1982, the year I switched from video games to D&D.
Wholeheartedly recommended:
(I saw it on netflix; it's actually easier to find the whole movie on the Internet than it is to find the trailer)
Hidden in that documentary (which doesn't blame ET, btw) is the fact that Atari's sales were largely driven by consoles; by 1982 everyone who wanted a 2600 had one. Meanwhile, the only games you could get for the 5200 were ports of 2600 games.
It's interesting how the modern perspective is that video games "died" in '82, when in fact there was just a three-year lull while next-gen systems (NES and Sega) came out. Atari outcompeted Coleco and Intellivision and then handled their monopoly poorly, but Nintendo did pretty well (until the Wii U, anyway).
"Can it happen again?" I think it's fair to say that the prolonged life cycle between Xbox and PS generations says a lot about the lessons learned.
Ahhh yea, there is a documentary that I've seen a few times.
I had an Intellivision, then moved over to a C64 and a Trash-80. When Atari's stock dived, there were three game stores where I lived. One switched to D&D and away from computers, the other two closed and left me with Radio Shack. It took two months saving paper route and lawn mowing money to get the TRS-80, and I wish I still had it.
- "Can it happen again?"
Console-wise? sure. It needs a massive influx of shovelware and bad games that guts the profit margin of games to the point where the developers are not making the console licensing fees back. With Origin, Steam, GoG, and even the Windows Store, I see a console crash feeding the PC market, while a PC crash will feed the console market. My one take-away from the '82 event was all the eggs were in one basket, then they killed the chickens and played hackey-sack with the basket. The PC market is HUGE and there are so many types of games it is hard to see a crash, but then again the console markets are HUGE as well, and the PC and Console people are rather distinct markets. There is some cross over between the two, but (anecdotally in my friend group) PC gamers and console gamers don't really own both ecosystems. Before the Vic-20 and to a lesser extent the TRS-80 came out and got big, if you wanted to play games at home, you had a console.
The one fear I have of a crash is that the audience runs out of cash to spend on entertainment and instead starts to play through their back catalog. I have over 500 games on steam. Granted some of those are DLC so say 100 games to be safe. I've finished maybe 30 of those. I have another 100-200 on Good Old Games because I either cannot be arsed to dig out the discs, or the games are on floppies, or I once owned them but cannot find them now. That is about 6-8 years of game play assuming I never buy another game. How many other gamers are in my shoes?
Games are cheap, and hitting the sales is even more of a deal. I spent a grand total of $100 on Galactic Civilizations 3 and already have 1500 hours played. I have Europa Universalis 3 and 4 ($150 for both games and DLC) and about 500 hours into each. Team Fortress 2 was a free game that came with Half Life 2 and I have 3500 hours in that monster over the last 10 years. And I already have 100 hours in Elder Scrolls Online that I got on sale for $25. For the same cash I can get what, 10 movies in the theater and snacks? Maybe 20 if I swing matinees for a total of 60 hours of entertainment?
Is there going to be a crash? If the crash gets hyped, or the customers get pissed off enough to want one, sure. Is it likely? I'm not sold on the idea honestly. I do see a correction incoming where some types of games (Minecraft clones and 'Indie' games for example) are going to take a hit if for no other reason that it is harder and harder to build an audience. There are going to be individual studios and developers that are going to lose everything when their game sells 1000 copies and dies in the market. When you can make a billion bucks in a month with a GTA, Destiny or soon Overwatch and the WoW expansion, a true crash is IMO unlikely.