Well, there are lots of claims about what caused the crash....
A few of my opinions or beliefs:
1. I never noticed or even heard of this "crash" until many years later. I enjoyed playing the games, that's it. I was just a kid, I was not concerned with the economy.
2. If you were in the business at the time, how could you NOT SEE this coming. The games were everywhere, stores, hair salons, auto repair shops, on and on!.... arcades within a few miles of each other. It would be like opening 10 Burger Kings on the same street within blocks of each other. Everybody got greedy and bought a bunch of games "to get rich quick"
3. 80's technology just plain sucked, it was too expensive to produce, and unlike today, not many people had money to blow on video games. (I got in severe trouble with my parents many times for "wasting money" on video games) and that is just for a few quarters at the arcade, not to mention buying games for at home, which we only got at birthdays/Christmas etc.
4. Nintendo was responsible for saving video games. Did you know that Nintendo had to agree to buy back any unsold NES's before most stores would offer them for sale out of fear they would not sell?
5. If you had a home computer, in the 80's you were very lucky. It compares to having a new car as a teenager in the 80's. Only happens for a lucky few. There was no way in the world my Mom & Dad was going to spend that kind of money for something that frivolous. (wasn't frivolous to me) :-)
6. I'll bet another "crash" is on the way... Games seem to be now either Halo, Pokémon, Sports, or Driving/Flying/Fighting types. Or life consuming MMORPGS.
in other words, the genres are getting tired. The console wars are not helping either with their proprietary formats and no backwards compatibility with old titles, not forgetting the DLC with no physical ownership of future game titles.