Replay: The History of Video Games
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That same day Atari hired Al Alcorn, a young engineer who had worked for Dabney and Bushnell at Ampex as a trainee. Bushnell wanted to give Alcorn a very simple game to get him used to the basics of video game technology and thought of Ping-Pong , the Odyssey game he had played the month before. He described the game to Alcorn and told him it was a part of a deal he had done with General Electric. “I thought it would be a good way of getting him through the whole process because the circuits I’d designed were pretty complex,” said Bushnell. There was no deal, however, and Bushnell had no intention of doing anything with the game. He thought the bat-and-ball action was too simplistic to be popular and saw it as no more than on-the-job training for the young employee. Alcorn, however, threw himself into the project. He improved on Bushnell’s brief by making the ball bounce off the player’s bats at different angles depending on which part of the bat it hit. He also added scores and crude sound effects. The result had just one instruction: “Avoid missing ball for high score”. These minor improvements did not drastically change the game, but were enough to make Bushnell and Dabney change their plans. “My mind changed the minute it got really fun, when we found ourselves playing it for an hour or two after work every night,” said Bushnell, who named Alcorn’s game Pong .
That September Atari decided to test Pong on the customers of Andy Capp’s Tavern in Sunnyvale, California. At the same time Bushnell headed to Chicago to show Bally Midway the game, hoping it would fulfil Atari’s contract with the pinball manufacturer. Bally Midway, however, was unimpressed. “They didn’t want it,” said Bushnell. “First of all, it was only two-player and no coin-op game at the time was only a two-player game, some had two-players but there had to be a one-player option. That was the big veto in their minds.”
Back in California, Alcorn also got some bad news from the owner of Andy Capp’s – Pong had stopped working. Alcorn drove over to the bar to investigate. On arrival he opened the coin box so he could give himself free games while trying to diagnose the problem and out gushed a flood of coins; spilling, spinning and sliding all over the barroom floor. The sheer amount of coins put into the Pong machine had caused it to seize up. The customers at Andy Capp’s had gone crazy for Pong , people had even begun queuing outside the bar waiting for it to open just so they could play the game.
At the time when the average coin-op machine would make $50 a week, Pong was raking in more than $200 a week. Atari now knew it had a hit on its hands; the only problem was how to get it into the arcades. Hoping the game’s takings would persuade Bally Midway to change their mind, Bushnell went back to the pinball firm. Worried the company wouldn’t believe the real figure, Bushnell told them it was making a third of what it actually was. Bally Midway once again rejected the game. Atari then offered Pong to Nutting Associates in exchange for a 10 per cent royalty, only to be rejected again on the grounds that the royalty demand was too high.
With options drying up, Atari decided to make the game itself. It was a big leap for the young firm: it had next-to-no money, no production line and no links with arcade machine distributors. Bushnell was nervous about the move but figured the game’s simple design meant it would be easy to build. Atari gambled everything on its first run of Pong machines. “Our first run was 11 units, which was 100 per cent of the money that we had,” said Bushnell. Each machine cost $280 to make but sold for $900.
“We sold the 11 units immediately for cash, so all of a sudden we had our cash back. The next release was 50 units and we completely ran out of space,” said Bushnell. Luckily for Atari, the company in the business unit adjacent to their offices went bust just as space got tight. “We went from 2,000 square feet to 4,000 square feet and knocked a hole in the wall to link the two,” said Bushnell.
By now word about Pong had spread through the arcade business. “We had distributors all over the country who were just screaming for the units,” said Bushnell. Atari needed a proper production line fast if it was going to meet the soaring demand for Pong , but lacked the cash needed to set up a proper manufacturing facility. So Bushnell headed to the banks to ask for a credit facility. The banks were, however, disinterested – put off by Bushnell’s long hair and the dubious image of the amusements business, which had become linked in the public mind with gangsters and gambling. Back in the 1930s gangsters had close ties to the amusements business, none more famously than Frank Costello – a notorious mobster nicknamed ‘the prime minister of the underworld’. Costello owned a network of 25,000 slot machines located in cafés, gas stations, bars, restaurants and drug stores across New York City that earned him millions of dollars every year and helped bankroll his less legitimate activities.
