The Mother of All Video Games

This month has been a big one for video game enthusiasts, with the near-simultaneous releases of Sony’s PlayStation 3 and Nintendo’s Wii home game systems. And there are a lot of enthusiasts. According the video game industry’s trade group, the Entertainment Software Association, they spent a staggering $7 billion on video games last year. It’s hard to believe that such a popular pastime began just 34 years ago today, on November 29, 1972, with the release of Pong. The record-shattering popularity of that unassuming coin-operated tennis simulation established the nascent video game industry and launched it on its rise into a multi-billion-dollar entertainment powerhouse.

In 1972 Nolan Bushnell was a struggling entrepreneur in California. He had just left his job designing coin-operated games at the tiny company Nutting Associates, where he had designed the first coin-operated computer game, Computer Space. That complicated game was a failure, partly because its instructions were several pages long, but Bushnell felt certain that video games would be the next big thing. He and a coworker from Nutting Associates, Ted Dabney, founded a small company to develop the idea, with just $500 in start-up capital. It was initially named Syzygy but soon renamed Atari, a term from the ancient Japanese board game Go.

At the start, Bushnell was working on another, even more complex outer-space-themed game. He gave an easy warm-up project to a new hire, a young electronics engineer named Al Alcorn. Bushnell wanted him to build a simple game based on ping-pong, with one ball, two paddles, a score—and nothing else on the screen. “I found out later that this was an exercise that Nolan gave me because it was the simplest game he could think of,” Alcorn recalled. The game consisted of a jumble of hard-wired circuit boards connected to an inexpensive Hitachi television set, all in a four-foot-tall wooden cabinet.

Much to Bushnell’s surprise, Alcorn’s tryout ended up being far more than just makework. It was a highly entertaining, competitive two-player game, and Bushnell saw its potential immediately. He named it Pong, made slight modifications to the coin box—each game would cost a quarter—and added a simple instruction card: “Avoid missing ball for high score.” They tested it in late 1972 in a Sunnyvale bar named Andy Capp’s Tavern. Within two weeks, the bar owner called Atari to say that the machine was broken. It turned out that it was so popular with patrons that the coin box had clogged with quarters. Bushnell knew he had a phenomenon on his hands.

Unfortunately, there was one more hurdle Atari had to clear. The television manufacturer Magnavox had commercialized the first home videogame system, the Odyssey, that same year. Magnavox sued Atari, claiming that Pong violated the patent for the Odyssey’s tennis game, which had been invented by an engineer named Ralph Baer. (Indeed, Bushnell may have played the Odyssey game at a trade show before Atari even existed.) Atari negotiated a $700,000 license fee with Magnavox, which quickly settled the suit and freed Atari to capitalize on a growing Pong mania.

Within a year, Atari had sold 2,500 Pong machines. By the next year, it had sold 8,000. Within a decade, after expanding boldly into the home videogame market with its Atari 2600 Video Computer System, the company would be bringing in $2 billion a year.

Bushnell sold Atari to Warner Communications in 1977 for $28 million, and he left the company, a very rich man, in 1978. (At one time, he owned a yacht he named Pong.) He would go on to create the Chuck E. Cheese restaurant chain. Today he’s the brains behind a high-tech California restaurant called uWink, where customers input their orders on computer screens.

Though there was a sharp downturn in the videogame market in the early 1980s, it bounced back by the end of the decade, with Japanese companies such as Nintendo and Sega leading the way. Today videogame systems are in millions of households nationwide—and they’re all the ongoing legacy of Nolan Bushnell and Pong.