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`byswayne Stéte University Press, Detroit, Michigan 48201. All
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`rig_hés:ré§erved.' Nd perf of this book may be reproduced without formal
`" pef1i1issior1L Marmfectured in the United States of America.
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`‘I Librsafjr OEICII-ohgrees Cetalogingdn-Publication Data
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`‘Before the 'c£as1{: early video game history I edited by Mark ]. P. Wolf.
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`biblliogrephical references and index.
`ISBN 9-7B—(j—314-3—3-’-15UeB(pbk.
`: alk. paper) — ISBN 975-0-31c1‘3—3722—e
`'(ebooi<)'
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`1'. Video games——History. 2. Video games~Sncia1aspects. I.Wolf, Mark
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`Gv14'69.3B44 2012
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`Typeset by Maya Rhodes
`Composed in Vf/m'm:u:k Pro and Arleta
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`CONTENTS
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`Foreword by Ed Rotberg vii
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`Acknowledgments xi
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`Introduction 1
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`MARK I. P. WOLF
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`Video Games Caught Up in History: Accessibility, Teleologicai
`Distortion, and Other Methodological Issues
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`CARL THERRIEN
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`Vi/hat’s Victoria Got To Do with It? Toward an Archaeology of
`Domestic Video Gaming 30
`ERKKI HUHTAMO
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`Ball—and—Paddle Consoles 53
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`LEONARD HERMAN
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`Channel F for Forgotten: The Fairchild Video Entertainment
`System 60
`ZACH WHALEN
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`The Video Game Industry Crash of 1977 81
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`lVlARI< I. P. WOLF
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`A Question of Character: Transmediation, Abstraction, and
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`Identification in Early Gaines Licensed from Movies 90
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`JESSICA ALDRED
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`KAI21'—;N COLLINS
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`The Rise and Fall of Cinematronics 138
`TIM SKELLY
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`C0lor—Cycled Space Fumes in the Pixel Particle Shoekwavez
`The Technical Aesthetics 0fDefender and the Williams Arcade
`Platform, 1980~82 168
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`BRETT CAMPER
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`C0in—Dr0p Capitalism: Economic Lessons from the Video Game
`Arcade 189
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`CARLY A. KOCUREK
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`Early Online Gaming: BESS and MUDS 209
`STACI TUCKER
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`Appendix A: Video Game History: Getting Things Straight 225
`RALPH H. BAER
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`Appendix B: The Magnavox Co. V. Activision, Inc.: 1985 WL 9469
`(MD. Cal. 1985) 234
`Ross A. DANNENBERG
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`Contributors 239
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`Index 245
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`vi
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`Contents
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`The Video Game Industry Crash of 1977
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`Though the Great Video Game Industry Crash of 1983 is well known, it was
`not the first time the industry experienced a crash. The crash of 1977, al-
`though not as big or long—lasting, was the first to test the home video game
`industry. In some ways, it was a warning to the industry and was predictive
`of the Great Crash of 1983, with which it shared similar conditions: bur-
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`geoning commercial success encouraging high expectations, cheapened
`product glutting the marketplace, tough competition forcing the slashing
`of prices, and technical advances resulting in a new generation of technol-
`ogy that quickly outmoded older systems and sent them into obsolescence.
`Based on the patterns of other electronics industries, some foresaw the
`1977 crash. To understand why it happened, we must first look at the con-
`ditions that preceded it and the context in which it occurred.
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`EARLY RAPID GROWTH
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`The first coin—operated video games, Galaxy Game and Computer Space,
`appeared in 1971, and the first home video game system, the Magnavox
`Odyssey, and the first hit game, PONG, appeared in 1972. Video games
`caught on, and by mid—1975, the Odyssey had sold Over 350,000 in three
`years.‘ Seeing the Odyssey’s success, Atari followed up its arcade PONG
`(1972) with a home version OEPONG in 1975, and both had a growing num~
`ber of imitators. More arcade video games began appearing, and in 1975,
`Magnavox further released two new home game systems, the Magnavox
`Odyssey 100 (model 7010) and Magnavox Odyssey 200 (model 7020). By
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`itemfi’ crows a spokesperson for Sears, Roebuck
`“It’s a sell—out
`& Co. stores in the San Francisco area. “We can’t get enough of
`them," says a representative of Bloomingdale Bros. in New York. “I
`don’t know how many we could have sold if we had them in stock,”
`wails a buyer for a major West Coast department store chain.
`The object of these retailers’ holiday cheer is yet another con-
`sumer product from the high—technology workshops of the elec-
`tronics industry—the video game. But consumers’ eagerness to
`pay $100 and up to convert their television sets into miniature
`athletic fields virtually guarantees a rush of competition next year.
