Editing History of video games (section)

===The first arcade video games and home consoles===
{{See also|First generation of video game consoles|History of arcade games|History of arcade video games}}
[[File:Magnavox-Odyssey-Console-Set.jpg|thumb|The [[Magnavox Odyssey]], the first home console]]

The modern video game industry grew out of the concurrent development of the first [[arcade video game]] and the first [[home video game console]] in the early 1970s in the United States.

The arcade video game industry grew out of the pre-existing [[arcade game]] industry, which was previously dominated by [[electro-mechanical game]]s (EM games). Following the arrival of [[Sega]]'s EM game ''[[Periscope (arcade game)|Periscope]]'' (1966), the arcade industry was experiencing a "technological renaissance" driven by "audio-visual" EM novelty games, establishing the arcades as a healthy environment for the introduction of commercial video games in the early 1970s.<ref name="Smith">{{cite book |last1=Smith |first1=Alexander |title=They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. I: 1971-1982 |date=19 November 2019 |publisher=[[CRC Press]] |isbn=978-0-429-75261-2 |pages=119–20, 188–91 |url=https://books.google.com/books?id=Cxy_DwAAQBAJ&pg=PT119}}</ref> In the late 1960s, a college student [[Nolan Bushnell]] had a part-time job at an arcade where he became familiar with EM games, watching customers play and helping to maintain the machinery while learning how it worked and developing his understanding of how the game business operates.<ref name="NGen23">{{cite magazine |title=The Great Videogame Swindle? |magazine=[[Next Generation (magazine)|Next Generation]] |issue=23  |date=November 1996 |pages=211–229 |url=https://archive.org/details/NextGeneration23Nov1996P2/page/n72}}</ref>

In 1966, while working at [[Sanders Associates]], [[Ralph H. Baer|Ralph Baer]] came up with an idea for an entertainment device that could be hooked up to a television monitor. Presenting this to his superiors at Sanders and getting their approval, he, along with William Harrison and William Rusch, refined Baer's concept into the "Brown Box" prototype of a [[home video game console]] that could play a simple table tennis game. The three patented the technology, and Sanders, not in the commercialization business, sold licenses to the patents to [[Magnavox]] to commercialize. With Baer's help, Magnavox developed the [[Magnavox Odyssey]], the first commercial home console, in 1972.

[[File:Pong.svg|right|thumb|''[[Pong]]'' was the first [[arcade video game]] to ever receive universal acclaim.]]

Concurrently, Nolan Bushnell and [[Ted Dabney]] had the idea of making a coin-operated system to run ''Spacewar!'' By 1971, the two had developed ''[[Computer Space]]'' with [[Nutting Associates]], the first arcade video game.<ref>{{cite book |title=They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry |volume=1: 1971 – 1982 |last=Smith |first=Alexander |publisher=[[CRC Press]] |date=November 27, 2019 |isbn=978-1-138-38990-8|pages=309–310}}</ref> Bushnell and Dabney struck out on their own and formed [[Atari, Inc.|Atari]]. Bushnell, inspired by the [[table tennis]] game on the Odyssey, hired [[Allan Alcorn]] to develop an arcade version of the game, this time using discrete [[transistor–transistor logic]] (TTL) electronic circuitry. Atari's ''[[Pong]]'' was released in late 1972 and is considered the first successful arcade video game. It ignited the growth of the arcade game industry in the United States from both established coin-operated game manufacturers like [[WMS Industries|Williams]], Chicago Coin, and the [[Midway Games|Midway]] subsidiary of [[Bally Manufacturing]], and new startups such as Ramtek and [[Centuri|Allied Leisure]]. Many of these were ''Pong'' clones using ball-and-paddle controls, and led to saturation of the market in 1974, forcing arcade game makers to try to innovate new games in 1975. Many of the newer companies created in the wake of ''Pong'' failed to innovate on their own and shut down, and by the end of 1975, the arcade market had fallen by about 50% based on new game sale revenues.<ref name="down many times">{{cite book | last = Ernkvist | first = Mirko  | chapter = Down many times, but still playing the game: Creative destruction and industry crashes in the early video game industry 1971-1986 | year = 2008 | pages = 161–191 | title = History of Insolvancy and Bankruptcy | publisher = Södertörns högskola | editor-first=  Karl | editor-last=Gratzer | editor-first2=Dieter | editor-last2=Stiefel | isbn = 978-91-89315-94-5 }}</ref> Further, Magnavox took Atari and several other of these arcade game makers to court over violations of Baer's patents. Bushnell settled the suit for Atari, gaining perpetual rights for the patents for Atari as part of the settlement.<ref>{{cite book |title=Atari Inc.: Business Is Fun |last1=Goldberg |first1=Marty |last2=Vendel |first2=Curt |publisher=Syzygy Press |date=November 25, 2012 |isbn=978-0-9855974-0-5 |url-access=registration |url=https://archive.org/details/atariincbusiness0000gold | page=204  }}</ref> Others failed to settle, and Magnavox won around {{US$|100 million|long=no}} in damages from these patent infringement suits before the patents expired in 1990.<ref>{{cite web |url=https://www.npr.org/blogs/alltechconsidered/2014/12/08/369405270/inventor-ralph-baer-the-father-of-video-games-dies-at-92 |title=Inventor Ralph Baer, The 'Father Of Video Games,' Dies at 92 |date=December 8, 2014 |last=Mullis |first=Steve |work=[[NPR|National Public Radio]] |access-date=May 3, 2016 |archive-url=https://web.archive.org/web/20160322121715/http://www.npr.org/sections/alltechconsidered/2014/12/08/369405270/inventor-ralph-baer-the-father-of-video-games-dies-at-92 |archive-date=March 22, 2016 |url-status=live}}</ref>

Arcade video games caught on quickly in Japan due to partnerships between American and Japanese corporations that kept the Japan companies abreast of technology developments within the United States. The [[Nakamura Amusement Machine Manufacturing Company]] (Namco) partnered with Atari to import ''Pong'' into Japan in late 1973. Within the year, [[Taito]] and [[Sega]] released ''Pong'' clones in Japan by mid-1973. Japanese companies began developing novel games and exporting or licensing them through partners in 1974.<ref name="gamestudies geemu">{{cite journal | url = http://www.gamestudies.org/1302/articles/picard | title = The Foundation of Geemu: A Brief History of Early Japanese video games | first = Martin | last= Picard | volume = 13 | issue = 2 | issn = 1604-7982 | journal = [[Game Studies]] }}</ref> Among these included Taito's ''[[Gun Fight]]'' (originally ''Western Gun'' in its Japanese release), which was licensed to Midway. Midway's version, released in 1975, was the first arcade video game to use a [[microprocessor]] rather than discrete TTL components.<ref>[[Steve L. Kent]] (2001), ''[[The ultimate history of video games: from Pong to Pokémon and beyond : the story behind the craze that touched our lives and changed the world]]'', p. 64, Prima, {{ISBN|0-7615-3643-4}}</ref> This innovation drastically reduced the complexity and time to design of arcade games and the number of physical components required to achieve more advanced gameplay.<ref name="gamasutra history atari">{{cite web | url = https://www.gamedeveloper.com/business/the-history-of-atari-1971-1977 | title = The History of Atari: 1971-1977 | first=  Steve | last =Fulton | date = November 6, 2007 | access-date = September 11, 2018 | work = [[Gamasutra]] }}</ref>