The first generation of home video game consoles were mainly dedicated systems which only gave the ability to play different varieties of one game. With the games built into the system there was no option to add additional games that were developed after the console’s release. These systems initially gave the general public the ability to play some of their favorite video arcade games in the comfort of their homes. However due to the limitations of the consoles only being able to play built in games and the overwhelming amount of new games being released into the arcades forced home console manufacturers to look for a more innovative approach to allow for the ability to play multiple games without having to continue to purchase a completely new system.
The second generation of consoles began in 1976 with the release of the Fairchild Channel F system and lasted until 1984, ending due to the great video game crash of 1983. Some of the first generation home consoles had removable cartridges for their systems but they were merely just circuit connectors to activate games already programmed into the console. As technology advanced in the mid 1970’s with games now consisting of microprocessor based code, this gave the ability to burn games onto ROM chips that could be mounted inside plastic cartridges which could be plugged into consoles. If a cartridge was plugged into the gaming console the microprocessors in the system would read the cartridge memory and ran the program that was stored on the ROM. This allowed console manufacturers to provide their customers with a large library of games instead of being confined to a small selection of games built into the console itself. This was an extremely important step for the home video game market as they would now be able to keep up with the arcade market by supplying customers with new and unique experiences.
In August 1976 Fairchild Semiconductor released the first video game console that used a microprocessor as well as the first system with programmable ROM cartridges. Fairchild Semiconductor launched their system as the Video Entertainment System or VES, but when Atari later released their Video Computer System or VCS Fairchild renamed its machine to the Fairchild Channel F. The system retailed for $169.95 and was initially successful but lost popularity when the Atari Video Computer System was released in late 1977.
The Channel F was designed using the Fairchild F8 CPU and had enough processing power to produce the required artificial intelligence to allow for player versus computer matches. This was a first in console history as all of the previous systems of the first generation required a human opponent. The console sported a very unique style controller with the main body being a hand grip with a triangular cap on top which could be manipulated to produce multiple functionalities. The triangular cap could be moved for eight-way directional control much like a joystick or twisted to act like a paddle and not only could it be pushed down to operate as a fire button but also pulled up.
Over the life of the console 26 cartridges were released known at the time as Videocarts. The Videocarts typically retailed for $19.95 and some cartridges were capable of playing more than one game. The Videocarts were the approximate size of an 8-track tape, bright yellow and inserted in the front of the Channel F console. Even though the console took removable media the console did contain two built-in games giving the purchaser the ability to play the system right out of the box without any additional purchases. The built-in games were Tennis and Hockey; both advanced Pong clones much like what the first generation of consoles were offering.
The Channel F was an innovative system which gave the home video game market new possibilities but never gain widespread success due to being over shadowed by its competitors which release more advanced systems shortly after Channel F released. Channel F laid the groundwork for the second generation of systems by educating gamers on the new possibilities home consoles could offer and spurred other game manufacturers into releasing and improving their next generation console.
In late 1979 the rights to the Channel F were sold to Zircon International who released a redesigned console. The major features of the new design were, removable controllers from the console as the original controllers were wired directly into the console and the sound was now fed into the TV signal so the unit no longer required a speaker. The redesigned console was released as the Channel F System II with a new modern looking case design to compete with Atari’s VCS but did not have much effect mainly due to the limited amount of games being released for the system.
RCA was the next manufacturer to release a second generation gaming console to the market with their RCA Studio II. The system was released a mere five months after the Fairchild Channel F in January of 1977 retailing for $149.95, $20 less than the Channel F. The Studio II came with five built-in games in comparison to two which the Channel F offered and also offered cartridge based games retailing for $19.95.
RCA did what they could to market Studio II against the Fairchild Channel F but the system was obsolete at launch. The Studio II only offered black and white games were Channel F offered color and the Studio II did not offer controllers but instead used two ten button keypads that were built into the console itself making it difficult for multi-player games as the system would have to be placed between the two players and shared. With the hardware limitations and the small game library the system was an immediate failure.
Atari purchased an engineering Research and Development Company called Cyan Engineering in 1973 to have a division of Atari that would be focused solely on next generation video game systems. This branch of Atari had been working on a prototype known as “Stella” which unlike prior generations of consoles had a CPU core that would allow it to play multiple games on removable media. The core of the prototype was a cost efficient version of the famous MOS Technology 6502 known as the 6507. Well “Stella” was in development Fairchild Semiconductor released their CPU based system beating Atari to the market and forcing them to pump additional funds into the development of “Stella”.
