In 1983, the US video game industry generated over $3 billion in revenue. By 1985, it was down to about $100 million, a self-inflicted collapse. This episode breaks down the video game crash of 1983, starting with Atari’s closed loop around the 2600 and Space Invaders, the four programmers who left Warner Communications to found Activision after being compared to towel makers on a loom, and how a console with no security measures let anyone manufacture a compatible cartridge.

We trace the gold rush of Quaker Oats, Purina, and shovelware like Chase the Chuck Wagon, the year the industry produced roughly 200 percent more cartridges than there were consoles, the discount bin death spiral, and the Commodore price war and William Shatner ads that offered a superior alternative. Then we separate myth from fact in the Alamogordo landfill and explain how Nintendo disguised the NES as a VCR, used R.O.B. as a Trojan horse, and locked down the ecosystem with the 10NES chip.

• Why Atari’s $356 million quarterly loss and Warner’s half-billion-dollar hit marked the end of the American console market
• How E.T. was coded by one programmer in about five weeks and what the 2014 excavation of roughly 728,000 cartridges actually revealed
• Why Japan was insulated from the Atari shock and how the Famicom launched in July 1983
• Nintendo’s 30 percent licensing fee, five-game annual limit, no-returns policy, and Seal of Quality
• How today’s app store fees and walled gardens trace directly back to 1985