A Gaming Decade in Review: 1970s

1976-1977: The First Wave and Crash

“Growth for the sake of growth is the ideology of the cancer cell.” -Edward Abbey

While Atari was still in its “hire anyone who walks through the front door” phase a 20 year old college dropout hippie showed up smelling of all the baths he didn’t take. Bushnell decided to bring the little rapscallion on board and later said this of him: “If he thought you were a dumb s—, he’d treat you like s—. That pissed certain people off. I liked him a lot. Still do.” So just who is this inexorably rude bum? You may know him as the guy who made a career stealing from other people. No, not Thomas Edison. Good guess, but I’m talking about none other than Steve “I’ve screwed over everyone I’ve ever met” Jobs. Luckily for creative individuals everywhere, Jobs left for a pilgrimage in India shortly after being hired. When he returned he was put to work on improving the engineering of Breakout, which his friend Steve Wozniak had developed based on Bushnell and Bristow’s concept.

One of the more popular apocryphal stories from computing history involves the events Woz recounted above regarding the reduction of the number of chips in Breakout. It was designed with 75 chips and Atari would save about $100,000 for every chip removed. Atari promised a generous bonus to Jobs and Woz if they could reduce the chipset. Alcorn explains,

“I found what really had happened is Jobs never designed a lick of anything in his life. He had Woz do it. Woz did it in like 72 hours nonstop and all in his head. He got it down to 20 or 30 ICs. It was remarkable, a tour de force. It was so minimized, though, that nobody else could build it. Nobody could understand what Woz did but Woz. It was the brilliant piece of engineering, but it was just unproducible [sic]. So the game sat around and languished in the lab.”

Wozniak was set to receive his bonus. After Jobs characteristically pocketed $4,650 he gave Woz $375. Woz found out about it several years later and was crushed. By that time  (mirror) he was already enjoying his success as the co-founder of Apple so I suppose he survived well enough. While Atari was offering these bonuses, however, it was having money problems of its own. The recent push into the living room, an area formerly monopolized by the Odyssey, left Atari stretched paper thin. Money was pouring in from every sector, but it left just as soon as it arrived.

No packaging has ever before or since been this unaabashedly “70s.”

“Home Pong” was taken up by Sears Roebuck and debuted in 1975. It was an impressive piece of hardware, with its microprocessor being the most powerful chip in any consumer electronic device to date. Its inclusion was necessary for Sears’ approval. The prototype was filled with a mess of wires and Sears executives were concerned about the feasibility of manufacturing such a product. Alcorn belayed their fears by ensuring that the innards would be replaced with a single IC (integrated circuit). Carl Lind, head of the sporting goods dept., said “Mr. Alcorn, you’re telling me that you’re going to reduce that rat’s nest of wire to a little piece of silicon the size of your fingernail?” When Alcorn told him yes, he leaned forward and asked “How you gonna solder the wires to it?” Presumably after Alcorn had to explain what “replace” means, Bushnell guaranteed 75,000 units and Sears demanded 150,000. Bushnell knew Atari didn’t have the manpower to manufacture those units, but being the sly, scheming rac- er, human being that he was, he agreed and just decided to borrow the money for manufacturing elsewhere.

Bushnell met with a well-known venture capitalist named Don Valentine. Valentine demanded that he be made a member of Atari’s board of directors to minimize risk on his part. Valentine combined income from various partners including Time, Inc. (now known as Time-Warner-AOL-Ziploc-US Department of Transportation) to open a $10 Million line of credit. And Atari needed it. At one point Bushnell sent a memo to engineering outlining all the games he wanted designed. Alcorn sent back a memo saying “One small issue, we have no money.” Bushnell responded by writing “NO” in big letters on the memo and returning it. The trouble for Valentine was, Atari desperately needed his help when they first went to him, but by the time he was ready to seal the deal Atari had recovered from their poor performance of 1974 and the merger of Kee Games. Venture Capitalists like to keep their clients waiting so they get good and desperate. In Atari’s case, however, the long wait meant they were in a better position to demand more capital. When Valentine drove up with champagne in his back seat to celebrate the deal, Keenan told him “Oh, by the way, we’re doubling our price.” After Valentine was finished blowing up, he settled in at Atari.

