Replay: The History of Video Games

by Donovan, Tristan

  The challenge to Atari’s control of the games released on its console started with a memo innocently sent by the company’s product marketing group to the game developers in the home console division. The memo detailed the sales figures for 2600 game cartridges and was meant to help the team understand what types of video game were most popular. But instead of inspiring more successful products, it sparked a rebellion. The hackles of the division’s game developers were already up when the memo landed on their desks. “The frustration began when Atari refused to pay a bonus program that was believed to be in place,” said David Crane, the programmer who had converted Atari’s bomb-dropping arcade game Canyon Bomber to the 2600. “Our department manager had negotiated a small royalty based on unit sales and when he later asked about that, he was asked ‘what royalty?’. To stop the grumbling, managers went through and gave raises to key employees, but a line had been crossed.” The product marketing group’s memo reopened the royalties issue. “The memo was a one-page list of the top 20 selling cartridges from the previous year, with their per cent of sales. The purpose of the memo was the hint: ‘These type of games are selling best…do more like these’. But this memo also showed us whose games did well, not just the game type. We noticed that four of the designers in a department of 30 were responsible for over 60 per cent of sales. And since we knew that Atari’s cartridge sales for the prior year was $100 million, it was a shock to know that four guys making $30,000 per year made the company $60 million.”

  The four guys in question – Crane, Larry Kaplan, Alan Miller and Bob Whitehead – decided enough was enough and took the matter straight to Kassar. Miller put together a revised employment contract to present to Kassar, based on the kind of deals record labels gave their artists. “The four of us took this little sales statistic up to Kassar,” said Crane. “Our point was that the statistics showed we must be doing something better than others. Since a game is a creative product, it is possible that one person is more creative than another and, therefore should be compensated accordingly. We were told that ‘you are no more important to Atari than the guy on the assembly line who puts them together – without him we have no sales either’.”

  Furious at Kassar’s dismissal of their arguments, the four quit Atari a few days later. With help from former music industry executive Jim Levy and $750,000 of venture capital investment the four rebels formed Activision, a company that would create and publish games for the 2600. It was a bold step. Until that moment only the manufacturers of video game consoles released the games. Indeed, Atari never even thought anyone else would make games for the 2600 and so had created nothing within the console that could prevent it. Activision’s founders had declared war on their former employer and set out to smash Atari’s monopoly on 2600 games. When Activision went public with its plans, Atari sued, hoping to crucify the fledging company and maintain its iron grip on the lucrative pool of 2600 owners it had spent millions cultivating. Atari’s legal challenge backfired. The court backed Activision and ruled that Atari had no right to stop others developing games for the 2600. In July 1980 Activision’s first three games – Crane’s Fishing Derby and Dragster plus Whitehead’s Boxing – reached the shelves packaged in distinctive boxes that prominently displayed the names of their creators.

  Activision’s public promotion of each game’s creator addressed one of the main complaints of Atari’s programmers about their employer: the policy of keeping their names out of the public eye. “The fear was either that another company would try to steal them away or that the engineers would get an inflated sense of their worth and start making outrageous demands,” said Howard Delman, co-creator of Lunar Lander. The reasoning may have made sense to Atari’s management, but it angered its game developers who were starting to see themselves as the artistic pioneers of a new form of entertainment. The policy would prompt another of the company’s leading VCS 2600 developers to resign in late 1979.

  Warren Robinett joined Atari in 1977 after completing a masters degree in computer science at Berkeley University, California. After completing Slot Racers, a car-themed remake of Combat, Robinett was searching around for an idea for his next game when he encountered Don Woods and Will Crowther’s text game Adventure. “I played Adventure at the Stanford Artificial Intelligence Lab in early 1978. My housemate Julius Smith was a grad student at Stanford and he took me up there,” said Robinett. “Crowther and Woods’ game took the nerd world by storm in 1978. I was just finishing Slot Racers then and needed to come up with an idea for my next game. The idea of exploration through a network of rooms, with useful objects you could find and bring with you and obstacles to get past, and monsters to fight – I thought this could work as a console game.”

  The 2600’s limited capabilities and lack of a keyboard ruled out a direct remake of the text game, so Robinett reworked the ideas into visual form. The turns-and-text original was transformed into an action game where players ran around the screen dodging and fighting monsters and finding objects to allow them to access new areas as they searched for an enchanted chalice.[6] Officially there were 29 rooms in Robinett’s Adventure, but, unknown to his colleagues, there were actually 30. The secret room was Robinett’s protest against Atari’s attempts to hide away its game creators. “Atari was keeping us game designers anonymous, which I found irritating,” he said.

  To access the 30th room players had to discover a hidden dot and use it in the right place to open an invisible doorway. Inside awaited the flashing words: ‘Created by Warren Robinett’. “Atari had the power to keep my name off the box, but I had the power to put it on screen,” he explained. Adventure’s concealed message was one of the earliest ‘easter eggs’ – a hidden secret within a video game for players who search carefully enough to discover.[7] Such secrets have since become a standard part of video games. Robinett was proud of his game. During its development, Atari’s management felt he was being too ambitious and tried to stop him working on it. Halfway through its development, his boss told him to turn it into a game to tie in with the Warner’s 1978 Superman film. His colleague John Dunn stepped in and used a copy of the half-finished game to create the Superman game, so that Robinett could finish his game. When Adventure eventually came out in late 1979, it became a big success selling more than a million copies worldwide.

