The North American video game crash of 1983 (sometimes known as the video game crash of 1984 because it was in that year that the full effects of the crash became apparent to consumers) was the crash of the US video game market in the early 1980s. It almost destroyed the then-fledgling industry and led to the bankruptcy of several companies producing home computers and video game consoles in North America. The crash brought an abrupt end to what is considered the second generation of console video gaming in the English-speaking world. It lasted for about two years and during that interval, many business analysts of the time expressed doubts about the long-term viability of video game consoles. The video game industry was revitalized a few years later, mostly due to the widespread success of the Nintendo Entertainment System (NES), which was released in North America in 1985 and became extremely popular by 1987.
There were several reasons for the crash, but the main cause was oversaturation of the market with dozens of consoles and hundreds of mostly low-quality games. Hundreds of games were in development for the 1983 release alone, and this overproduction resulted in a saturated market without the consumer interest it needed.
While walking down nostaliga-lane, researching old classic video games, their programmers, and so forth, I came accross the NA Video Game Crash Wiki.
North American video game crash of 1983 - Wikipedia, the free encyclopedia
Free market forces in this case resulted in the console industry imploding, leaving Japan to swoop in with its heaviliy restrictive market-preserving regulations, and take over the market, which it dominates to this day. Is this yet another example of how pure free market is an absurd exercise that always ends in market collapse, and how regulation is always evidenced to be not just the answer, but the long term solution?
While walking down nostaliga-lane, researching old classic video games, their programmers, and so forth, I came accross the NA Video Game Crash Wiki.
North American video game crash of 1983 - Wikipedia, the free encyclopedia
Free market forces in this case resulted in the console industry imploding, leaving Japan to swoop in with its heaviliy restrictive market-preserving regulations, and take over the market, which it dominates to this day. Is this yet another example of how pure free market is an absurd exercise that always ends in market collapse, and how regulation is always evidenced to be not just the answer, but the long term solution?
The best of the best emerged. How is that a bad example of free markets?
Arguably, the lack of regulation that allowed Japanese companies like Nintendo to enter the American market relatively cheaply is what saved the video game industry in the United States
Why would you want to regulate a good thing??
Arguably, the Japanese are just smarter than Americans and, regardless of the regulatory climate, they would have kicked our butts in electronics one way or another.
Ricardo's Law says that every nation should specialize in what they do best, even if there are other nations that do it better. Sound wisdom.
Also, this is a classic line from the Clint Eastwood movie, The Eiger Sanction. Eastwood, a retired assassin employed as a college professor of literature, is asked why he is going on yet another assassination mission. He replies, "it is what I do best."
If you are one of those people - like me - who responds to every social situation by asking oneself, "what would Clint Eastwood do?" then you should be sure to apply Ricardo's Law whenever these tricky economics questions come up.
Video Game crash of 1983 had to do with several issues, non of them due to regulation. The biggest contributor was the introduction of new technology, namely the portable PC.
There were several reasons for the crash, but the main cause was oversaturation of the market with dozens of consoles and hundreds of mostly low-quality games. Hundreds of games were in development for the 1983 release alone, and this overproduction resulted in a saturated market without the consumer interest it needed.
Yes, not just the PC, and not primarily the PC.The flood crashed the gaming market at the time.
Regulating the gaming market would be a catastrofic failure. Regulating the US economy is much the same.
Free markets are never unregulated, to be a market they are necessarily regulated. How well they are regulated, and to what extent, are really the only thing to discuss I'm guessing.The best of the best emerged how is that bad a bad example of free markets?
Not exactly.
Notice ow it only took 2 years for the industry to bounce back in full force
(and its been relatively strong since)
Arguably, the lack of regulation that allowed Japanese companies like Nintendo to enter the American market relatively cheaply is what saved the video game industry in the United States
You disagree in part later, and so does the Wiki quoted below:
In the game crash scenario, game companies did not self-regulate. Lots of competition, no regulation, lead specifically to LOWER quality games, and the eventual market COLLAPSE. It did not rebound. Another country came in, specifically WITH regulations (And now a near-monopoly), and showed the U.S. how to thrive using the market....and self-regulation.
Cause, no regulation. Solution, regulation.
If they do not self-regulate, you regulate them or let it collapse and be run by someone else, who will regulate. Really what you want? We can let Japan run our market, or China, but that's less relevant than the fact that to stay efficient and not collapse, they will regulate.
Precisely the opposite of what happened, even supported by your acknowledgment of how it happened. Nintendo did not have a flood of cheap games, why? They put restrictions on it solely to help the market thrive (and thus their business/profit).
It really seems cut and dry to me in terms of leading cause, leading solution. In fact, the lack of specific "regulation" is what cause the failures in both cases, and has always been the solution historically.
