What caused the video game crash of 1983 that nearly destroyed the entire industry?

The answer

The North American video game crash of 1983 saw the industry's revenue plummet from $3.2 billion in 1983 to just $100 million by 1985 - a 97% collapse. The crash was caused by market oversaturation: too many consoles (Atari 2600, Intellivision, ColecoVision) and thousands of low-quality games flooded stores. The notorious E.T. the Extra-Terrestrial game for Atari, developed in just five weeks to meet a holiday deadline, became the symbol of the crisis - millions of unsold cartridges were famously buried in a New Mexico landfill (confirmed by a 2014 excavation). Retailers lost confidence in gaming entirely. The industry was rescued by Nintendo's NES, released in North America in October 1985, which implemented strict quality control through its 'Seal of Quality' program, restoring consumer and retailer trust.