The authorities had long been worried about the connection between the Mafia and the slot machine industry, so when several manufacturers started producing pinball machines that offered cash prizes they decided to act. New York City’s Republican mayor Fiorella La Guardia led the charge. A year after becoming mayor in 1934, La Guardia began petitioning courts for a ban on pinball, arguing it was an extension of gambling. After years of legal battles, La Guardia got his way in 1942 when a Bronx court sided with him and banned pinball – a ban that would stay in force until 1976. To celebrate his victory La Guardia held a press conference by the city’s waterside where he smashed up a confiscated pinball machine with a sledgehammer before throwing it into the East River. Over the next three weeks police impounded more than 3,000 pinball machines, dealing a severe blow to Costello’s slot machine empire. Other US cities and towns began to follow New York’s lead, fixing the idea that pinball and arcades were inextricably linked with gangsters, gambling and moral decline.
So when Bushnell asked banks for a loan to help build his amusements machine business, they showed him the door. Eventually Bushnell persuaded the bank Wells Fargo to lend Atari $50,000 on the back of an order for 150 Pong machines. It was less than Atari had hoped for, but enough to get a production line going.
With funding in place, the company turned a disused roller-skating rink into its new manufacturing arm and headed to the local unemployment office to recruit an instantly available workforce. “They were horrible,” said Bushnell of the staff they hired to man the Pong production line. “We had a bunch of heroin addicts and things like that. They were stealing our TVs. We were young and dumb is what I like to say. But we learned quickly. They didn’t last very long.”
Soon Pong had taken the nation by storm, introducing millions to the idea of the video game. Other amusement machine manufacturers quickly started producing their own versions of the game, hoping to cash in on the new craze. Pinball firms such as Chicago Coin and Williams released thinly veiled remakes of Atari’s hit. Bally Midway went back to Atari and signed a licensing deal that gave the Californian start-up a 5 per cent cut from sales of its Pong clone. Nutting Associates, doubtless regretting its decision to turn dwn Bushnell’s offer of Pong , released Computer Space Ball . Some of these clones achieved sales comparable to the 8,000-plus Pong machines sold by Atari. Paddle Battle and Tennis Tourney transformed the fortunes of Florida-based Allied Leisure, increasing its annual sales of $1.5 million in 1972 to $11.4 million in 1973. Pong soon went global.
In Japan, Taito, an amusements manufacturer built off the back of jukeboxes, peanut vending machines and crane games, looked at Pong and produced Elepong – the first Japanese arcade game. French billiards table makers René Pierre jumped on the Pong bandwagon with Smatch and in Italy, Bologna-based pinball company Zaccaria entered the digital age with TV Joker , a Pong copy produced under licence from Atari. “In 1972, Pong arrived in Italy and it was a great success,” recalled Natale Zaccaria, co-founder of Zaccaria. “Zaccaria produced pinballs and sold them all over the world, so we had a wide net of contacts. When the video games started, we were ready to start selling and producing them under licence. Zaccaria assembled a cabinet for Italy and called it TV Joker . At the start we were buying the motherboards from the US and building just the cabinets.”
By September 1974 an estimated 100,000 coin-operated video games were in operation across the US, raking in around $250 million a year. For the amusements business, long shamed by being connected to gambling and gangsters, the video game offered a new start, attracting a new demographic to the arcades. “For years, our games – pinballs, shuffle alley, pool – appealed mainly to, you know, the labouring class. Now with the video games you have a broader patronage,” Howard Robinson, the manager of an Atlanta coin-op distributor, told The Ledger newspaper in September 1974. “A lot of lounges will take a video game that never would have let a pinball machine in the door.”
As Frank Ballouz, sales manager for Atari, remarked a couple of years later: “Many arcades used to be in rat-hole locations. Now they have turned into family amusement centres where you can take your wife and six-year-old daughter and 14-year-old son.”
