alternatehistory.com

Arcade
Titles like Nemesis, Paperboy, Gauntlet, and Space Harrier would prove to be classics this year, but most of them would begin to find more success when ported to home arcades later due to a major shift in the video game industry.

Atari (VCS and SuperSystem)
The SwordQuest competition is still continuing, with the WaterWorld competition ending and the release of AirWorld. While the SuperSystem continued to be a huge financial success, Atari would begin development of its eventual successor this year.

Intellivision/Intellivision II
After RCA dropped out of the home arcade industry, Mattel was the first company to ask for the rights to the Master Strategy games, hoping to port them to the Intellivision. Mattel would soon find themselves in a bit of a bidding war. More importantly, this year Mattel proved the rumors to be true: There will be an Intellivision III.

ColecoVision
While the other firms were preparing for the next generation of home arcades, Coleco decided to ride upon the success of the ColecoVision for just one more year - managing to turn Coleco a profit in 1985. Coleco also announced that a ColecoVision 2 is planned, but development has not yet started.