loss in 1984.
Centuri’s numbers aren’t quite so clear, since they were losing money even before the crash (In addition, they changed their fiscal year from October 30 to December 31 in 1983).
1980: $6/($4.5)1981: $61/$7.5
1982: $21/($2.9)
1983: $108/$2.8
1984: $135/($2.2)
Note too that in 1983 and 1984, a good amount of the total revenues came from Outdoor Spots Inc. More significantly, in December of 1984, Centuri’s board of directors voted to drop video games entirely, a clear indication of how poorly they were doing.
Finally, while reliable production runs for individual games are hard to come by, the numbers we have indicate that the top selling coin-op video games from before 1983 sold far more copies that those in 1983/84. Since it is public, I'll use Wikiepedia's list rather than my own (though I feel mine is more complete). Of the top 25 games on that list, 18 were released between 1979 and 1982, 6 were released after 1990, and one was released in 1986. The top selling game released in 1983 27th and sold just 16,000 copies. Sure, some of the 1982 releases were still collecting quarters in 1983 and 1984. And Pole Position was basically a 1983 game (I'd guess it was the bestselling 1983/84 game, with around 21,000 produced), but to me that only illustrates the fact that the "golden age" was over.
In summary, then, I don’t see how anyone could plausibly claim that there was no crash in the arcade video game industry in 1983 and 1984 – though maybe I’m not looking at it the right way.