  Robinett, however, had already quit by the time it came out: “I thought I had done a pretty good job in creating the Adventure cartridge and did not get the slightest bit of positive feedback when I completed it. My boss initially thought it was impossible to do and told me not to do it; when I went and did it anyway, he did not see this as a good thing. He told me I was ‘hard to direct’. When I told him I was quitting, he smiled. I guess I forgot to tell him that I had my name hidden in the final game code for Adventure that I had handed over to him.” Robinett went on to join educational software publisher The Learning Company, where in 1982 he would create Rocky’s Boots, one of the first successful educational games that taught Boolean logic using a puzzle game format.

  * * *

  Activision’s decision to muscle in on Atari’s console audience was well timed. Atari had released its Space Invaders cartridge a few months before the first Activision games arrived, causing 2600 sales to rocket. Activision’s clever marketing coupled high-quality games such as the bomb-catching action of Kaboom! and the jungle adventure Pitfall! soon gouged out a sizeable share of the multi-million dollar 2600 game cartridge market. In 1981 Activision had achieved sales of $6.3 million, in 1982 this soared to $66 million.

  The public profile of their developers soared in tandem with sales, leaving the company snowed under by thousands of fan mail letters every week. “Publicising our names provided all of the positives of celebrity and none of the negatives,” said Crane. “I was never chased by the paparazzi but, in certain circles, there was pretty good name recognition. But the real thrill is hearing directly from a game player that your work touched them in some way. Because there was a name and a fa
ce behind the game, players were able to let me know directly how much they enjoyed playing my games.”

  Other Atari employees took note of Activision’s success. Coin-op developers Howard Delman, Ed Rotberg and Roger Hector quit to form Videa in 1981 to make games for Atari and other arcade companies. “There was a lot of money being made in the industry, but the fraction coming to the engineers was small relative to the profits,” explained Delman. “It occurred to some of us that being a contractor to Atari, or any game company for that matter, could be far more lucrative than being an employee.”

  That same year another group of employees from the home console division decided to follow Activision’s example. Backed with $2 million of venture capital, they founded Imagic on 17th July 1981 with the goal of publishing games for the 2600. Among the Imagic team was Rob Fulop, the author of the 2600 version of Space Invaders: “We were authors and we didn’t feel like authors at all. We weren’t compensated based on how good our work was perceived; our name wasn’t on the game. So we left. I wasn’t involved in getting the funding for Imagic; someone else did that and invited me to the party. It took me about two seconds to say yeah.”

  Imagic’s debut game, Fulop’s Galaxian-inspired Demon Attack, became one of the best-selling 2600 games of 1982. Manny Gerard, the Warner executive responsible for overseeing Atari, felt the exodus of talent at that time was inevitable: “Entrepreneurial guys go off and that’s exactly what happened,” he said. “Guys see a way to make money and they run off and they build companies. Atari was getting bigger and it was not as entrepreneurial as it was. It happens. It’s the natural evolution of things.”

  But Activision didn’t just inspire Atari employees to walk. It also encouraged companies unconnected to Atari to start releasing 2600 games, creating new rivals such as Quaker Oats’ U.S. Games division, Xonox and Fox Video Games.

  Atari may have resented the companies seeking to grab a slice of what it regarded as its market, but their existence did little to damage the video game giant’s income. By 1982 Atari had become the single biggest business in the Warner Communications conglomerate. It had spent $75 million promoting its products in 1982, more than Coca-Cola and McDonald’s. Its sales were more than five times that of Warner’s film and music businesses and 70 per cent of Warner’s profits came from Atari. As a consequence Warner’s share price ballooned from just under $5 a share in 1976 to $63 in 1982. “We made more money than god,” said Noah Anglin, a manager in Atari’s coin-op division. “We made more money than Warner’s movie division. We went from being a mention in their corporate magazine to where we were their corporate magazine.”

  And with cinema ticket and record sales being hit as teenagers swapped vinyl and the silver screen for the electronic thrills of the arcade, the video game looked unstoppable. In the 48 months since Space Invaders’ release, the video game had conquered North America. Its relentless ascent marked the biggest revolution in entertainment since the arrival of the TV set. And then, suddenly, everything fell apart.

  [1]. Spacewar!, for example, was created on a computer that had a vector graphics monitor.

  [2]. The combat vehicle was built by the US military in response to the Soviet Union’s Boyevaya Mashina Pekhoty vehicles, which combined the features of light tanks with armoured personnel carriers.

  [3]. The all-too-real threat of nuclear war between the US and USSR inspired Theurer, but Atari played down the atomic armageddon theme. Officially the game was about defending space bases on planet Zardon.

  [4]. Pac-Man was originally called Puck-Man and was released under that name in Japan. The game’s US distributor, Bally Midway, worried people might vandalise the cabinet and change the P to an F. So they renamed it Pac-Man – the name used for the game ever since.