His number one problem was fitting in at a game company because he didn’t particularly like games (the heathen!). You see, there has been a slow cultural change over the past fifty years. Whereas today gamers come from all walks of life, Atari’s customers in the first half of the 70s were either bar patrons who needed to blow off some steam, or else children and their quarter-producing families. Back in the 1970s it was odd for Valentine to spend a work day talking about games and perhaps even test-driving them. It wasn’t until my generation that it became common for many gamers to derive the majority of their entertainment from games, as that was a long, gradual process. It’s now more common than ever for entertainment consumers to be attracted specifically to games.

Sears didn’t really like the laid-back atmosphere of Atari either. When they visited Sunnyvale to see the new production facility, they came in to see Bushnell riding the conveyor belt in a cardboard box. That night for dinner Bushnell, afraid of scaring off his investors, ordered the board members to wear suits and ties to the restaurant. To their “Gift of the Magi”-flavored horror, they saw the Sears executives nervously dressed in T-shirts and jeans. Of course, don’t get the idea that Bushnell was only the playful type. He would often look over engineers’ shoulders while they were working and make suggestions. Whether he visited Alcorn who was working on a high-speed modem (yes, in the 1970s. I’m telling you, Alcorn was a genius) or a junior engineer designing a game, he would suggest changes. The problem was that the junior engineers didn’t understand that he was just offering advice and would follow his input as if it were an order, which would often have negative ramifications on the product. To combat this, Alcorn told everyone to not take Bushenll’s suggestions as orders unless he said something three times. Bushnell eventually caught wind of this and held a meeting where he vehemently stated “When I tell you to do something, you do it!” One of the engineers yelled back, “Could you repeat that two more times?”

Despite minor problems and frictions, the units were shipped out and Sears took it from there. The gates opened on Christmas 1975 and boxes flew off the shelves. Home Pong’s ambitious production run of 150,000 units (mind, the Odyssey only sold 100,000 units in its entire lifetime) showed Atari just how popular playing at home was. Of course, it showed every other company how popular it was too. Just as countless imitators released Atari knock-offs in the arcade, so too would living rooms be subject to imitations. In 1975 and ’76 not only were there multiple versions of Pong released by Atari itself (e.g. Super Pong), but there were also eight versions of the Odyssey (original, 100, 200, 300, 400, 500, 2000, 3000, and 4000), two versions of the Coleco Telstar; the RCA Studio II, and many others. 75 different companies planned to introduce Pong-like consoles in 1976. This glut of consoles resulted in a poor performance for all parties. The gamer who had not yet been spoiled by the many variations of Hockey on the Odyssey was now in for a veritable treat–Pong, Pong, and more Pong.


“Eh, I guess it’s better than in 1952 when the commies tried

to sell me three different versions of shrapnel.” -Grandpa

Isn’t it depressing to think of how you can never win the game of Handball? The score keeps track of how many balls you missed. If you had the skill and tenacity to keep the ball bouncing for hours, all you’d have to show for it is a big, fat 0 on the screen. You’d look at the TV, then you’d look in the mirror and see that your score isn’t the only thing that’s empty.

1976 saw the video game industry rise meteorically, then crash harder than a Yuba City bus (I’m sorry, was that joke too soon? I don’t mean to upset anyone). 1977 marked the beginning of the second generation of consoles, and the beginning of the first game crash. Luckily for the two Steves, Valentine was still around to fund their little start-up (mirror) Apple after Joe Keenan refused to fund it. So, I guess not everyone was hurting.

