E.T. the Extra-Terrestrial Was the Most Important Video Game Ever Made

Once upon a time, a chubby plumber redefined platform gaming in his quest to destroy a turtle king.

Once upon a time, a nameless dude redefined first person shooters in his quest to save the world from the hell-spawn takeover.

And once upon a time, a game so awful was created that it simultaneously destroyed – and saved – the entirety of the video game industry.


While the truly amazing titles helped to shape, mold, and set the standard for video games of the future, the most important video game in the industry’s history also happens to be the worst video game in the industry’s history: E.T. the Extra-Terrestrial.

Founded in 1972, Atari was primarily responsible for the birth of the video game industry, both in arcades and in the home. From the moment founders Nolan Bushnell and Ted Dabney slapped some hardware on a black and white Walgreens television set and called it Pong, Atari dominated the coin-op industry virtually uncontended. In 1975 Bushnell began production on the Atari 2600, the “Video Computer System”, which is still one of the most successful consoles in history. The system was too expensive to manufacture, however. So in 1976, Atari was sold to Warner Communications, with the Atari 2600 being released in October 1977.


In 1981 Atari hired game designer Howard Scott Warshaw. Warshaw’s greatest success was the 1982 game adaptation of Raiders of the Lost Ark. Due to the success of the title, Warshaw was chosen to design and program E.T. the Extra-Terrestrial. Warshaw was given just five weeks to complete the game – and it showed.

Using a top-down perspective, the player guides the alien E.T. through a variety of stages in search of pieces of a telephone in order to allow E.T. to call his home planet. At the top is an energy bar, with the energy decreasing any time E.T. does anything. Literally anything. If E.T. moves, he loses energy. The title was confusing, visually unimpressive, and boring, and sales confirmed this. Of the 4 million E.T. cartridges produced, roughly 3.5 million were sent back to Atari, as either unsold or returned to store.

Atari had been expecting a 50% increase in expected earnings, banking largely on how identifiable a title E.T. was. Yet, at 3:04pm on December 7, 1982, Atari reported only a 10% to 15% increase. By the end of the following day, stock for Warner plummeted to about two-thirds its previous value. But E.T. the Extra-Terrestrial did more than cost Atari millions of dollars – it also caused immense damage in consumer trust.

In October 1983, The Sydney Morning Herald reported on the now infamous “Atari graveyard,” with the headline “Atari video games take plunge into concrete.” The story reads “With the video-game business gone sour, some manufacturers have been dumping their excess game cartridges on the market at depressed prices. Now Atari Inc, the leading video game manufacturer, has taken dumping one step further.” The story covers how the company dumped 14 truckloads of unsold cartridges and equipment in a landfill in Alamogordo, New Mexico.

Atari cartridge dig

At the time of the North American video game crash, more than a dozen current systems – all with a fairly sub-par library of titles – were on the market. When combined with powerhouse Atari releasing a high profile, recognizable hunk of garbage like E.T., consumers lost faith in the one promising industry as a whole. Revenues dropped from $3.2 billion to $100 million over the course of just three years. North Americans were ready to give up on video games for good.

And then Nintendo appeared, rising from the ashes of what had been left behind. In December 1985, a reworked version of the Japanese Famicom system soft-launched in New York, under the name Nintendo Entertainment System. In 1986, the NES was officially released in North America. Nintendo had already established itself as a supplier of coin-operated arcade games with the 1981 release of Donkey Kong. Due to the title’s raging success, Nintendo bundled the NES with the new, and instantly successful, [/i]Super Mario Bros.[/i] By 1988, sales had skyrocketed from $100 million to $1.1 billion.

Nintendo president Hiroshi Yamauchi stressed the importance of quality games in 1986, saying “Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games.” Nintendo limited most third-party publishers to only five games per year on its systems, required all cartridges to be manufactured by Nintendo, and demanded all cartridges to be paid for in full before they were ever manufactured. All licensed games received a literal gold seal of approval from Nintendo, serving as a promise of quality to consumers.

The industry rose back up because a company did everything they could to earn their consumer’s trust – a trait so valuable that it should still be present today. And yet, that trust would ever have the value it does had it not first been broken.

It is nearly impossible to imagine what the industry would look like today had E.T. the Extra-Terrestrial never been made. While E.T. was not solely responsible for the downfall of Atari, it is certainly an accurate and dramatic symbol of the implosion of one of the fastest growing companies in history. And, while my deepest condolences are extended to anyone who had to suffer through any amount of the title’s gameplay – myself included – it’s impossible to deny the game’s continuing relevance and impact.

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