The Ultimate History of Video Games: From Pong to Pokémon and Beyond—The Story Behind the Craze That Touched Our Lives and Changed the World

by Steven Kent

  He said, “I guess so.”

  By December 26th we knew we had a monster business on our hands.

  —Manny Gerard

  Shortly after the budget meeting, Gerard returned to California. While there, he heard that Bushnell was holding an Atari board meeting without Warner representation. This was the last straw. Gerard had an attorney draw up papers, and he dismissed Bushnell.

  There was this whole thing in which it came to my attention that Nolan was trying to call a board meeting with Joe [Keenan], and they said something about didn’t I get my notice? I said to myself, this is untenable, then I got the contracts out, I got the lawyers out, and I removed Nolan from office.

  Nolan was simply removed and he was put on the beach. Okay?

  Then Joe asked to be put on the beach. That’s a … word of ours, because by putting him on the beach, he was entitled to certain modest compensation in some bonus pool arrangements.

  I don’t remember the numbers, but Nolan and Joe got 1 percent of this bonus pool, which, at that moment in time, he [Bushnell] believed was valueless. I believe what was going on was that they perceived they could make a fortune with Chuck E. Cheese, and who gave a shit about Atari anyway?

  —Manny Gerard

  Bushnell’s forced retirement knocked him out of the video-game industry. One of Warner’s original stipulations for purchasing Atari was that Bushnell sign a seven-year noncompete clause. Once he left Atari, he was not allowed to work for any video-game company until 1983. On the other hand, he still received bonuses based on Atari’s performance. If Gerard and Kassar ran Atari profitably, he stood to make some easy money.

  Ray Kassar replaced Bushnell as the CEO of Atari. His autocratic style had angered a few Atari employees when he was just a consultant. Now that he was chief executive, he offended people in droves. Once Bushnell left, several of Atari’s key figures followed within the next few years.

  A lot of us didn’t know Ray when he was appointed to run the company, so he gathered the entire consumer engineering department in one of the cafeterias to talk about how he was going to run things.

  The question just came up, “What’s your background?” He said it was from the textile industry, importing fabric and stuff like that.

  Somebody asked him, “Well, how are you going to interact with electronics designers?”

  He said, “Well, I’ve worked with designers all my life.”

  I remember saying to myself, “What does he mean by that?”

  He went on to say, “The towel designers … ”

  I was like, oh-oh, we’re in for a lot of trouble. This is going to be a disaster. And it sure turned out to be a disaster.

  —Alan Miller, former Atari game designer, cofounder of Activision and Accolade

  * Atari did not make the first joystick. German scientists developed the joystick during World War II for controlling guided missiles.

  The Return of Bushnell

  Solid-state pinball was a really foolish market—they sold before they even finished building it. It was a wonderful market for Bally that only lasted about three years and went into the dumps. The reason it went into the dumps is because a video game called Space Invaders came out and captured the attention of everybody on the face of the earth.

  —Eddie Adlum

  Nolan started Chuck E. Cheese at about the same time that Warner bought Atari. You want to hear about Chuck E. Cheese?

  —Al Alcorn

  Arcades Reborn

  In the spring of 1978, Taito approached Midway about distributing a new arcade game in the United States. The game had originally been invented as a hexadecimal test used for evaluating computer programmers. Someone decided to convert the test into a video game that Taito distributed in Japan, despite the unenthusiastic blessing of company executives. The game was called Space Invaders.

  Space Invaders did very poorly for the first few months after being introduced to Japanese arcades. By the time the game was three months old, however, it started to show signs of life. More than a year passed between the time that Space Invaders was introduced in Japan and when it arrived in the United States. By that time, it had become an unprecedented phenomenon in Japanese arcades.

  By the end of its arcade life, more than 100,000 units of Space Invaders blanketed Japan. So many people were playing the game that it caused a national coin shortage. The Japanese mint had to triple the production of the 100-yen piece because so many coins were glutted in the arcades.

  In 1978, Taito came out with Space Invaders in Japan. It was such an outrageous hit in Japan that many vegetable stores and other little stores would get rid of their vegetables and dedicate the whole store to Space Invaders. All told, worldwide, they say there were at least 300,000 Space Invaders games built, including counterfeit versions.

  —Eddie Adlum

  Even after Space Invaders’ triumph in Japan, Taito executives felt that the game’s theme of defending space stations from an extraterrestrial attack was too different from other games to appeal to American audiences. Most of the top games of 1978 were based on popular themes such as driving, sports, and war. In Space Invaders, players moved a laser turret from side-to-side along the bottom of the screen, instead of controlling familiar objects.

  The aliens in Space Invaders marched in a rectangular formation eight columns long and five rows deep. They marched horizontally, advancing toward the bottom of the screen. Players lost if the invading alien army reached the bottom or if players lost all their turrets.

  To defend against the invaders, players had to shoot at the aliens with their laser turrets while avoiding descending enemy missiles. Four bases toward the bottom of the screen offered limited cover from missile barrages, but enemy fire could obliterate those bases quickly. Destroying an entire wave of aliens earned 990 points. Extra points could be earned by shooting flying saucers that flew across the top of the screen at 25-second intervals.