Atari’s prototype was still not ready for production but it was clear to Atari that they needed to release their system before the market was flooded with similar clone systems which had happened after the release of their Pong system. Atari needed to get their system on the market quickly but just did not have the cash flow to get the system completed quickly. Nolan Bushnell ended up approaching Warner Communications and sold the company to them in 1976 for $28 million. With the newly found revenue from the sale to Warner Communications, Atari was able to ramp up the development of Stella and by the time it was ready for release the development had cost approximately $100 million.
Atari launched its prototype in October 1977 under the name Atari VCS for Video Computer System and is the system that is credited with popularizing the use of microprocessor based hardware with cartridges containing game code. The system came bundled with two joystick controllers, a pair of paddle controllers and one game cartridge of “Combat”. Combat was based on two earlier coin-operated arcade games produced by Atari, Tank and Anti-Aircraft II.
The Atari VCS retailed for $199 and had eight additional games available at launch that sold separately. The games that were available at launch were Blackjack, Air-Sea Battle, Indy 500, Basic Math/Fun with Numbers, Star Ship, Street Racer, Surround, Video Olympics and Combat which was sold with the system until 1982. Since Atari already had a relationship with Sears for the distribution of their Pong console they looked to capitalize on this to compete against the Fairchild Channel F and play some needed catch-up as they released the Atari VCS 14 months after the Channel F was released. The systems that were distributed through Sears, Roebuck and Company stores were rebranded as the Sears Video Arcade. Between Atari’s popular brand name in the Arcades and with their Pong home system and Sears household name the Atari VCS was able to sell 250,000 in 1977.
The home video game market was weak in 1978 due to the amount of Pong clones that had been made obsolete by the newer and more powerful systems. Both the Channel F and Atari VCS found themselves in the midst of a vicious round of price-cutting due to this as Pong clones were sold off to discounters for very low prices. Many clone companies were going out of business due to the saturation of the market and both Fairchild and Atari found themselves selling to a market that was completely burnt out on Pong. Atari managed to sell only 550,000 units of the 800,000 that were manufactured in 1978 leading to further financial support needed from Warner Communications to cover their losses. The merger of Atari with Warner Communications led to Nolan Bushnell having less say within Atari and disagreements on development of projects and the direction the company was headed; this ultimately led to Nolan Bushnell leaving the company in November of 1978.
When Atari first merged with Warner Communications Nolan signed a non-competitive agreement which he did not think much of at the time as the thought of leaving Atari was not something that ever crossed his mind. The non-competitive agreement that he signed would ban him from working in the industry that he helped build and pioneer. Unable to work in the industry Nolan had to shift his focus elsewhere. Nolan Bushnell founded Chuck E. Cheese’s Pizza Time Theatre while at Atari in 1977. Bushnell’s experience in the amusement park industry and love for entertainment influenced the concept of Pizza Time Theatre. The first location opened in San Jose, California in 1977 as an entertainment restaurant and indoor arcade. When Bushnell parted ways with Atari he purchased the Pizza Time Theatre concept from Warner Communications. Bushnell over the next several years focused on Chuck E. Cheese before moving his focus to developing new innovative products.
The public started to realize that the new generation of systems were able to offer a much more in-depth experience than the first generation of systems and programmers learned how to push the new hardware capabilities. The Atari VCS started to gain in popularity at the beginning of 1979 and by this point Fairchild had given up thinking video games were a passing fad. This move handed the entire quick growing market over to Atari and by the end of 1979 the VCS became the best-selling Christmas gift and console, selling approximately 1 million units.
By the end of 1979 Atari released 26 additional games since its launch, 14 released in 1978 and 12 released in 1979. Atari began 1980 with 35 video games in its library containing exclusives hit arcade games that could be played at home, hits such as Atari’s Football, Breakout and Space War. Atari was able to obtain licensing rights to the smash arcade hit Space Invaders by Taito which greatly increased the systems popularity when it released in January 1980 resulting in doubling the systems sales to over 2 million units. Atari would go on to gross over $2 billion in 1980 mainly due to the success of the Atari VCS and its cartridge sales. Sales would continue to double for the next two years and by 1982 Atari sold more than 10 million Atari VCS consoles with its best-selling game Pac-Man selling 7 million copies.