`“The toy and game market is limited only by our imagination," says
`Scott Brown, consumer marketing director at National Semicon-
`ductor Corp. “it can be as big as the calculator market is today.”
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`In addition to giving a sense of the optimism of the time, the articl
`compares the game market to the calculator market, a good reminder than"
`home video games appeared as a part of the larger home electronics indus .
`try and must be understood in that context. Video games were just one of
`many innovative products that emerged in the years following the appea'_ "
`ance of large—scale integrated (LSI) circuits and microprocessors, such a's__I
`pocket calculators, digital watches, and later, home computers. The same"
`article even goes on to speculate about the home video game industry’s_"
`near future: “A big question is whether the entry of National and other‘
`semiconductor makers will create the same cut-throat price competition
`that has bloodied the calculator industry.”
`The question was an apt one. In the early 1970s, calculator prices _
`dropped rapidly as more and more models entered the marketplace. LS1
`circuits allowed thousands of circuits on a single chip, enabling electronic
`devices to be made smaller and smaller. As an article in the October 9,
`1971, issue of Business Week recounted,
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`Just three years ago it was unfeasible to make a battery—powered
`calculator designed to fit in the operator’s hand. The first “pocl<et"
`calculator, which was made in Iapan, did not appear until 1969.
`Requiring dozens of integrated circuits, it was bulky as a large pa-
`perback book and was priced at a hefty $400.
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`Coleco was the first customer to order the AY-3-8500 chip, and many
`other companies followed, as the rush to get cheap home game systems
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`Less than a year later, a Newsweek article reported that “the world market
`for calculators will total about 700,000 this year,” and ‘fwith prices settling
`as low as $39.95, next year's market could reach 10 million.”5 By autumn
`of 1972, more than two dozen Japanese companies and 50 U.S. firms were
`making calculators. With a price drop from $400 to $39.95 in less than four
`years and intense competition from so many companies, many went out of
`business, and those that stayed in business were forced to accept meager
`profits despite the high volume of production. The crash, then, was not due
`to lack of consumer interest; calculator demand led to chip shortages. The
`large number of competitors, severe price drops, and the lack of profits,
`especially for smaller companies that could not withstand huge losses, were
`the causes of the crash. As some foresaw, a similar scenario would soon oc—
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`' Cur in the nascent video game industry.
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`A SYSTEM om A CHIP
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`_ By 1975, the video game industry was well underway, but it was the AY~3~
`8500 chip, produced by General Instruments (G1) in early 1976, that was
`the catalyst for an onslaught of new systems. The AY—3—8500 chip had all
`of the circuitry necessary for a video game on a single chip, making the
`production of video games much easier. As PONG historian David Winter
`writes,
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`A complete video game system could be built with this chip and a
`few additional components. Since the chip was available to every
`manufacturer at low Cost, it was no longer necessary to design a
`whole and expensive electronic circuit (GI provided the schernat»
`ics for using the chip). This drastically changed the video game
`industry. Between 1976 and 1977, hundreds of manufacturers re-
`leased their video game systems all over the world, and other chips
`appeared, some with color graphics, some with more games, and
`so on. The period of early video game history was over and the
`market was open to everybody.‘5
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`. The cost of the GI chip ranged from $5 to $6,
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`chip was the convincer. .
`depending on the volume involved. It promised total system costs of $25
`to $30 and retail prices in the $60 to $75 range. .
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`. The GI chip made it
`possible for companies to establish simplified production lines and build
`lower—cost games?”
`In the rush to cash in on the home video game craze, dozens of Com-
`panies produced second-rate products to try to beat their opponents to
`market. Some systems, like the Wonder Wizard by General Home Prod—
`ucts, did not even bother to have a copyright notice on their boxes. Even
`systems that have long since been forgotten by the public found success
`initially; National Semiconductors Adversary home game system, for ex-
`ample, sold over 200,000 units in 1976.5 Around 70 companies were among
`the competitors, and one of the most successful. Atari, was bought by War-
`ner Communications for $28 million; not bad for a company whose modest
`start had been only four years earlier.
`The 1976 Christmas season would be the best yet for the home video
`game industry, with estimated retail sales of around $150 million.” Demand
`was such that many stores experienced shortages of home game systems.
`The enthusiasm continued into 1977, and an article in the March 16 edition
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`of The Chicago Tribune stated that
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`there’s every reason to believe the boom is only beginning. Video
`game sales in 1976 totalled an estimated 3.5 million units (10 times
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`the 1975 figures), and they are expected to double and redouble
`within the next two years, and should top 16 million annually by
`1980.
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`lt’s no wonder that the makers of these teletronic competitions
`exuded nothing but gleeful optimism last Ianuary during the Con-
`sumer Electronics Show at the Conrad Hilton Hotel?”