The 1983 crash came from bad business practices at ATARI, who lead the market at the time, too many crappy games without a market for them...
1983 was pure greed, pure "quantity over quality".
In 1984, there was mostly the fall out of the market, Atari tried in vain to release a new console, but the brand had been sullied by the failures of the last year. In 1985 Nintendo released the NES in the spring, and the system was light years ahead of anything any American company had ready.
It was innovative, the games like no one had ever seen... it blew people away.
Nintendo fell from grace when Sony released the PS and chose CD over cartridges. That wasn't due to regulation, that was due to smart free market practices at work.
The PS2 smashed everyone later because it was backwards compatible and finally Nintendo got into the Disc market with the gamecube, but again Sony lead because they had a smarter business plan.
Jump ahead to today and we Sony teetering on the brink of failure because they SCREWED UP. Adn Nintendo and MS have gained heavy ground with innovative products, smart marketing and good products at the right price.
Sony believed their own hype and released an over priced console that had 1 thing going for it in this new era, Blue Ray. And not everyone was willing to drop the grip for that.
What does the Video Game history tell us? Smart companies succeed, bad ones do not. Remember the SEGA consoles, you could write an entire book on the problems with that, and most were due to poor management.
Regulation has never been an issue in the VG market.
If we are not to use my view on the issue, nor yours, who's are we to use? It's another datapoint that backs what I stated, you are free to post similarly, and free not to. You will not find "proof" either way in economics, you should already know that. A good theory is the best you get.First, never use wiki as your primary source of info.
Competition is regulated every day, in every known market, in a variety of ways. When you write "you don't regulate competition", I'm not quite sure what you are referring to, it has no basis in reality.You're confusing government regulation with market initiative. You don't regulate competition.
If they don't regulate, then they fail. You let them fail. This is more attuned to the automotive industry issue, not a government market regulation issue.
I clearly wrote it was a flood of games, numerous times.There was never a hardware flood.
The 1983 crash came from bad business practices at ATARI, who lead the market at the time, too many crappy games without a market for them...
1983 was pure greed, pure "quantity over quality".
What does the Video Game history tell us? Smart companies succeed, bad ones do not.
I totally agree. It is innovation that spurs the most substantial growth in any industry, not "regulation".
Take polio for instance. Under that assumption, it was not the discovery of penicillin that saved millions, but the regulations in place when it happened
Yes, but regulation is a matter for companies, not governments in an arena like this. Video Games are NOT an isolated market, video games are bigger then hollywood.I'm with you, but see where that leads. Here is what I'm seeing:
To avoid ATARI having too many crappy games flooding the market, what do they do? (regulate the quantity/quality of games in their market space, at least to the point they control). They did not, it took another SMART company to come in and do that. And they did, and they succeeded. This worked well, as you noted, in this isolated market segment (video game/entertainment)
That's life, sometimes ****e happens.Let's say two cornerstone companies in industryX exist, and one is playing smart/conservative, and one is playing short-term greedy.
1. If one of these companies is stupid/short-term greedy, it should be allowed to fail (with all due haste). This is *ideal* market reaction.
2. It is possible tha the size of the companies and the particular space in the mareket they occupy, creates a different scenario however. One that we see time and time again.
The one stupid/short-term-greedy company DOES fail, but will cause an unavoidable collapse of the entire market segment, which is also tied to so many other industries that it will bring everything down with hit.
This is *not a ideal* market reaction. We want to ensure #1 happens. The stupid companies, FAIL MISERABLY and lose money. What we do NOT want happening, is a stupid miserable company in finance, to ruin your IT Consulting business. What sense would that make? You were efficient, had good forecasting, planned well, played by the book, were smart, offered a good service at a good price, and you collapse as a direct result of some other stupid company that you were NOT directly tied to?
Trying to centralize control of the markets is... utterly impossible and a dangerous mindset. History teaches this over and over again.We want to foster the first. We want companies to routinely try, and possibly even fail, and ultimately arrive at an efficient market for that time.
It's unavoidable that things can go bad, it's worse when it's pushed and abetted by government (think Freddi and Fannie and the housing market)What we do not want to foster is companies to be incentivized to create companies that are enormously powerful, and allowed to run entirely irresponsibly if the net result is their failure affects each and every other person in the market in some catastrophic way.
Very silly argument, really.We do not think Iran should have Nukes. Why?
Is the economy of the U.S. of such little importance that we incentivize people to build economic nukes that take down our markets? I don't believe it is.
Government cannot run anything right, you want to trust the economy to it?I'm just noting that it goes hand in hand in any "good" market that promotes efficiency and good free market principles, that if companies are so unrestricted to be allowed to fail miserably, depending on their position in the market, should then necessarily not be allowed to take everyone else down with them. Achieved either by regulating their practice, or regulating their size. Either/or, but ignoring both = collapse, inefficiency, etc.
