Atari sues Coleco over Atari compatibility
With sales of the Atari 5200 console already seriously impacted by the rival Colecovision video game system, and perhaps hoping to distract from a potentially alarming earnings statement issued the same day, Atari files suit against Coleco over the first add-on produced for Colecovision: Expansion Module #1, which allows Colecovision owners to play Atari 2600 games (and entices 2600 owners to trade up to Colecovision, since their existing game libraries won’t automatically become useless). Atari sues for patent infringement, while Coleco immediately countersues, claiming that Atari is violating antitrust and monopoly laws.
More about Colecovision in Phosphor Dot Fossils
The first hint of the crash
Warner Communications, the parent company of video game manufacturer Atari, issues an earnings statement in which it anticipates losing money in the fourth quarter of 1982. The losses are attributed to product returns and other shortfalls experienced by Atari, despite the acquisition of licenses for home video games based on Pac-Man and E.T. The reaction on Wall Street is immediate, and a massive sell-off of video game related stock leaves the entire industry reeling within a week. The industry is seeing the first hint of the bust that will end the boom years.