  There was no way to beat Space Invaders; the alien waves kept coming until the player either gave up or was killed. The best you could hope for was to post the highest score of the day at the top of the screen.

  After testing the game, Taito of America’s vice president of product development Keith Egging predicted that Space Invaders would do well in the United States. He set up a prototype in a secret testing location in Colorado. The players’ response convinced him that Taito had sold Midway a major hit.

  I was exceptionally confident that it would do good in this country. I had just started with the company [Taito of America], and they thought I was a nut. I said we could sell tens of thousands, and they said, “You can’t sell that many.”

  —Keith Egging, former vice president of project development, Taito of America

  Midway introduced Space Invaders into the United States in October 1978, and American audiences adopted it almost immediately. Midway sold Space Invaders machines for approximately $1,700. The orders poured in so quickly that the company became backlogged. Arcade owners gladly paid the price; the game could pay for itself in a single month. In good locations, each machine earned between $300 and $400 per week.

  Within a year, Midway manufactured and sold more than 60,000 Space Invader machines in the United States. Suddenly, video games were the most lucrative equipment a vendor could own.

  Not too long after I opened the game room, Space Invaders came out. What a great game. That was the first time I saw a cash box that represented a significant portion of the cost of [buying] the game in any one week. It was hard to believe that any game could capture the audience to the degree that it was capable of doing.

  I can remember only a few games that had that dynamic game-playing magnetism. You could probably count them on your fingers.

  —Joel Hochberg

  In a 1982 interview, Taito import manager S. Ikawa tried to explain why so many people liked Space Invaders: “Space Invaders gives you a feeling of tension. A little neglect may breed great mischief.”1

  Though Space I
nvaders played the biggest role in revitalizing the coin-operated business, another game also had a major impact—Atari Football.

  Contrary to a popular notion, Football was not the first game to use a trak-ball controller. According to Dave Stubben, who created the hardware for Atari Football, Taito beat Atari to market with a soccer game that used one. According to Steve Bristow, when his engineers saw the game, they brought a copy into their lab and imitated it.

  Dave Stubben, a large and beefy man who often wore cowboy boots to work, cocreated Football with software designer Mike Albaugh. Stubben saw a partially completed football game called X’s and O’s that Bristow had begun around the time that he created Tank. Stubben improved Bristow’s design by adding a smooth-scrolling playing field and trackball controllers.*

  Few games absorbed more abuse than Atari Football, and few games have injured so many players. It was housed in a waist-high tabletop cabinet. Players stood beside the cabinet, pounding the trackball as hard as they could. On offense, players slapped the trackball to control their quarterback and make their receivers run. To build speed and to maneuver, players had to spin the trackball as quickly as possible. All over the country, people developed blisters on their hands.

  Although the computer microprocessor that powered Football far exceeded dedicated circuits of games like Pong, it lacked the horsepower needed to display complex graphics. The teams in Football were represented by Xs and Os.

  Unlike Space Invaders, Football ran on a three-minute timer. Once the three minutes were up, players had to insert more quarters to continue. For the first three months of its release, Football was, quarter-for-quarter, as big a money maker as Space Invaders. The football season ended in January, and with it went most of Atari’s Football business.

  The Problem with Pizza

  One of Nolan Bushnell’s pet projects while working at Atari was finding new outlets for getting his games to the public. Video games had already found their way into bowling alleys, amusement parks, movie theaters, bars, pool halls, and arcades. In 1979, Space Invaders opened new doors as fast-food restaurants and even drugstores began experimenting with games.

  The progress was slow, however, because much of the public still associated video games with pool halls, sleazy arcades, and vagrancy. Adding to the problem was a very effective war against video games launched by a woman named Ronnie Lamb, from Centereach, Long Island. She had seen a growing number of children playing the games and was appalled at the waste of time and money. She did not approve of the violence in many of the games and felt that arcades were not wholesome environments.

  Ms. Lamb presented her concerns on The Phil Donahue Show. Her campaign resulted in a few small towns banning arcades and helped to sour the public’s perception of video games and arcades. Despite arcades’ growing popularity, few shopping mall owners would allow arcades to be built on their properties.

  In order to reach a larger audience, Bushnell had to find a way to legitimize video games. He wanted to make them a family activity, and the only way to do that was to create locations in which parents were practically forced to let their children play them. The answer came in the form of a pizza parlor with a video game arcade and a built-in theater that showed a robot stage act.

  Bushnell hoped that the restaurant would legitimize the arcade. The robotic show, he thought, could create a Disney-like atmosphere that would make children select his parlors over such other chains as Pizza Hut and Godfather’s.

  It didn’t matter if the pizza was good or even mediocre; the arcade and robot show would attract kids. Once he lured customers, Bushnell hoped they would enter his arcade while their pizza was cooking. To help tempt them, he gave them a handful of free game tokens—enough to last five minutes. They would have to purchase more tokens if they wanted to spend additional time in the arcade while they waited.