The idea that video games were somehow separate from the seedy arcade machines of old was something Atari deliberately pushed. “We fostered that it was a more sophisticated thing to do because we thought it was better marketing,” said Bushnell.
Bushnell had delivered on his promise that Computer Space was just the start of a new era for the amusements business. The only question now was how to follow up such a megahit.
[ 1 ]. Teletypes were a brand of teleprinter. Teleprinters were electric typewriters that connected to early computers and were used in place of screens. Users would type out their commands on a roll of paper in the teleprinter, which would then print out responses to their commands. Teleprinters also formed the basis of newswires, allowing news agencies such as Reuters to send news reports over the wire to teleprinters in newspaper offices.
[ 2 ]. It should be noted that at this time, and throughout most of the 1970s, ‘TV games’ was the more common term. The term ‘video game’ eventually came to the fore later in the 1970s and the term ‘TV game’ faded away in the early 1980s. ‘Computer games’ were also sometimes talked about but, since most video games did not use microprocessors before the late 1970s, it’s a misleading term. As Ralph Baer put it: “People began calling them computer games. They weren’t. There were no computers!”
[ 3 ]. Electro-mechanical arcade games were notoriously prone to breaking down due to the various moving parts they were built out of.
[ 4 ]. Syzygy is the term for a straight-line alignment of three celestial bodies, such as when the Earth, Moon and Sun line up during a solar eclipse.
Fun Inc.: Nolan Bushnell watches Gran Trak 10 games roll off the Atari production line, July 1974. Tony Korody / Sygma / Corbis
3. A Good Home Recreation Thing
Pong ’s popularity sent shockwaves through the amusements business. In less than six months Atari had gone from an unknown start-up to the leaders of a revolution in the arcades. For the game-playing public, video games embodied the technological dreams of the Cold War in a way pinball tables and electro-mechanical games never could. No longer was TV just for watching, now the viewer could take control. As Florida’s Ocala Star-Banner newspaper put it: “What better evidence is there that Americans are living in the space age than the growing application of electronics in games that are played?”
The success of Pong restructured the amusements business. Arcade owners turned their backs on the cranky and unreliable electro-mechanical games that once filled their game rooms and embraced the video game. “Video games offered a wider assortment of entertainment and, since video games had fewer moving pieces, they were more reliable,” said Bob Lawton, who founded the Funspot Arcade in Wiers Beach, New Hampshire, in 1952. “Ask anyone who ran electro-mechanical games back in the day and they will tell you the same thing. You can do so much more with a video game than you can with a plastic car, electric motors and relays.”
Within a year of Pong ’s debut in Andy Capp’s Tavern, more than 15 companies had piled into the coin-operated video game business that once was Atari’s alone. Not that these companies strayed far from the bat-and-ball formula of Pong . Instead they produced barely disguised copies and various new twists on Atari’s game such as Chicago Coin’s TV Pingame , a fusion of Pong and pinball where players used the bat to hit the virtual ball into digital pins to score points, and Ramtek’s Clean Sweep , where the goal was to clear dots from the screen by hitting the ball over them. With competition intensifying, Atari knew it needed to expand its range of games beyond Pong remakes. [1] “We knew that we understood the technology and everybody else pretty much just xeroxed our technology,” said Atari boss Nolan Bushnell. [2] “I felt we could out-innovate them.”
To encourage this innovation, Bushnell sought to mould Atari into a business based on egalitarian values and fostered a working culture based on fun and creativity. He spelled out his thinking in a two-page company manifesto that drew on the ideas of the hippy movement of the late 1960s. The manifesto declared “an unethical corporation has no right to existence in any social framework” and promised that Atari would “maintain a social atmosphere where we can be friends and comrades apart from the organizational hierarchy”. It also stated that Atari would not tolerate discrimination of any kind including “the short hairs against the long hairs or the long hairs against the short hairs”. “This is slightly after the days of Aquarius and the hippy revolution and we all wanted to create this wonderful, idealistic meritocracy,” explained Bushnell.
