Replay: The History of Video Games (5 page)

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 redefined 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.”

Taito in particular was working hard to turn itself into the Japanese answer to Atari. After the success of its 1973
Pong
clones
Elepong
and
Soccer
, the company started to explore new video game concepts. In 1974 Tomohiro Nishikado, the designer of
Soccer
, created the company’s first truly original game: the racing game
Speed Race
. As with
Gran Trak 10
, the action was viewed from above but instead of squashing a whole track into one screen,
Speed Race
created the impression of a larger course by having rival cars move down the screen as the player accelerated. The player, whose car could only be moved left to right and spent the whole game at the bottom of the straight-line race track, had to weave in and out of the traffic as he or she overtook the other racers. “Until then there had not been any games that differed greatly from
Pong
in Japan,” said Nishikado, who started his career at Taito making electro-mechanical games.
Speed Race
proved popular both in Japan and in the US, where Bally Midway released it as
Wheels
, providinghe earliest indication that Japan was destined to become a major force in video games. “Until then we only imported games from the US and with this game we managed to start exporting games to the US,” said Nishikado.

Atari Japan, meanwhile, ate through $500,000 before Bushnell admitted defeat in 1974, just as the company’s failure to go through the right channels began to catch up with it. “Basically, to keep from going to jail we had to sell it,” said Bushnell. Atari Japan was sold to Nakamura Manufacturing, a Japanese coin-op manufacturer and distributor formed in 1955 by Masaya Nakamura that would rename itself Namco in 1977. The buy out made Nakamura Manufacturing the exclusive distributor of Atari games in Japan for 10 years. The Atari Japan disaster, the under-pricing of
Gran Trak 10
and the slowing sales of
Pong
games left Atari teetering on the edge of closure. Then, just as it looked like Atari was doomed, one of Bushnell’s more wily business moves came to the rescue.

* * *

Back in late 1972 when
Pong
became a runaway hit, Atari discovered that the coin-op distribution system in the US limited its ability to profit from the game. The coin-op business was based around distributors who bought the machines and then sold the machines to, or installed them in, the various bars, arcades and other outlets they supplied. To attract these locations to their network, distributors demanded exclusive deals from manufacturers for the geographical areas they covered so that only they, and not competing distributors, had access to certain machines whether that was Atari video games, Bally pinball tables or Rock-Ola jukeboxes. So in a town with two distributors, a coin-op manufacturer could only hope to get its machines in the locations in one of those distributors’ networks.

Bushnell worried this system not only meant Atari sold fewer games but would also encourage the formation of a serious competitor. He hit on a novel solution – he would form a bogus rival that would repackage Atari’s games and sell them to the distributors that Atari could not work with because of pre-existing deals. “It was a defensive strategy as much as an offensive strategy,” said Bushnell. “I was always looking to put anybody who copied us out of business if I possibly could. That was kind of my ethic. I found that the distributors that we did not have in each of these cities were desperate to find somebody to knock our products off to be able to compete with the guy across the town that had our stuff. I said this is a gigantic demand that is going to create a competitor that might be somebody that’s actually good, so let me make it so much harder for them by satisfying that demand. That’s what Kee Games was all about. I wanted to cut off distribution to would-be competitors.”