In 1982 the Steven Spielberg film “E.T. the Extra-Terrestrial” hit the public consciousness with a sonic-boom. The film would quickly become the highest grossing film in history (a record which would last a decade) and, strangely enough, the film would also be the catalyst for the destruction of the console video game market a year later.
Recently I flipped past the film playing on cable which left me remembering the massive impact E.T. had on two things I was in love with at the time of the films release: candy and video games.
For historical context on the effect of the film on society at the time, I submit the following. As a child I was carted off to theaters to see E.T. more times than I can even recall. Family members, neighborhood parents, everyone was going to see it for their first, second or tenth time. Neil Diamond was on top of the radio charts with his E.T. inspired hit “Heartlight“. The television news breathlessly reported on how Princess Diana of Wales was moved to tears by E.T. and how the U.N. would honor Speilberg with a Peace Medal for the film. Here in Los Angeles we were treated by Universal Studios to the opening of the “E.T. Earth Center” where one could buy every conceivable piece of E.T. related merchandise imaginable – including Michael Jackson reading E.T. on audiobook. Even my own father, an ex-marine, fell victim to E.T. mania when he felt compelled to paint a picture of the long-necked, glow-fingered alien which he hung on the wall. Ah, they don’t make cultural phenomenon movies like they used to.
E.T. was a movie which would make millions of dollars for many companies, but two would not be so fortunate: Mars Inc. and Atari.
In 1981 Universal Studios approached Mars Inc., the makers of M&M candies, with a request to use their M&M’s in a new film Universal was working on. The product placement deal would showcase M&M candies in a crucial scene to the movie in exchange for some cross-promotional advertising by Mars Inc. The new film Universal Studios was working on was, of course, E.T. The Extra-Terrestrial and to the use of M&M candies in it the Mars Brothers gave a firm denial.
Product placement deals with movies are a common thing and one can only wonder why Mars would pass on a mutually advantageous deal. Of course they could not know that in passing on it they were handing perhaps the greatest marketing coup in history to their direct competitor Hershey Foods. Hersey had their own little round candy called “Reese’s Pieces” and it was to Hershey that Universal Studios turned next in trying to find a product that Elliot could use to lure E.T. into his house in that seminal scene from the movie.
The release of E.T. caused sales of Reese’s Pieces to skyrocket with most accounts suggesting an immediate 65% sales boost as the Hershey confection became known as “E.T.’s Favorite Candy”. I know that I, personally, was eating them by the bag full in 1982 and I was not buying M&M’s. I recall being in the car with my parents going somewhere during that time and the news guy was on the radio saying people at Mars Inc. were literally beside themselves crying in tears over the lost opportunity. Such would be the bitter fruit of making one of the worst business decisions in history.
While the tale of Mars Inc. is a straightforward one with an utterly predictable ending, the story of how Atari was destroyed by the advent of E.T. is the story of the video game crash of 1983. The Wikipedia entry does a wonderful job summarizing it, and it is a good read. Arguably, however, the straw which broke the camels back was in fact E.T. The Extra-Terrestrial for the Atari 2600.
Atari paid $20 Million for the license to produce an E.T. console game based on the film. Their plan was to produce the cartridge of the game quickly in order to capitalize on the holiday buying season. While Atari had rightly predicted that parents would line up to buy a copy of the game for their kid at $40 bucks a pop, this would prove to be the undoing of mighty Atari – the first great force in video games. For Atari had produced a game so foul, so noxious, that is takes an article by 1UP to fully capture the terrible and unnatural thing Atari had birthed upon the world.
This would lead to the famous Atari Video Game Burial where millions of unsold Atari video games were unceremoniously driven truck after truck to the desert and left for dead in a New Mexico landfill.
My friend Pat got the E.T. cartridge for Christmas in 1982. We tried to play it that day and something in both of us died. It did not take long for us to go back to Pitfall! which was an awesome game. Pat would never load E.T. into his Atari 2600 again after that fateful morning and his parents would become more judicious about buying any game after that. The same story of any parent who saw their kid crying over their copy of E.T. for the 2600 on Christmas morning.
It is interesting, in hindsight, to note that Mars and Atari could have both prospered had they played their cards differently. But I guess someone has to serve as a lesson to the rest of us.