The Tale of Atari's E.T. Video Game: How the Extra-Terrestrial Almost Buried an Industry — and Shaped Gaming in the UK

In 1982, Atari was the undisputed king of the video game industry, with its Atari 2600 console in millions of homes. When Steven Spielberg's E.T. the Extra-Terrestrial became a global film phenomenon, Atari saw an opportunity to capitalise. The company quickly acquired the game rights for a record-breaking $22 million, hoping to bring Spielberg's beloved alien to gaming screens. But what was expected to be a massive success instead became one of the most notorious failures in video game history, sparking a crisis in North America and, surprisingly, accelerating change in the UK.

A Rush to Capitalise on E.T.

Atari’s ambition to release E.T. before Christmas 1982 left just five weeks to develop, produce, and distribute the game. Howard Scott Warshaw, an Atari designer known for his creativity, was chosen to lead the project. With great pressure and minimal time, Warshaw designed an adventure game where players would guide E.T. through a maze-like environment to collect parts of a communicator to "phone home." The concept was innovative but ultimately far too ambitious for such a tight deadline. As Warshaw later admitted, "I don’t know exactly what I was full of at the time, exactly, but whatever it was, I was overflowing with it, and I believed I could pull it off" (NPR, 2017).

Immediate Backlash and the Financial Collapse in the US

Upon release, E.T. the Extra-Terrestrial was met with poor reception. Players found it confusing and frustrating, particularly due to E.T. frequently falling into pits. Critics later described the experience as "the video-game equivalent of purgatory" (NPR, 2017). By early 1983, Atari had manufactured millions of unsold cartridges, leaving the company with significant losses and contributing to the North American video game crash.

The UK Gaming Scene: A Different Story

While North America faced a full-blown crisis, the UK’s experience diverged due to different market dynamics. In the early 1980s, the UK was already witnessing a shift from traditional game consoles to home computers like the Sinclair ZX Spectrum and the BBC Micro. These computers offered superior graphics compared to the Atari 2600 and, more importantly, were compatible with software that was significantly cheaper to produce and purchase than console cartridges (BBC News, 2016; Wikipedia, 2023).

The game console crash in North America only accelerated this shift in the UK. Affordable home computers with adaptable software quickly became the preferred gaming devices, with microcomputers overtaking the console market by 1984. This period marked the beginning of a uniquely British gaming culture centered around personal computers rather than consoles. According to the BBC, "The switch towards microcomputers... was already an apparent, emergent trend by the time of the crash, which, in the UK, merely accelerated an inevitable transition to microcomputers" (BBC News, 2016).

E.T. and the Home Computer Boom

By 1983, the UK home computer market was thriving. The arrival of low-cost microcomputers allowed a new wave of British developers to create games in their homes, fostering a “bedroom coder” culture that produced some of the most iconic early UK games. Games could be developed and distributed with fewer financial barriers, allowing small studios and independent creators to enter the market.

While E.T. effectively contributed to the downfall of Atari and the decline of consoles in the UK, it simultaneously pushed the UK gaming industry into a new era. The game’s failure and Atari’s struggles symbolised a shift toward home computing that would shape the UK gaming landscape for years to come. By 1984, computer games had overtaken console games as the largest sector in the UK video game market, with titles for the ZX Spectrum and Commodore 64 leading the way (BBC News, 2016; Wikipedia, 2023).

The Burial and the Myth

In 1983, Atari famously dumped unsold copies of E.T. into a landfill in Alamogordo, New Mexico. For years, this became an urban legend, symbolising the overreach and excess of the early video game industry. In 2014, a documentary crew excavated the site, uncovering thousands of cartridges. Howard Scott Warshaw, present at the excavation, remarked, "What struck me was that something I did so long ago was still creating joy and excitement for people" (The Guardian, 2015).

Reflection and Legacy

For Warshaw, E.T.'s failure marked a painful chapter. "Atari was the world to me," he recalled, and its downfall was a personal blow (NPR, 2017). He eventually left the gaming industry, becoming a therapist to help others navigate their own professional and personal challenges. Reflecting on his journey, Warshaw explained, "I have succeeded and I’ve failed and I’ve lost it, and I’ve had it and I’ve lost it. I’ve seen all this go. I can help people really understand and relate and find a way around and through it" (The Guardian, 2015).

The UK gaming industry, meanwhile, emerged stronger and more adaptable than before. The collapse of the console market in the early 1980s enabled Britain to develop a unique gaming identity focused on innovation in computer games, paving the way for a generation of UK developers who would become influential worldwide.

The Enduring Legacy of Atari's E.T.

The failure of E.T. in North America may have been disastrous, but it also left an indelible mark on the industry. In the UK, it sparked a shift that fostered the rise of home computing and independent game development. The infamous E.T. cartridges uncovered in New Mexico stand as a testament to a turbulent but transformative period in gaming history, with lessons in ambition, innovation, and resilience. What began as an ambitious project for Atari eventually helped forge a new path in the UK, one that defined an era of creativity and resilience in British gaming culture.