Replay: The History of Video Games (16 page)

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 panic 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.

Some of the seeds of destruction were sown when
Pac-Man
took the US by storm. The game’s enormous popularity prompted companies all over the country to start buying arcade machines on credit in the hope of earning fortunes by installing them in locations as unlikely as golf clubhouses and dentist receptions. In the hubris of the boom years it seemed like a great idea, but soon it became clear these locations lacked the volume of passing trade needed to make the machines profitable. With no money coming in, these companies soon began to default on their debts leaving coin-operated game manufacturers with bad debts worth millions of dollars. “Everything’s based on a pyramid scheme to a degree, everyone coming in and financing the next expansion on credit,” said Ed Logg, the Atari coin-op designer who made
Asteroids
.

The sheer volume of arcades that opened added to the problems, spreading the finite audience for video games too thin for any arcade operator to make a living. Desperate for customers, some arcades began offering eight rather than four goes per dollar on their video games – reducing income even further. “Too many arcades had opened,” said Day. “They were taking customers away from each other at the same time that more and more people were investing in home game systems. Eventually there were about four arcades in Ottumwa by 1984 and the city could not support so many arcades. We all went out of business at the same time.”

Arcade goers were also tiring of the increasingly difficulty of the games on offer. “Games were becoming too hard,” said Scott Miller, the co-author of
Shootout: Zap the Video Games
, a 1982 guide to beating arcade games. “Arcade makers figured out that too many players could master their games and play for hours on one quarter, so they defeated these players – including me – by greatly increasing the difficulty.” The evolution of shoot ’em ups during the boom was typical. By 1982,
Space Invaders
looked sluggish and tame next to the fearsome
Defender
and dizzying fury of
Tempest
. “You had a player base that lived for the challenge and were becoming more and more highly skilled. So you had to up the ante with each game to continue the challenge and thrill the players,” said Eugene Jarvis, the designer of
Defender
.

Noah Falstein, the co-designer of intimidating 1982 shoot ‘em up
Sinistar
, agreed: “As players got better at them, coin-op games got more challenging in order to keep the coin drop high. In the case of
Sinistar
, the development team actually had an easier version ready to release, but our management insisted on making it tougher to keep it more profitable. I don’t actually disagree with this, you have to be careful about profitability, but I do think it contributed to the collapse of the arcade market.”

Dedicated video game players thrived on the ever-greater challenges thrown at them, but the mainstream audience, upon whom the boom was built, found them too demanding, poor value for money and not much fun. The final blow that felled the arcades was the growth of home console ownership, which sucked players out of the arcades. In 1981 the coin-op video game business in the US peaked with annual sales of $4,862 million, in 1984 sales had nearly halved to $2,500 million.

The home console market’s fall was not far behind, however. The suc
cess of Activision, the company formed by four ex-Atari employees to make VCS 2600 games, had encouraged dozens of other businesses to follow suit. These companies churned out poor-quality games in the hope of making a fast buck from the excitement surrounding video games.
[1]
“Activision was the main cause of the crash – although indirectly,” said Activision co-founder David Crane. "We showed that you didn’t have to spend $100 million to produce a game console to make money in video games. In one six-month period 30 new companies sprang up trying to duplicate our success.”

The volume of games and the dubious quality of many of them started to put customers off. “There was way too much product, some of it inappropriate,” said Manny Gerard, the Warner Communications’ vice-president who oversaw Atari. “The single greatest failing was built into the 2600 from the very beginning, although nobody understood it at that point, which was we couldn’t control the software for our system. People were putting out cartridges for the 2600 – one was called
Custer’s Revenge
.”

Custer’s Revenge
was one of three sex-themed games released in the autumn of 1982 by American Multiple Industries, a video game publisher formed by porn filmmakers Caballero Control Corporation. It was both terrible and downright offensive: the aim was to rape a Native American woman tied to a post. The game’s launch in New York City attracted 100 protestors armed with placards declaring: “
Custer’s Revenge
says rape is fun” and “Pornographers are pimps”. Atari was furious, but could do nothing to stop the release of
Custer’s Revenge
. “There wasn’t anything we could do about it – it was terrible. We had no control over that because we couldn’t control the software,” said Gerard.
Custer’s Revenge
and dozens of other dismal games, including adverts disguised as games such as the toothpaste promotion
Johnson & Johnson Presents Tooth Protectors
and the pet food plugging
Chase the Chuck Wagon
, delivered death by a thousand cuts to Atari’s console.

With so much dross clogging up the shelves, sales stalled and retailers found themselves lumbered with piles of unsold games. Shops did what shops do with unsold goods – they discounted them in the hope of getting rid of the excess stock. Soon games that once sold for $30 could be bought for less than $10. Retailers also stopped ordering new games, causing cartridges to pile up in video game companies’ warehouses. These warehouses full of unsellable games were a ticking time bomb for the video game business. “We predicted the crash. I remember saying that ‘none of these new companies will be in business in a year’,” said Crane. “What we didn’t realise is that each company already had a million game cartridges in their warehouse when they went under. It was the sale of these games by liquidators that flooded the market. The liquidators bought them out of bankruptcy for $3, sold them to retailers for $4 and the retailers put them in barrels at the front of the store for $5. When dad went in to buy junior the latest Activision game for $40, he saw that he could be a hero and get eight games for the same money. Sales of new games went to near zero.”

Companies such as Activision and Atari had no choice but to slash their prices to shift the cartridges now building up in their own warehouses. A vicious cycle from which no company could escape had begun.

The ageing technology of the 2600 did little to help. The five-year-old system was looking its age and people were growing bored by its limitations. Yet by the start of 1982 no convincing alternative had emerged. Mattel’s Intellivision – the nearest challenger – offered too small a technological leap to pry gamers away from their Ataris and, instead of seeking to build its own successor to the 2600, as suggested by the company’s founder Nolan Bushnell in 1978, Atari had stifled research projects that might undermine its flagship product. “There were a number of projects that were started and brought to the point of being ready for production and then stopped,” said Steve Bristow, vice-president of engineering at Atari. “I heard words to the effect of ‘why should we take risks on introducing a new video game that is possibly going to cannibalise our sales?’”