Video Game History | Smithsonian Institution

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From the earliest days of computers, people have found ways to play games on them. These early computer programmers weren’t just wasting time or looking for new ways to goof off. They had practical reasons to create games.

During the 1940s and 1950s, computers took up entire rooms and were so expensive that only universities and large companies could afford them. Most people had both a limited understanding of what these electronic behemoths were able to do and an unfamiliarity with the types of mathematical equations these machines were regularly programmed to compute. Games like tic-tac-toe or William Higinbotham’s 1958 Tennis for Two were excellent ways to attract public interest and support. As an added bonus, computer programmers were able to learn from the creation of games as well because it allowed them to break away from the usual subroutines and challenge the computer’s capabilities.

It was this mindset that led a group of MIT students during the 1960s to create one of the first and most groundbreaking computer games. Students Steve Russell and his friends were granted access to the school’s new PDP-1 computer providing they used it to create a demonstration program that (1) utilized as many of the computer’s resources as possible and “taxed those resources to the limit,” (2) remained interesting even after repeated viewings, which meant that each run needed to be slightly different and (3) was interactive.

Inspired by the science fiction novels Russell and his friends enjoyed, these computers “hackers” decided to create a dueling game between two spaceships. The result, called “Spacewar,” caused a sensation on campus and variations on the game soon spread to other universities that had computer engineering programs.

Although Spacewar was fun to play, it was never destined for released to the general public, since computers were still too expensive for personal use. To play Spacewar one needed access to a research facility’s computer, which kept the game’s influence limited to the small computer technology sphere.

In fact, video games did not get their true start from computer programmers, but from an engineer skilled in another major invention of the 20th century: the television set. By the 1960s, millions of Americans had invested in televisions for their homes, but these television sets were only used for the viewing of entertainment. Engineer Ralph Baer was certain this technology could be used to play games.

In 1966, while working for Sanders Associates, Inc., Baer began to explore this idea. In 1967, assisted by Sanders technician Bob Tremblay, Baer created the first of several video game test units. Called TVG#1 or TV Game Unit #1, the device, when used with an alignment generator, produced a dot on the television screen that could be manually controlled by the user. Once Baer had established how it was possible to interact with the television set, he and his team were able to design and build increasingly sophisticated prototypes.

Sanders senior management were impressed with Baer’s progress and assigned him the task of turning this technology into a commercially viable product. After a few years and numerous test and advancements, Baer and his colleagues developed a prototype for the first multiplayer, multiprogram video game system, nicknamed the “Brown Box.” Sanders licensed the Brown Box to Magnavox, which released the device as the Magnavox Odyssey in 1972.

With fewer than 200,000 units sold, Magnavox Odyssey was not considered a commercial success. Among the contributing factors, poor marketing played a large role. Many potential consumers were under the impression—sometimes encouraged by Magnavox salesmen—that Odyssey would only work on Magnavox televisions. Ultimately, the problem was that Magnavox saw Odyssey as a gimmick to sell more television sets. Executives at Magnavox lacked the vision to see that television games had the potential to become an independent industry, and did not give the product the support it needed.

Meanwhile, a creative young entrepreneur named Nolan Bushnell remembered playing Spacewar during his years as a student at the University of Utah. He began to think of ways that the game could be retailed. Bushnell had past experience with amusement park arcades and had witnessed firsthand the popularity of pinball machines. He believed that Spacewar would make a successful coin-operated machine.

Video Game History | Smithsonian Institution

In 1971, Nutting Associates, a coin-op device manufacturer, released Bushnell’s idea as “Computer Space.” However, while Spacewar had been an enjoyable game, Computer Space proved too complex for the casual game player to understand quickly. The changes that were required to convert the two-player Spacewar to a one-player game made Computer Space frustratingly difficult for those who did learn how to play.