I want the market to function without the meddling of government, which is like kryptonite to the system.It's like wanting to go through hardships in order to come out stronger, vs wanting to get hit and killed by a train to come out stronger. The former is more ideal right?
Trying to centralize control of the markets is... utterly impossible and a dangerous mindset. History teaches this over and over again.
It's unavoidable that things can go bad, it's worse when it's pushed and abetted by government (think Freddi and Fannie and the housing market)
Government cannot run anything right, you want to trust the economy to it?
Seriously?
I want the market to function without the meddling of government, which is like kryptonite to the system.
You have this belief that government should direct the economy.No it doesn't. I keep showing you are wrong about such views and you keep pretending my posts don't exist.
Centralized control of markets is what allowed the Asian tigers to go from the periphery to the core. While they did engage in free market trade with the rest of the world, the government centralized planning as to what the economy would specialize in. South Korea has exceptionally strong electronics and ship building for this primary reason. Back under Dictator for Life, cough, I mean President Park, massive government intervention directed resources to electronics, cars, chemicals and ship building. And right now those are some of the strengths of the privatized South Korean market. The existence of the Chaebols as well as Zaibatsus in Japan are excellent examples where of centralized control of markets with integration in the free trade world has proven wildly successful as a method of development.
But you're just going to pretend that all government intervention and central planning is always bad rather then actually understand the concepts of which you constantly pretend to think you understand.
You do realize that Freddie and Fannie have been around for a long, long time and only the use of mortgages as social policy by the two parties within the past decade had caused their downfall no? Previously, when good conservative banking polices were practiced at F&F and when neither party used mortgages as social policy in any real way (CRA had a tiny amount of loans, around $20 billion total, virtually all profitable) there wasn't a problem.
Define "right." Or is right however you deem it to be? The government runs roads relatively well on average. It runs utilities relatively well in keeping them from gouging us. It in practice over the long term uses the military well. Private military is quite a dangerous concept. Does government run everything well? No. Does it run some things well? Yes.
Except when you deem the meddling to be okay. :rofl
You do realize that Freddie and Fannie have been around for a long, long time and only the use of mortgages as social policy by the two parties within the past decade had caused their downfall no? Previously, when good conservative banking polices were practiced at F&F and when neither party used mortgages as social policy in any real way (CRA had a tiny amount of loans, around $20 billion total, virtually all profitable) there wasn't a problem.
Regulation is not the opposition of innovation though.
Regulation can stifle innovation, or encourage innovation, all depends on the market, the industry in question, it's position in the market, size, etc. Markets in general ENCOURAGE innovation, and they are ALL regulated, necessarily some regulation has been instrumental in all modern innovation. That alone suffices to shut that line of reasoning down.
Same with parenting "rules". Some create problems, some help control them.
Same with laws. Some laws improve society, some tear it apart.
But a monopoly is "natural", it must therefore be good and innovative? Really? It encourages more innovation than a more competitive market segment? But if I had a monopoly, I would certainly argue a monopoly is the pinnacle of good and the driving force behind real innovation...well, depending on how damned my soul was at that time.
I was responding to your statement about regulation being the reason Japanese firms won the consol wars up until 2006, which is false. It was industry innovation, regardless of the regulations allowed at the time (unless of course they would create a black market).
You have this belief that government should direct the economy.
You look at SK and see it's success. You don't understand that SK was able to expand and grow like that because of the situation at the time.
The economic advantage of their currency vs. dollar made such enterprises HIGHLY profitable.
The culture of SK, lot's of things played into their success, very very little of which translates to America today.
You also love to bring up roads, as if I have EVER said roads or other infrastructure issues are better off in private hands. Please, pull that post up, you can't cause it does not exist.
And you do realize that Freddie and Fannie were central to the economic mess we're in right now SPECIFICALLY because of government "Meddling" in the free markets. "You banks, you must give loans so poor folk can buy houses! We don't care if they cannot afford them, do it or you will be breaking the law! Freddie, Fannie will back you up. Oh and Banks and investment firms, you guys can become one if you want too."
but the Republicans lacked the back bone to fight the Dems on their pet project and punted the issue.
THAT is what I am talking about when I mean government meddling in the free market.
Thanks for proving my point. It's not meddling when you like the outcome, it is when you don't.
Cherry picking at its finest.
When the outcome is financial ruin and disaster because it's government pushing social programs and political agendas over smart market policies
Yeah I think there is AMPLE evidence of this being bad. That's not cherry picking, that's using my brain and applying common sense.
You however... you don't seem to have a standard. You think all government intervention is good...
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