>In 1983 the video game industry crashed, plunging from an estimated global market value of $42 billion in 1982 to only $14 billion in 1985. It was catastrophic for what had seemed an unstoppable industry and, like most economic crashes, spawned many myths about its causes and outcomes.
>The popular imagination blames the crash on a combination of poor-quality games (most famously, E.T. the Extra-Terrestrial), the rise of home computers, and the increasing number of video game consoles for consumers to choose from. These myths have largely been accepted and perpetuated by historians, social media personalities and popular culture.
>Fast forward to 2025 and the video game industry seems to be going through another crash. Just this year alone, according to the website GamingLayoffs.com, the industry collectively has laid off 3,563 game developers. Gaming website Kotaku reports that Virtuous Ltd, the studio behind one of the biggest successes of the year with The Elder Scrolls: Oblivion Remastered, is laying off three hundred employees.
>What the crash of 1983 and the ongoing crash of 2025 have in common is that in both cases, most media, historians and social media influencers have muddied the waters on the cause and source of the crisis.
>In a way, the gaming industry is a canary in the capitalist coal mine. Video games are a sort of luxury goods – nobody ever died from not being able to play Donkey Kong Country or failing to grab the latest Call of Duty game. What this means in practice is that the capitalists who own and run the industry can be as greedy and rapacious as possible, above and beyond what they think they can get away with in more “serious” industries.
>Going back to 1983, Atari’s home version of Pac-Man – considered one of the worst games ever made – still managed to sell a total of seven million copies. Subjectively that’s an eye watering sum of units to sell; objectively it was the highest selling game the Atari console would ever sell. But despite this, Pac-Man for the Atari 2600 console reveals one of the unspoken truths about capitalism: it’s not enough to be successful. While Pac-Man sold seven million units, the corporate executives had banked on selling twelve million – that target would have required every single Atari console owner, plus another two million people, to purchase a copy.
>Now, fast forward to 2025. The Elder Scrolls: Oblivion Remastered sold nine million copies according to the parent company, Bethesda Studios. Many of these units were sold online without the company having to pay for manufacturing and distributing a physical game disc. Despite this and the fact that it opened up to universal praise from critics and players, the studio who did the bulk of development is being hit with mass layoffs.
>Back in 1983, Atari lost money on Pac-Man and E.T. the Extra-Terrestrial partly because, in that era, developers were financially responsible for buying back unsold games from retailers. But that wasn’t enough to crash the industry – the problem wasn’t with retailers or gamers, but with the executives. In 1982, Atari’s parent company Warner Communications projected that revenues would only increase fifteen percent, down from fifty percent earlier in the year. This prompted a panic among investors, who sold off their stocks and withdrew investment money.
>Video games are capital intensive and require a skilled workforce to produce, with the average game developer needing a bachelor’s degree in computer science or software engineering. Many developers experience what’s called “crunch,” a time when mismanagement by corporate executives causes workers to go through mandatory 60-hour to 80-hour work weeks, often without overtime pay or sick days. According to Jason Schrier in the New York Times, at least half of industry employees have gone through crunch and, as a result, have experienced serious physical and mental health problems such as ulcers, memory loss, severe anxiety and PTSD.
>When we are children, we love playing games in which we are super spies, Italian plumbers or magic heroes on a quest. As children we’re also taught that capitalism is about being successful and making money.
>Gaming journalist Stephanie Sterling once said, “Games are not too expensive to make – executives are too expensive to pay.” The people who make all the money in the games industry don’t do any of the actual programming, writing or art behind the games. They assume none of the risk and their whims and projections are based off of nothing but gut feelings that can destroy the lives of thousands.
>The lie of capitalism, which the video games industry lays bare, is that it’s not enough to be successful. Even if you make money, you and your job will be destroyed because investors will forever expect astronomical profits, and mass layoffs are the only way to give the illusion of eternal growth.
>E.T. didn’t kill Atari – capitalism did.