What factors contributed to E.T's reputation as a bad game?

According to a documentary on Atari called Game Over it is stated that "ET" is the worst video game ever made.

Why is that?

I played the game when it was released, and although very young, I recall that falling into holes was extremely frustrating, and my gaming sessions with it never lasted very long, but what else contributed to its bad reputation?

The main arguments are pretty obvious. Though it was restricted by the technology of the time, it delivered a poorly constructed and somewhat confusing rendition of the video game's portrayal of the classic movie.

The wiki says several things on the topic:

...complaints focused on the plot, gameplay, and visuals.

Video Games called the game "really for kids (the littler ones)".

..."primitive" graphics, "dull" gameplay, and a "disappointing story".

Additionally (as Robotnik pointed out) it was also considered to have a major impact on the video game industry crisis of 1983.

One of the best explanations for the hatred of the E.T. game is given on this page:

While that seems like a great list of features, players in 1982 weren't prepared for that much change. You really needed to read the manual to understand the game and how to play it. As younger children were the primary audience, it's no surprise that it wasn't well received.

The argument here is that it was ahead of its time. It was complex compared to other Atari titles, while appealing to a less sophisticated audience.

There's also a list of common complaints on that page, which I've compacted a bit:

• The game seems incredibly complex.
• The game is incredibly hard.
• You spend a lot of time accidentally falling in to wells.
• E.T. is not green. (I'm really surprised that this isn't a common complaint.)

Falling into wells occurs because of some odd choices regarding collision detection. The page I linked shows that games like the first Zelda chose a different way to represent the player character that make more sense.

The difficulty stems from a combination of the game's design forces you to explore, while penalizing you for doing it by sapping your energy.

There are also a set of bugs listed on that page, which can cause annoyance and keep the game from matching the descriptions in the (required reading) manual.

E.T. has taken on almost legendary status in the years since release, which has probably overinflated the terribleness of the game. There are a few examples of games that are notoriously terrible, and E.T. is often cited as one of them.

Many people attribute the flop of E.T. as one of the primary factors in the video game crash in the early 80's. At the time, the level of quality in video game releases was highly variable, with many popular, hyped titles rushed out to terrible reviews and riddled with bugs and issues. (Sound familiar?)

As a result of all of this, many companies went out of business or had to restructure significantly, which killed many western consoles/brands, like Collecovision, Atari, Magnavox Odyssey, etc.

This cleared the way for a little upstart Japanese corporation to take the market a few years later with something called the "Nintendo Entertainment System." The NES came with a promise that Nintendo would vet titles for the system to ensure they were worthy. They called this the "Nintendo Seal of Quality"

Basically, part of the problem is that it was a weird game for its time, with a big license that didn't deliver to people's expectations. The other part is that it was endemic of a more severe problem in the video game industry at the time, and the way it was handled has made it a landmark in gaming history.