  We were running out of locations, and opening a video game arcade in the 1970s was like opening a pool hall. Malls weren’t interested in letting us open arcades. So Nolan figured, okay, I’ll go into food service.

  What food are people used to waiting a long time to eat? Pizza. While they wait, we’ll give them tokens to play games so they don’t mind waiting a half hour for the pizza. We’ll use these animatronic robots that Grass Valley engineered.

  It was a scheme where you could tell mall management, “I’m not putting in a video-game arcade, I’m putting in a pizza parlor with video games.” But it was as big an arcade as you could possibly get in and still call it a pizza parlor.

  —Al Alcorn

  Bushnell called his new venture Pizza Time Theaters. He named his restaurants Chuck E. Cheese after the robotic rat mascot.

  Although Chuck E. Cheese restaurants were somewhat similar to the Cavalier restaurant/arcade that Joel Hochberg helped open in 1961, Bushnell’s vision was unique. The Cavalier was designed to attract adults with games and food. Bushnell went after children, knowing that if they came, their parents would have to follow.

  Bushnell began work on Chuck E. Cheese long before leaving Atari. He told a reporter that he had a rat costume on a mannequin in his office as early as 1974. Atari purchased an abandoned Dean Witter brokerage office in a San Jose outdoor mall and converted it into a Chuck E. Cheese restaurant in November of 1977.

  The first Chuck E. Cheese was far smaller than later restaurants. Along with an arcade, the establishment had a food service area with three stages, from which a robotic animal band played family tunes. The eating area was laid out like a cafeteria, with tables in long rows.

  Though Warner acquired the rights to Chuck E. Cheese when it purchased Atari, the project never interested Manny Gerard or Steve Ross. According to Bushnell, they eventually asked him to sell the entire franchise off.

  The project was started before Warner bought the company. They sort of said, “Okay, it’s another one of Nolan’s hare brains.” They sort of tolerated it, but they figured it was going to be something that would go away. They didn’t understand it.

  —Nolan Bushnell

  When Bushnell left Atari, he asked to buy the rights to Chuck E. Cheese. Ross sold him the entire project, including the rights to the robot technology, for $500,000. Bushnell paid the debt at the rate of $100,000 per year. Within weeks of leaving the company, he began planning his second location.

  Along with video games, Chuck E. Cheese had midway games that rewarded players with tickets that could be redeemed for prizes. Bushnell had run similar games at the amusement park in Salt Lake City, Utah, while working his way through school. He believed that the promise of winning prizes would have enormous appeal to children.

  Skeeball was dying. The company [that made the games], Philadelphia Toboggan, was going out of business and all of a sudden Nolan recognized there was play value there. You’ve got to give him credit for this.

  The whole redemption idea was kind of a shady thing at the arcades, almost gambling, but Nolan realized that this was something the kiddies would love because they could spend time at the counter redeeming all those tickets.

  I don’t know if he stole the idea from somebody else, but it was his drive and his vision.

  —Al Alcorn

  Had the video-game industry remained in the doldrums, Chuck E. Cheese might have quietly failed and disappeared. Instead, Space Invaders burst upon the scene and the entire industry flourished. Since Chuck E. Cheese was one of the places people were sure to find the games they were looking for, the franchise rode the swell of excitement over hot titles like Space Invaders.

  The second Chuck E. Cheese was far more ambitious than the first one. Bushnell put it in a San Jose building that had once housed a Toys “R” Us store. It was one of the largest Californian arcades of its time, with two floors of video games and a spiral ramp running around a 20-foot tall revolving statue of Chuck E. Cheese.

  By the end of 1979, Bushnell began selling Pizza Time Theater franchises. It cost approximately $1.5 million to construct a full-sized Pizza Time Theater. A prop
erly run location could pay for itself in six months.

  As it turned out, Space Invaders was only the tip of an iceberg that eventually turned Chuck E. Cheese and several other video game–associated ventures into billion-dollar success stories. The golden age of video games was about to dawn.

  * The trackball was created by Jerry Liachek, the Atari mechanical engineer who created all of Atari’s best coin-op controllers. Liachek worked on the handle for Lunar Lander, the joystick controller for Star Wars, and the dual joysticks for Battlezone.

  The Golden Age

  (Part 1: 1979–1980)

  Nobody gets their first game published.

  —Theurer’s Law (Atari doctrine named after Dave Theurer,

  creator of Missile Command and Tempest)

  Games such as Pac-Man and Space Invaders were going into virtually every location in the country, with the exception of maybe funeral parlors, and even a few funeral parlors had video games in the basements. Absolutely true. I believe churches and synagogues were about the only types of locations to escape video games.

  —Eddie Adlum

  The End of an Era

  Once Nolan Bushnell left Atari, other notables soon followed. Within a few months of Bushnell’s departure, Joe Keenan joined him. Gil Williams hung on for nearly two years; his last assignment was to set up a coin-op manufacturing plant in Ireland. Gene Lipkin remained a bit longer, then left the company under unpleasant circumstances.