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Arcade
To say 1981 was a good year for arcades would be an understatement. Pac-Man fever was still going strong and showed no signs of stopping all year. In face, it was only boosted by its sequel, Ms. Pac-Man. Pitched to Namco by engineers at Midway, Ms. Pac-Man was just as successful - if not more successful - than the titular character's husband. Namco's in-house space shooter Galaga also ate up plenty of quarters.
Nintendo would also find themselves hitting the big time this year, and it only took one game: Donkey Kong. The platform game was originally envisioned as a Popeye game, but when Nintendo was unable to obtain the licenses to the characters, director Shigeru Miyamoto would end up creating his own characters: an damsel-in-distress named Lady, a blue-collar Italian-American guy named Jumpman, and brutish ape named Donkey Kong. Back then, Miyamoto had no idea that his characters would eventually eclipse the Popeye gang in popularity.
Other notable titles include Frogger and Defender.

RCA Studio 2
Like the other two firms in the home arcade race, RCA mostly got by with ports of the latest hit arcade games and a few minigames here and there. That would change with Quest for the Rings. Quest for the Rings was unique for its time in that it was a hybrid of a board game and a video game. The game required three players - two heroes who have to find ten lost keys using the joysticks, and the "dungeon master" who managed the game with the console's keyboard. The game received positive reception all around, and its success would indicate that it wouldn't be the last video/board game hybrid.

Intellivision
After being teased a few times since launch, the Mattel Keyboard Component was finally launched. This allowed the Intellivision to function as a personal computer, and as such, most of the software that would be released for the add-on would mostly be financing and educational software.
While the Keyboard Component was the most talked-about, the Intellivision did have plenty to offer on the gaming side of things. The influential city-building game Utopia saw its release this year, as well as the fixed shooter Astrosmash.

Atari VCS
Atari's first-party games were nothing new - most were ports of their earlier arcade games. In addition, a port of Pac-Man was released by Atari themselves, but its rushed release for the Christmas season would in time be regarded as a failed cash-in on Pac-Man fever. Most eyes were on third-party companies such as Activision, such as the best-seller Kaboom!. Overall, RCA's Master Strategy series and Mattel's Keyboard Component would mark 1981 as the year Atari began to decline.