Even as the industry was heading toward ruin, companies were pushing forward with their innovations. Coleco (short for Connecticut Leather Company) was having trouble pushing its Telstar console out the door. The process seemed all but guaranteed at first as Coleco was the only company who received all the chips they ordered–all the other companies had to wait for supply to catch up. Coleco was ready by July of ’76 to make waves but they ran into a problem with the FCC. Apparently the Telstar caused radio interference and Coleco only had one week to rectify the problem. In desperation, they contacted Sanders Associates and asked Baer to fix the problem. He agreed provided they would sign a licensing contract. Within two days he found the solution in an iron ring that would act as a choke for the RF. Now that the Telstar was within acceptable specs, Coleco was ready to release. The Telstar was out on Father’s Day and quickly sold 100 Million units, pushing Coleco straight to the top of the heap…

…which isn’t necessarily a good thing.

This wasn’t the last time Baer was brought into the spotlight. In 1985 Nintendo sued Magnavox to invalidate his patents and avoid paying royalties. They claimed that the first video game was Tennis for Two and thus Baer held no credit as the father of video games. The court ruled that Tennis did not use video signals (remember, it used an oscilloscope instead of a CRT) and could not qualify as a video game. Of course, nowadays the distinction between computer games and video games is made only by whether a game is played on a computer or a console (which is a type of computer); but back then it had the potential to be a legal landmine. And as for Baer’s title, that wasn’t constant. By the ’80s Baer was recognized as the father of video games, but during the ’70s in the heyday of Atari, Bushnell gladly accepted that title. Toward the end of the ’70s Bushnell introduced Baer to Gene Lipkin as the “Father of Video Games” and Baer replied “I wish you would have said that to the press.”

Back to the console story: Bushnell meanwhile wanted to push further into the home market. Home Pong was nice, but the limitation of a console that only played one game was painfully apparent. How many Pong units could one home need? This limitation was only made more obvious by the high production cost of these units and further by Telstar’s success. Bushnell’s plan was to release a programmable cartridge-based console. There was just one problem: “We have no money.” Not even Valentine could provide the necessary funding. Seeing no other way, Bushnell sold Atari to Warner Communications for a staggering $28 Million. With this infusion of money Atari’s engineers continued work on their new console, code-named Stella after one of the engineer’s bicycles.

It’s good that Stella’s development started when it did, because the same year Atari was sold, Fairchild released the first console with changeable cartridges and the first console of the second generation: the Fairchild Video Entertainment System (mirror) (VES). Coincidentally, 27 cartridges were released for the system. Approximately (mirror) 1.5 of them were fun. By 1977 when the Atari VCS was released 250,000 units of the VES had already sold. That success was short-lived, however, because being the first meant that Fairchild made the mistakes that everyone else would learn from. The VES had an astonishing palette of 8 colors (compared to the VCS’ 128) and only 64 bytes of RAM (as opposed to 128). Yes, that’s right–64 bytes. That’s an amount so small it couldn’t even contain this sentence. (65 bytes)

Atari’s goal was to manufacture Stella as cheaply as possible. To that end they used as little silicon as they could get away with; every other company was ordering silicon like there was no tomorrow. There was no frame buffer, the display was taken care of by the in-house-designed TIA (which you can read about more in the excellent book Racing the Beam), the CPU was the 6507 chip–a stripped-down version of the ubiquitous 6502 chip–, and to top it off Stella only had 128 bytes of RAM. That’s why its launch game Combat looks like this.

“Tanks for the memories! Ahahaha, you suck at this game! I boned your mom last night!” “Daddy, stop it! This is why I don’t like to play with you!”

Still, such simple graphics were a leap ahead of the Fairchild VES, which by now was known as the Fairchild Channel F to avoid confusion. The VCS was sold with only a $10 profit margin, but Bushnell meant to make money by selling games at a $20 margin, setting the tradition of low-cost hardware, high-cost software for the industry. The VCS launched with nine cartridges, including Combat which itself consisted of many variants. After two years of playing nothing but Pong at home, you’d think that this sudden explosion of variety would be a boon to the industry, right? Sadly, it was too late. Consumers were tired of having to buy machine after machine and not even the threat–uh, I mean, promise of being able to play Star Ship, was enough to prevent a crash.

Next page: Will gamers learn to stop worrying and love the Pong?

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