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`The article lists 22 systems produced by 14- different companies, and over
`half the systems listed already featured color graphics. After summaries of
`the games and game systems listed, the article's cheery optimism suddenly
`ends with a note of warning:
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`A brief, cautionary word. Despite the variety of electronic games
`available, some industry observers are convinced the future lies
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`It promises five built-in games with three cartridges available ini—
`tially and others to follow.
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`A programmable video unit, with its ability to create virtu-
`ally any imaginable kind of visual display, has the potential to of-
`fer much more than just entertainment. It could be the first step
`toward a true home computer, useful as an instructional tool and
`as an information storage and retrieval device. As these applica—
`tions are refined, the price of new program cartridges should drop,
`perhaps by as much as 50 per cent.
`All this, of course, still is some time away. Meanwhile, there
`are plenty of electronic games with which to occupy our leisure
`time.
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`Television anyone?“
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`Cartridge—based home game systems and home computers would in-
`deed become the two new directions the industry would be heading, and
`the two worst threats to the older entrenched order that had so far seen
`astonishing success. In August 1976, Fairchild Camera and Instrument
`Corporation introduced the Video Entertainment System (VES), the first
`cartridge—based home video game system (described in detail in Zach
`Whalen's essay in this volume). By the end of the year, the V138 was on back-
`order as the company was unable to keep up with demand, and Fairchild
`announced they would come out with a new cartridge every month.
`Home computers were also finally arriving in the home, and soon after,
`in stores. Micro Instrumentation and Telemetry System’s Altair 8800 had
`been sold as a mail~order kit for hobbyists beginning in 1975; in July 1976,
`Steve '\X/ozniak began selling his handmade Apple I computers, which still
`required buyers to add a power supply, case, and keyboard. But by 1977,
`fully assembled home computer systems, many using televisions as moni-
`tors just as the home video game systems did, were on the market as con-
`sumer items. The Commodore PET 200l was announced at the Consumer
`Electronics Show in January 1977, and came out the following October. The
`Apple II was announced in April 1977 and came out in June. In August,
`Tandy announced its TRS—80 Microcomputer, which also appeared later in
`the year.
`As the promise of cartridge—based systems and home computers
`loomed on the horizon and the dozens of nearly~identical tennis, soccer,
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`By January 1977, G1 had shipped over 7 million AY—3-8500 chips and
`planned new series of chips that could do even more. In addition to com-
`peting with each other and F-airchild’s new programmable system, home
`game systems also had to compete against non—video electronic handheld
`games, which also made use of the new microprocessor technology and 5
`offered the first portable electronic gaming. Texas Instruments, one of the
`major companies producing chips for handheld games, released the Little
`Professor, an electronic handheld learning aid, in 1976 and Data Man in
`1977. In late 1976, Mattel released the handheld games Auto Race and Foot-
`ball, both in the $25 to $35 price range. Over the next two years, they re-
`leased several more, including Basketlaall and Baseball, all with LED-based
`displays. With their success, handheld games from other companies, such
`as Tomy, Bandai, and Milton Bradley, would soon follow.
`With video games up against the new industries of home computers
`and handheld games, and with a surge of new games entering the market
`while consumers waited for better and cheaper products to come, the mar-
`ket finally collapsed. According to the Eimbinders,
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`Despite the shortage of TV games during the Christmas 1976 sea-
`son, the market collapsed in 1977.
`Allied Leisure went bankrupt before it could deliver its back-
`gammon games. National Semiconductor stopped development of
`its improved version of Adversary; Magnavox cancelled its top-of—
`the-line 24-game system. Atari, thanks to a fresh infusion of money
`by Warner Communication, hung in. So did Coleco, somehow sur-
`viving losses of $30 million for 1977. One by one, most of the video
`game manufacturers dropped out. The casualties included the
`three semiconductor companies who were building games with
`their own chips: Fairchilcl, National Semiconductor, and RCA.”
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`Among the earliest analyses of the 1977 crash was the one—page ed-
`itorial “TV Electronic Games Grow Up” in the September 1977 issue of
`Popular Electronics, written by the magazines editorial director, Arthur P.
`Salsberg, which stated:
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`The sale of home TV electronic games peaked during the Christ-
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`those of 1976. And nonvideo electronic games will certainly make
`their mark this year, too.
`Home TV games did not move as well as anticipated during
`the first half of ’77 for a variety of reasons: (1) Christmas doesn’t
`last all year (though interest in games should be year-round); (2)
`reduced selling prices on games disheartened many retailers, who
`placed them on the back shelves; (3) programmable games are just
`around the corner. Concerning the latter, there are two companies
`already marketing them——Fairchild, who can’t seem to keep up
`with consumer demands at $170 a game [system] plus “cartridges,"
`and RCA, just really entering the market with a $150 program—
`mable model.“
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`The editorial goes on to say that the future for home video games is "ex-
`traordinarily bright” and that programmable video games are expected to
`account for 20 percent of unit sales in 1979 and 33 U3 percent by 1980.
