Atari invented the video game industry — then buried 700,000 cartridges in a desert

Atari, founded in 1972 by Nolan Bushnell, created the video game industry. The Atari 2600, launched in 1977, dominated the home console market with an 80% share. By 1982, Atari was generating $2 billion in annual revenue and was the fastest-growing company in American history. Warner Communications had bought it for $28 million in 1976; at its peak, Atari was worth billions.

The collapse was spectacular. In 1982, Atari paid $21 million for the license to make a game based on the movie E.T. — and gave the programmer, Howard Scott Warshaw, five weeks to build it. The result was widely considered the worst video game ever made. Millions of unsold E.T. cartridges, along with other excess inventory, were buried in a landfill in Alamogordo, New Mexico, in September 1983.

The E.T. disaster was a symptom, not the cause. The market was flooded with low-quality games from dozens of third-party publishers, and consumers lost trust in the Atari brand. Atari's revenue fell from $2 billion in 1982 to under $100 million by 1984 — a 97% decline. Warner sold Atari's consumer division in 1984. The video game crash of 1983 nearly destroyed the entire industry until Nintendo revived it with the NES in 1985.