039 – Video games – 1972

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Everyone who’s ever taken a shower has an idea. It’s the person who gets out of the shower,
dries off and does something about it who makes a difference… Nolan Bushnell

1951 Ralph Baer was designing television sets and generating patterns on the screen as a test process.  He wondered if this might be built into a set for gameplay but his employer Loral had no interest.  Fifteen years later working at Sanders he produced a four-page outline of his earlier idea.

He involved Bill Harrison in a development project to emulate ping-pong, football, volleyball and shooting on screen.

1966 The Brown Box was completed, named for its use of an adhesive wood-grain cover.  Baer received the patent for controlling dots or ‘sprites’ on a screen.  Sanders sold the idea to Magnavox and the Odyssey was launched in May 1972.  Nolan Bushnell attended the launch.

The Odyssey used analogue circuits, transistors and diodes.  It had no sound and provided black and white images; coloured overlays simulated screen colours.  The cartridges were hardware, not software, using electrical connections to drive twelve games. It sold 130,000 units across two years.

Nolan Bushnell played Spacewar! at the University of Utah.  He and Ted Dabney decided to take it to a wider audience and founded what became Atari.  They agreed a manufacturing deal with Nutting Associates and the first coin-op arcade game, Computer Space, was released in late 1971.

It used an expensive minicomputer which proved slow; so was redesigned in hardware using seventy transistor-transistor logic chips and a black and white screen.  This analogue approach radically reduced costs.  Console styling was good but gameplay complex; yet they sold 2,000 units for c$3m.  Perhaps more vitally, through this Bushnell learned about the target end-user and gained experience of which locations were the most profitable.

1972 Bushnell and Al Alcorn developed Pong which was market–tested at Andy Capp’s Tavern, a helpful current client.  Within a few days the owner called to say it was malfunctioning.  Alcorn found the mechanism had been jammed by an overload of quarters!

Atari sold 38,000 Pong consoles.  With its large number of clones, it was the most popular arcade game of all time.

1974 The next challenge was to create a home version of Pong, based on a single chip to provide the game, on-screen scores and sound.  Atari signed a 150,000 unit deal with Sears. 1975 at $100 the Sears Tele-Games system flew off the shelves.

Bushnell’s attendance at the 1972 Magnavox Odyssey demo came back to haunt him.  Atari agreed to pay Sanders/Magnavox a $700,000 retrospective licence fee.  The success of Tele-Games also attracted a host of Pong-variant home game consoles.  By enforcing Baer’s patent, Sanders and Magnavox made millions.

1977 The Atari VCS, aka 2600 console, was launched.  It sold 550,000 units in 1978 but 800,000 had been manufactured; this led to Atari being sold to Warner Communications for $28m.  Under new ownership, in 1980 Atari acquired a licence for Taito’s Space Invaders game and sold two million units with revenues of $2bn.

1983 The ‘console crash’ meant Warner’s Atari lost $538m.  Warner retained its arcade business as Atari Games but sold off its home games division to Jack Tramiel, the founder of Commodore.

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