In practice, these values translated into a lack of fixed working hours, an anything-goes dress code and parties with free beer that the company threw if targets were met. “We were all very young,” said Bushnell. “The management team were all in their late 20s to early 30s and most of the employees were in their early 20s. With that kind of demographic, a corporate culture of fun naturally evolves. Then we found out our employees would respond to having a party for hitting quotas as much as having a bonus. We became known as a party company because we’d have beer kegs on the back lot all the time because we were hitting quotas all the time.”
Steve Bristow, who joined Atari as an engineer in June 1973, felt the company’s attitude was a world away from the big technology firms of the day. “At Atari it didn’t matter if you had tattoos or rode in on a motorcycle,” he said. “At that time in IBM you had to wear a white shirt, dark pants and a black tie with your badge stapled to your shoulder or something. At Atari the work people did counted more than how they looked.”
The company also turned a blind eye to the use of illegal drugs by employees. “There was absolutely no drug use in the factory, but we did have parties and, along with beer, some people preferred marijuana and we closed our eyes to it. It was pretty wild,” said Bushnell. Bristow felt it reflected the times: “This was California in the 1970s. It wasn’t company policy or anything, but at company parties one could detect certain odours and some people had sniffles. It was more of the times than of Atari.”
Despite Atari’s laid-back management style its staff worked hard, putting in long hours because they enjoyed their jobs. “It was quite common to have people working through the night. Sometimes we’d work 24 hours just because we were excited about what we were doing,” said Dave Shepperd, who became an Atari game designer in 1976. Noah Anglin, who quit IBM to become manager at Atari in 1976, remembered being impressed by the commitment of Atari’s employees: “What I saw was these absolutely brilliant hard-working guys. They r
edefined hard working and the ability to work hard.”
This blurring of work and life, coupled with Bushnell’s non-conformist management, helped Atari stay one step ahead of the bigger manufacturers now seeking to conquer the video game business. While other companies rehashed Pong , Atari began releasing new types of video game. It challenged arcade goers to steer through meteor storms against the clock with Space Race . Pong creator Al Alcorn’s Gotcha got people playing virtual kiss chase in a maze, using joysticks encased in pink rubber domes designed to look like breasts. In Qwak! , Atari handed players a rifle-shaped light gun for a virtual duck hunt. All three sold thousands.
Only Nutting Associates, Bushnell’s former employer, tried to explore what more could be done with video games in the immediate wake of Pong . It produced Missile Radar , a game where players had to shoot down incoming missiles. Atari later reworked the idea to create Missile Command. In March 1974 Atari’s experiments with video games resulted in the release of Gran Trak 10 – the first driving video game. Gran Trak 10 showed a bird’s eye view of a racecourse and asked players to drive their virtual racing car round the track using a steering wheel, gear stick and the game’s accelerate and brake pedals. It became Atari’s biggest-selling game since Pong but, thanks to an accounting error, the company underpriced the machine and lost money on every one sold. The resulting losses pushed Atari to the brink of collapse.
Matters were not helped by Atari’s decision to go global in 1973 by opening Atari Japan in Tokyo. “The Atari Japan excursion was an unmitigated, unbridled disaster,” said Bushnell. “We were young and thinking that everything was possible. We probably violated every international trade law with Japan. We actually funded the thing with cash and bought a factory without worrying about permits and things like that, which are so difficult to get in Japan.” Like many foreign companies that tried to enter the Japanese market, Atari found itself hampered by a legal system and business culture that openly conspired against overseas firms. In the early 1960s, Ikeda Hayato, the Japanese prime minister who played a crucial role in the nation’s post-Second World War economic success, had introduced laws that restricted the activities of foreign companies in a bid to protect Japanese businesses. On top of this, Japanese coin-op distributors refused to work with the cocky American business. “The distribution over there was really closed to us,” said Bushnell. “Sega didn’t like us. Taito didn’t like us. They were doing everything they could to throw obstacles in our way. They were entrenched and they were Japanese. We were American and stupid.”