  [5]. The literal translation of kawaii is ‘cuteness’.

  [6]. Robinett originally made it about finding the Holy Grail, but Atari’s marketing department changed it to an enchanted chalice.

  [7]. Other games had contained easter eggs before Adventure. Video Whizball, a 1978 game for the Fairchild Channel F, also had an easter egg that displayed the name of its creator Brad Reid-Selth. The 1973 DEC GT40 version of Lunar Lander that inspired Atari’s arcade remake featured a McDonald’s restaurant that appeared if the player landed in the right spot.

  Alamogordo reacts to influx of Atari junk. Alamogordo Daily News, 27 September 1983

  8. Devilish Contraptions

  On the 9th November 1982, the US Surgeon General Dr Everett Koop took to the stage at the Western Psychiatric Institute and Clinic in Pittsburgh. Dr Koop’s distinctive bushy beard gave him the air of an Old Testament prophet, which was apt given the impassioned plea he was about to make. On stage he railed against society’s failure to challenge domestic violence and child abuse. “If we truly care about human life, if we truly care about the future of our society, then we have to move to confront the terrible implications of family violence,” he declared before urging the medical professionals who had gathered to hear him to look out for the signs of such abuse.

  After finishing his speech, Dr Koop took questions from the audience. One questioner asked what he thought about the effect of video games on young people. There may be mental and physical harm because teenagers were becoming addicted “body and soul” to these games, Dr Koop replied. “Everything is ‘zap the enemy’, there’s nothing constructive,”added, before conceding there was no scientific evidence to support his view. The next day the newspapers reported how the surgeon general had let rip on video games. His call for action against domestic violence and child abuse went ignored. “Surgeon General sees danger in video games,” reported the Associated Press news agency while The News & Observer in North Carolina ran a cartoon called Koop-Man, showing Dr Koop’s bearded and open-mouthed head chasing a worried-looking Pac-Man. Dr Koop immediately released a statement emphasising his comments were not government policy: “The comments represented my purely personal judgment and was not based on any accumulated scientific evidence. Nothing in my remarks should be interpreted as implying that video games are, per se, violent in nature or harmful to children.”

  The surgeon general’s views did, however, echo widespread concerns about video games. Parents, teachers and officials worried that video game arcades were hubs of delinquency, places where children would be led into a life of crime or drug addiction. Reports in medical journals of new aliments connected to video games, such as ‘Space Invaders wrist’, fuelled the distrust as did rumours of teenagers dying from heart attacks after playing games for hours on end.

  By 1981 these fears were resulting in action as communities across the US attempted to suppress video game arcades. From New York and Texas to Florida and Milwaukee, arcades were being hit with new restrictions and, in a few places, outright bans. These concerns were by no means limited to the US. In the UK, Labour MP George Foulkes tabled a motion in Parliament calling for a law that would give local authorities the power to ban arcades. He accused video games of extracting “blood money” from “the weakness of thousands of children”. His call prompted a furious retort from Conservative MP and Space Invaders fan Michael Brown who labelled the motion a “petty-minded, socialist measure”. Foulkes lost the vote. Some countries did introduce bans. In late 1981 both Indonesia and the Philippines outlawed video games on the grounds of protecting the morals of the young. The Philippines government called video games “devilish contraptions” and threatened those who flouted the ban with up to 12 years in prison.

  In response to the rising tide of restrictions, arcades began calling themselves ‘family entertainment centres’, sought to brighten up their poorly lit facilities, and imposed strict rules on behaviour to reassure parents. Some started requiring players to become members in order to play. Atari responded with its Community Awareness Program, a service that supplied its customers with information they could use to combat local attempts to restrict arcades. Only a few brave politicians swam against the tide of moral p
anic about the arcades. One was Jerry Parker, the mayor of Ottumwa in Ohio. After being lobbied by the city’s Twin Galaxies arcade, Parker became an outspoken defender of video games. “He was a very bold man,” said Walter Day, the owner of Twin Galaxies. “Hundreds – if not thousands – of other communities and governmental bodies were legislating against video games. Jerry Parker bucked the international trend and proved himself a world-class leader who was willing to take a chance with his career.”

  But those clamouring for a clampdown need not have worried, because just 28 days after Dr Koop’s speech, the video game bubble burst. And it was Atari that brought the boom to a swift end. On the afternoon of the 7th December 1982, Atari announced its expected growth figures for the fourth quarter of the year. Up until then, investors had been led to expect growth of around 50 per cent thanks to the new Atari 5200 console and the release of the E.T. The Extra-Terrestrial game on the VCS 2600. Instead, Atari slashed its growth prediction to between 10 and 15 per cent. Investors were shocked. The share price of Atari’s parent company Warner Communications collapsed by more than 30 per cent. Atari’s announcement crushed investor confidence in the prospects of video games. The investors who had bankrolled the rapid expansion of the business pulled their money out and North America’s video game industry imploded. During the next two years, many of the companies that built the business would be destroyed or left as shrivelled wrecks. Atari received much of the blame for the crash, but the causes were far more complex and multi-faceted than the failings of one company.