This is a well known story in the lore of videogame history… There’s a certain amount of misconception about it.
Howard Scott Warshaw likes to talk about how E.T. has the reputation of being the worst game ever, and how between it and the highly regarded Yar’s Revenge, it gives him the greatest range of any game developer. But even he doesn’t think E.T was really the worst of all time. As he carefully states, E.T. is “the game that is widely held to be the worst video game of all time.” That’s a bit distanced from accepting that it is the worst.
It makes for a good story, and he likes to tell the story, and he’s a good storyteller, and he likes to set the record straight when he tells the story, because telling the story takes away the power of the failure to hurt him. He’s a really good sport about it, and a good guy, and was a good game developer when that’s what he was doing. He has a great attitude about failure, and it’s served him well in life. So more power to him.
Howard Scott Warshaw’s game was actually pretty good. I owned E.T. and liked it. It was ambitious, and it definitely had its share of flaws, but it was a much more complicated game than the arcade style action games that Atari was known for, and that was a problem for a lot of gamers who weren’t ready for a deeper game design and complex puzzle solving. The game was difficult, and solving the puzzles was a bit arcane, and the pits that you fall into frequently were rather annoying, but it was not the “worst game of all time” that it has been labeled as.
What it was, it was a huge commercial failure — mainly because Atari overpaid Steven Spielberg $26 million for the license rights to make an exclusive ET videogame. It was one of the better selling games for the Atari, moving 1.5 million units. Unfortunately, Atari had produced 5 million copies, vastly overestimating the market. And reviews of the game were mostly bad, in spite of the high sales. The sales came through more through name recognition and the success of the film, but once people played the game, many of them felt like it wasn’t good enough. And it was rushed. But it’s a very impressive achievement to create something as big and complex as E.T. with the tools that Warshaw had at the time, in as little time as he was given.
Atari were counting on ET to drive more console sales, and it didn’t happen. By 1983, the VCS was a 7 year old dinosaur, and badly needed a replacement. But Atari had a hard time leading the launch of the next generation of hardware, because doing so would have obsoleted their market-dominating 2600 model. They tried with the 5200, but it had several design problems, and this combined with lack of backward compatibility (they did release an adapter later) and expense made it unpopular.
At the time, there wasn’t really a precedent for the idea of computer equipment becoming obsolete in just a few years time, and so many consumers of the day felt like buying a new console every few years, particularly if their old games wouldn’t play on it, was a ripoff. They viewed electronics like a radio or television or record player, which could last for decades if cared for, and newer models could continue to play old media. And old game consoles may still work four decades on, but they are obviously obsolete and can’t play newer games, and newer machines don’t play old Atari games (other than through emulation.)
Meanwhile, Atari corporate had alienated some of their best developers, by refusing to credit them for their work on the cover of the box, or pay royalties, They left to found Activision, which opened the door to any third party releasing games for the 2600, including many fly by night operators who could barely program for the 2600, who put out horrid garbage games that glutted store shelves and gave the Atari a poorer reputation than it deserved, and resulted in the Great Crash.
It’s popular to blame ET for being the cause of the great crash of ’83, but it wasn’t.