`But the editorial, which appeared in September 1977 and must have been
`written earlier, did not anticipate or even mention the system that would
`be released the following month, the Atari Video Computer System (VCS),
`which would be renamed the Atari 2600 in 1982 and would far outsell every
`system that had come before it.
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`THE INDUSTRY Bounces BACK
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`The crash certainly was not due to any lack of interest in technology. The
`American pub1ic’s fascination with technology received a boost in 1977:
`the first space shuttle, the Enterprise (changed from the Constitution to
`the name of the Star Trek starship after a write-in campaign) was under»
`going flight tests during the summer, lasers were used for the first time to
`initiate fusion reactions, the VHS—format videotape was introduced in Iuly,
`and Star Wars (1977) was playing in theaters and wowing audiences with
`its numerous fictional technological marvels, including a video game—like
`technology for a holographic chess set with animated pieces.”
`Fairchild and RCA had cartridge—based systems out before Atari did,
`and this spurred Atari into releasing their system before the market was
`flooded again. The VCS appeared in October and sold for $189.95. Atari’s
`superior system helped revive interest in video games and also meant the
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`already known for its successful arcade games, many of which it would port
`to its home system, Atari was also quick to license other arcade hits, most
`notably Space Invaders { 1978), which became its first hit cartridge. The
`fact that Atari allowed third»party developers to make games for its system
`encouraged the start—up of many small game companies, some of which,
`like Activision and Imagic, were begun by disgruntled former employees of
`Atari. Third-party game development and production, eventually resulting _.
`in over 1000 different cartridges made for the system, would also keep the
`Atari 2600 in production until its official retirement in 1992, making it one _
`of the most successful consoles in video game history.
`Ironically, while the system helped the home video game industry _
`bounce back after the 1977 crash, the flood of cartridges for the Atari 2600 '
`and its competitors, many of which likewise allowed third—party game
`production, contributed to the greater industry crash of 1983. When the
`industry rebounded from this crash with the success of the Nintendo En-
`tertainment System (NES), Nintendo would be far more careful regarding
`third—party game development for its system.
`Although the crash of 1977 had less of an impact than the Great Crash
`of 1983, it provided a warning and demonstrated how unbridled enthusiéi
`asm within the industry would not necessarily be followed by consumers,-_
`who were becoming more careful and looking ahead to what technology
`was on the horizon, rather than adopting every new system and advance
`as it appeared. Continuing miniaturization and the rapidly dropping prices.
`of calculators and other electronics industry products led many to expect;_
`that further technological advances would happen, making them seem less‘:
`impressive or at least less surprising. In this sense, then, the crash of 1977;."
`was an important turning point in the history of home video games, and In
`one that would influence its later development.
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`NOTES
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`1. See David Winter, “System Profile: The Magnavox Odyssey,” 51; an
`Leonard Herman, “Early Home Video Game Systems,” 54. Both are in The Vida
`Game Ex_p£osiori:A Historyfrom PONG to PlayStation and Beyond, ed. Mark]
`P. Wolf (Westport, CT: Greenwood Press, 2007).
`'
`2. See “TV’s hot new star: The electronic game,” Business Week, Decembe
`29, 1975, 24.
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`Game Explosion: A Historyfrom PONG to PlayStation and Beyond, ed. Mark I.
`P. Wolf, 51.
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`'7. Jerry and Eric Eimbinder, “Electronic Games: Space‘-Age Leisure Activ-
`ity,” Popular Electronics, October 1980, 55.
`8. Ibid.
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`9. According to Roger Verhulst, “The future—playing now on your TV,"
`Chicago Tribune, March 16, 1977.
`10. Ibid.
`11. Ibid.
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`12. Jerry and Eric Eimbinder, “Electronic Games: Space-Age Leisure Activ-
`ity,” Popular Electronics, October 1980, 55. Although the Eimbinclers give $30
`million as the amount of Coleco’s losses in 1977, two other sources (“Coleco’s
`
`New Video Challege," New York Times, November 11, 1982; and "The Strange
`Cabbage Patch Craze,” Time, December 12, 1983, 122), give the figure of $22
`million as the amount. Either way, the point is made that Coleco's losses were
`enormous due to the crash. I would like to thank P. Konrad Budziszewski for
`
`pointing out these two sources.
`13. Arthur P. Salsberg, “TV Electronic Games Grow Up," Popular Electron-
`ics, September 1977, 4».
`14. Though it wasn’t the first; a holographic chess set had also appeared in
`Futureworld (1976) a year before.
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