In 1982 a revised version of the VCS was released with the wood grain removed, the systems were nicknamed “Darth Vader” consoles due to their all black appearance. These systems were the first VCS consoles to be officially called the “Atari 2600” after the unit’s part number CX2600 as the “Atari 5200” was release later that same year.
Fairchild and Atari were not the only companies to try entering the second generation of home consoles in the late 1970’s as Bally, Magnavox and APF Electronics all made attempts but just could not compete with the Atari VCS due to their exclusive arcade games. Midway, the video game division of Bally designed a home console which had very powerful graphics capabilities for its time and was looking to release in 1977 but due to delays was not available until 1978.
The system originally released as the Bally Home Library Computer and was only available through mail order. Bally decided to change the name of the system very early in its life cycle to Bally Professional Arcade and in this form was sold mostly in computer stores. The system had very little retail exposure unlike the Atari VCS which was sold in large department stores. With the dwindling market share Bally grew less interested in the video game market and decided to sell off their Consumer Products Division, including development and production of their game console.
A corporate buyer who was in charge of the Bally system was able to work out a deal with a 3rd party group that had been unsuccessfully attempting to bring their own home console to market. In 1981 the system was re-released this time known as the Bally Computer System and then changed the name again in 1982 to Astrocade where it sold under this name until the system was discontinued.
APF Electronics Inc. tried entering the gaming market with the release of the APF-M1000 also known as APF-MP100 in 1978. APF Electronics’ system was cartridge based, came with 2 non-detachable joystick controllers with a numerical keypad on each controller and one built-in game called “Rocket Patrol”.
With the home computer market just starting to take off at this time APF Electronics Inc. looked to capitalize on an opportunity to enter both markets at the same time with the release of their “Imagination Machine”. The Imagination Machine was a computer add-on for the MP-1000 but could also be purchased together as a set as well. The system was a hybrid between a computer and a video game console. The computer add-on came with a 53 key standard typewriter keyboard, built-it cassette deck, speaker, its own operating system and BASIC language interpreter. The MP-1000 game console rested on top of the computer add-on and the computer add-on concept was later used by other game manufacturers such as Coleco with their Colecovision gaming console connected to the Adam Computer and Mattel with their Intellivision gaming console with their ECS module.
In late 1978 Magnavox would re-enter the gaming market with the release of the Magnavox Odyssey². Magnavox succeeded in bringing the first home video game console to market with their Magnavox Odyssey and Odyssey Series pong only systems so it only made sense for Magnavox to continue using the Odyssey name as it was already familiar to consumers. At the time of the release Magnavox was now a subsidiary of North American Philips which resulted in the Odyssey² being released under multiple names. Within North American the system released under the Magnavox Odyssey² name, in Brazil the system was released under the Philips Odyssey name and within Europe the system was released as the Philips Videopac G7000.
The Odyssey² offered the same experience as its competitors at the time with removable cartridge based games but unlike any other systems the Odyssey² included a full alphanumeric keyboard built onto the console’s hardware. This was used for educational games, selecting options within a game or basic computer programming. Magnavox released a cartridge called “Computer Intro!” which taught simple computer programming, Magnavox was trying to separate themselves from their competition by offering additional features.
The Odyssey² seen moderate success selling approximately 2 million systems worldwide before it was discontinued but just like all of its competitors they just couldn’t hold a candle to the Atari 2600. Atari’s software lineup was just too strong with their arcade ports and exclusives that no one could compete but the playing field was just about to change with the start of the first 3rd party game developer.
The programmers at Atari became disgruntled with the company for not crediting game developers or compensate them for games that sold well. Many of Atari’s programmers decided to leave the company to form their own independent software companies. Four of Atari’s top programmers David Crane, Larry Kaplan, Alan Miller and Bob Whitehead left Atari in late 1979 to form their own software company. On October 1st, 1979 Activision was founded by Jim Levy, Richard Muchmore and the four ex-Atari programmers.
Activision became the world’s first independent developer and distributor of video games for gaming consoles. Before Activision, games for home consoles were published exclusively by the makers of the systems. Since the four programmers at Activision already had much experience with the Atari VCS their first products were cartridge games for the Atari VCS console. There first release was in July 1980 for the North American market and August 1981 for the international market. Activision titles quickly became more popular than those of Atari’s itself resulting in Atari trying to block 3rd party development for their console in court but failed.