Though Computer Space was a flop, Bushnell still believed that coin-operated video games could be successful. After seeing a demonstration of Magnavox Odyssey’s table tennis game in May 1972, Bushnell set about trying to create an arcade version of the same game. He and his business partner, Ted Dabney, formed Atari, Inc., in June 1972, and released Pong, an arcade ping-pong game, that same year. The first Pong machine was installed in Andy Capp’s Tavern, a bar located in Sunnyvale, California. A few days later, the tavern owner called Atari to send someone out to fix the machine. The problem turned out to be that the cashbox was filled with too many quarters. The coins had overflowed and jammed the machine. Atari clearly had a sensation on its hands.

Emboldened by Pong’s success, Atari partnered with Sears, Roebuck & Company to produce a home version of the game in 1975. Magnavox sued for patent rights infringement. The case was heavily in Magnavox’s favor. Ralph Baer had carefully documented his work. Magnavox could prove that they demonstrated Odyssey to the public in 1972 and that Bushnell had attended the demonstration. (It was even confirmed later that Bushnell had played Odyssey’s tennis game.) Rather than face a lengthy and undoubtedly unsuccessful court case, Atari settled with Magnavox.

The home version of Pong was just as successful as the arcade version. Atari sold 150,000 units in 1975 alone (compared to the 200,000 Odysseys that took Magnavox three years to sell.) Other companies soon began to produce their own home versions of Pong. Even Magnavox began to market a series of modified Odyssey units that played only their tennis and hockey games. Of these first-generation video game consoles, the most successful was Coleco Telstar, due in part to some luck and the help of Ralph Baer.

Coleco, a toy company that later became known for the wildly popular Cabbage Patch Doll in the early 1980s, was just beginning to branch out into video games. Acting on a recommendation from Ralph Baer, Coleco was the first company to place a major order for General Instruments’ AY-3-8500 chip, on which most Pong console clones were based. When General Instruments, which had underestimated the interest in the chip, had trouble meeting production demands, Coleco was at the top of the priority list. While Coleco’s competitors waited for months until General Instruments could complete their orders, Coleco cornered the market.

At a crucial moment, Coleco Telstar did not pass the interference tests needed for Federal Communications Commission approval. Coleco had a week to fix the problem or the unit would need to be totally redesigned before it could be resubmitted for FCC approval. The process could potentially take months, putting the company well behind its competitors. Without FCC approval, Coleco would be stuck with warehouses full of units that they could not sell.

The company turned to Sanders and Ralph Baer in hopes that Baer’s experience would be able to help them. Baer found their solution within the week and Coleco received its FCC approval. Telstar sold over one million units in 1976, before being overshadowed by the next generation of video game consoles.

Produced between 1976 and 1983, these second-generation consoles, such as the Atari VCS (also known as the Atari 2600), Mattel’s Intellivision, and ColecoVision, featured interchangeable game cartridges that were retailed separately, rather than games that came preloaded in the unit. This advance allowed users to build a library of games. There was soon a wide variety of games to choose from, but, ironically, this surplus proved to be the one of the key reasons that the industry faced a serious crash during the early 1980s.

In a classic case of supply outpacing demand, too many games hit the market, and many were of inferior quality. Further complicating matters, there were too many video game consoles from which to choose. Beyond the flooded market, video games consoles now faced growing competition from computers.

The bulky, room-sized expensive computer behemoths were a thing of the past. The age of the home computer had arrived. For many, purchasing a versatile computer, like the Apple II, Radio Shack’s TRS-80, or the Commodore 64, which could play games in addition to running a multitude of other programs, seemed a more logical investment than buying a system devoted solely to gaming.

Sales of video game consoles and cartridges plunged in 1983 and 1984. Many companies like Mattel and Magnavox discontinued their video game lines completely, while Atari, the leader in the field, struggled to remain afloat. Video games remained popular arcade features, but it seemed that the era of home video game systems had ended.

But in 1985, a small Japanese company proved just the opposite. That year, Nintendo released its Nintendo Entertainment System (NES), whose popularity and commercial success surpassed any previous game console. No longer a novelty, video games found a firm foothold mainstream American life, just as Ralph Baer had predicted they would.