Soon other publishers would follow in Activision’s footsteps and start developing games for the Atari VCS as well as developing for other systems. This move started to hurt Atari financially as they were the leader in the market and they were no longer the sole supplier of software for their popular gaming system. The beginning of 3rd party game development may have hurt Atari initially but it was a positive change for other console manufactures as it would allow for more games to be released on their systems and allow for popular arcade games to be developed for their systems which were needed in order to compete with Atari’s exclusives at the time.
With 3rd party development now available for multiple systems this took the burden off of the console manufacturers shoulders as they no longer had to maintain a consistent flow of new games being created in-house as the 3rd party developers would release enough games to keep their customers happy until the next 1st party game release. During the time where 3rd party development was just beginning, Mattel was test marketing a home console they were developing called the Intellivision.
The Intellivision was test marketed in Fresno, California in 1979 with four games available. The test market went well and Mattel moved forward with the release of the Intellivision in North America in 1980 for $299. The system was released with a built-in game of Las Vegas Poker & Blackjack and came with two controllers featuring a 12 button numeric keypad, four side located action buttons, a directional disk and offered the ability to use overlays that would slide over the 12 button numeric keypad to show game specific key functions.
Though the Intellivision was not the first system to challenge Atari, it was the first to pose a serious threat to Atari’s dominance in the home console market. A series of advertisements were produced by Mattel comparing the Intellivision’s graphics and sound capability to the Atari VCS using side by side game comparisons demonstrating how their system was superior in both graphics and sound. Mattel was able to market their console to a number of retailers as a rebadged unit much like Atari did with Sears a few years earlier. The Intellivision was sold under the TandyVision name in Radio Shack and the Sears Super Video Arcade in Sears.
Mattel hired an outside firm, APh Technological Consulting to develop games for their system and by the end of their first year they created a library of 35 games for the Intellivision. Mattel sold 175,000 Intellivision consoles in its first year and with its success Mattel started to shift focus from only having 2nd party games be created for the Intellivision by creating its own in-house game development group.
With 1st party games drawing in additional profits Mattel was able to grow the Intellivision brand to over two million units sold by 1982. The success of the Intellivision by expanding its user base drew the attention of newly founded 3rd party game developers. Activision and Imagic were the first 3rd party companies to jump on the Intellivision bandwagon releasing games in 1982. The Intellivision was deemed a success in North America and was introduced in Japan by Bandai in 1982.
With three other consoles already on the market, the Fairchild Channel F, Atari 2600 and Magnavox Odyssey² combined with the announcement of multiple other 2nd generation consoles that were just around the corner, Mattel was looking at ways to separate themselves from the competition. They did this by offering multiple hardware add-ons to the Intellivision and marketed the system as more than just a video game console but a computer entertainment system making it an intelligent television and the intelligent choice for your 2nd generation video game system.
The first add-on that was announced when the Intellivision was first released in 1980 was the Intellivision keyboard component. It was advertised that the Intellivision game console would plug into the keyboard component making it a full fledge personal computer. The keyboard component would contain an 8-bit 6502 microprocessor, 16K RAM, full keyboard, cassette drive for both data and audio content as well as expansion ports and a printer port. The original design for the keyboard component was extremely complicated for its time and the prototype was proven unreliable. Mattel shift gears by allowing a different team of engineers within the company to start creating a less complicated version of the product. In the end the keyboard component was strapped and the designed ended up releasing in its place under the name Entertainment Computer System (ECS) in 1983.
Mattel introduced the first downloadable games in video gaming history with its PlayCable module. Released in 1981 the PlayCable enabled local cable companies to send Intellivision games over the wire with the TV signal. Owners of the Intellivision would have the option to subscribe to the PlayCable: The All Game Channel with their local cable company and use the PlayCable Adapter to download games to play on their game console. The PlayCable Adapters were rented from local cable companies and not sold separately to the public and when the system was discontinued in 1983 all adapters had to be returned.
The PlayCable Adapter plugged into the cartridge slot of the Intellivision and hooked up to the TV cable. Once the system was powered on the PlayCable software displayed several pages of on-screen menus and available games. Twenty titles were available at one given time with the catalog of games being updated monthly. When a game was selected from the menu the games programming code would be downloaded into the PlayCable’s memory allowing the Intellivision to read the PlayCable Adapter’s memory as if it were a game cartridge.
The PlayCable service was cutting edge for its time drawing attention from other companies looking to offer the same type of service. Control Video Corporation also known as CVC looked to incorporate the same style of service for the Atari 2600 as it had a larger user base and figured there was more potential to obtain subscribers. CVC released the GameLine for the Atari 2600 which was a large cartridge which could download games using a telephone line via a built in modem instead of a cable subscription. Both the PlayCable and GameLine service offered temporary downloads as the games were not permanently downloaded for the user to keep; these services were a rental service not a purchasing service.
Mattel ended up offering one additional hardware add-on device for the Intellivision before reengineering and releasing a modified version of the Intellivision console, the Intellivoice module. The Intellivoice module was a plug-in voice synthesis unit which added voices to specifically designed games that were made to take advantage of the new add-on device. The Intellivoice simply plugged into the Intellivision game cartridge slot and had its own cartridge slot for Intellivision games to be plugged in. Only 5 games were designed to take advantage of the new add-on device and due to poor sales it was discontinued in 1983.
In August of 1982 Coleco entered the console market with the release of the ColecoVision. The ColecoVision was similar in style to Mattel’s Intellivision and approach at being expandable by offering hardware add-ons. The ColecoVision was more powerful than any of its competitors when the system launched. Coleco took a different approach than Mattel by working with established companies that had popular arcade titles to get them ported to their new console instead of focusing on creating new content. The ColecoVision was powerful enough to have arcade games ported to it without any loss in graphics or gameplay.
Coleco was able to offer the best arcade experience in a home console and was able to obtain exclusive content from arcade manufactures like Sega, Konami and Nintendo. The system was released with the enormously successful arcade game “Donkey Kong” bundled in with the system and sold for $175. The ColecoVision was an instant hit and sold over a million units within its first year on the market.
The ColecoVision’s controller was very similar to the Intellivision’s controller by offering a 12 button keypad designed that could be used with custom overlays that mapped the keys for a particular game and a set of side buttons. The main difference between the two controllers was that the ColecoVision version used a Joystick instead of a circular control disc that was offered with the Intellivision controller.
With Atari having the vast majority of the install base both Mattel and Coleco targeted the Atari 2600 in their advertisement instead of marketing their systems against each other. Coleco launched its first Expansion Module before the end of 1982 which gave the ColecoVision the ability to play any Atari 2600 game on its console. The Expansion Module sold for $60 and simply plugged into the Expansion Module Interface slot located on the front of the console. Not only did this give owners of the ColecoVision the ability to play Atari 2600 games but also allowed the use of Atari joysticks as the Expansion Module had ports in the front that were compatible with all Atari 2600 controllers.
Coleco’s Expansion Module did not emulate an Atari 2600 environment but was simply an Atari 2600 hardware clone. The hardware add-on only used the ColecoVision console for power and its RF connector to send video output to a television set. Atari instantly threatened to sue Coleco over the creation of the Expansion Module but Coleco’s legal team concluded that it would be completely legal to clone the Atari 2600 since all of its components were off the shelf hardware with no copyrightable software. Atari pressed this by taking Coleco to court for patent infringement, however a court ruled in Coleco’s favor just as Coleco’s legal team concluded. Since the Expansion Module did not infringe on Atari’s patents for the 2600, this opened the market for other companies to release Atari 2600 clones. Coleco even decided to make a stand-alone Atari 2600 clone named the Gemini which incorporated both a joystick and paddle on the same controller.
To stay competitive in early 1983 Mattel released a redesigned version of the Intellivision known as the Intellivision II. The system played the same games as the original Intellivision but was redesigned to be more cost efficient to manufacture. The system launched with a price tag of $150 but later dropped to $70 by the end of the 1983. The redesign also gave Mattel the ability to launch one last hardware add-on that was compatible only with the Intellivision II, the system Changer module. This plug-in hardware adapter gave the Intellivision II the ability to play Atari 2600 cartridges and allowing Mattel to advertise that the Intellivision offered more games than any other gaming console on the market.
The video game market became over saturated with competing console manufactures and a flood of low-quality games. The practice of quantity over quality became too common leaving many unsatisfied customers with their purchases. The market share was no longer sustainable resulting in the great video game crash of 1983. Revenues for video game makers dropped almost 97% in only two years. The crash almost destroyed the then-growing industry and cause newly entering companies to look for new and unique ways to win back customers. Ultimately this is what drove Nintendo to implement their seal of quality when releasing the Nintendo Entertainment System in North America. Nintendo installed a lock-out chip in their consoles which prevented any unlicensed companies from making games for their console. This gave Nintendo the ability to monitor and control the quality of titles that were being released and won back the customers that were lost at the end of the second generations of home consoles.