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Phase I: Before Spacewar

The video game industry didn't begin as part of any established master plan. Rather, it emerged when independent groups of people, working in different countries, came up with the same ideas at approximately the same time. These were traditional game creators looking for a way to diversify their business, technology companies taking advantage of newly discovered solid-state technology, and some isolated visionaries who imagined a new form of entertainment, which would grow with the passing of years into the industry we know today.

As you will soon see, the dawn of the video game age came in the early 1970s. But most of the companies that played a key role in that defining period of time were born much earlier. These companies started in different business sectors, but somehow ended up realizing that games played on electronic devices could effectively make money and become a new business sector.

An illustrative example would be the industry giant Nintendo, which was established as a traditional gaming company in 1889 by Fusajiro Yamauchi. Initially incorporated under the name Marufuku Company, its core business was to manufacture and sell Hanafuda, a type of Japanese playing cards (see Figure 1.1). In the year 1951, Marufuku was renamed The Nintendo Playing Card Company—Nintendo meaning "leave luck to Heaven." Later, as the first electronic games and devices appeared, Nintendo diversified its business by starting an electronic gaming division. As time went by, the traditional gaming business faded away, and Nintendo became the company we all know today. So Nintendo would be the perfect example of an already existing corporation that changed its sector of activity to embrace emerging technologies.

Figure 1.1. Hanafuda card.


Companies such as Sony followed a completely different approach. Created to focus on consumer electronics, the company known as Sony today was founded by Akio Morita and Masaru Ibuka as the Tokyo Telecommunications Engineering Corporation in 1946. The core business of the company was making tape recorders, which were miniaturized with the advent of solid-state transistors. As soon as the company's products began reaching the European and American markets, the founding team decided to change its name to make it easier to remember by non-Japanese customers.

The company was thus renamed Sony (from the Latin word "sonus," which means sound) in an effort to make its brand easily recognizable. Sony quickly became one of the leading vendors in the consumer electronics arena, especially in the audio and visual areas. Brands like Walkman, Trinitron, and many others are a testament to the impressive product line it assembled. But Sony stood away from the gaming business until the late 1980s when work on the first Sony PlayStation began. The rest is history. Today Sony builds consoles and creates games in many studios worldwide. The PlayStation gaming platform is central to its overall business strategy, which has been successfully expanded outside the consumer electronics division.

A third, minor group of companies provided some middle ground between technology and gaming companies. Sega is a classic example of this group. Its story started in 1940 when Martin Bromely, Irving Bromberg, and James Humpert founded Standard Games, a coin-operated machine manufacturer in Honolulu. In 1951, the company moved to Tokyo and was later registered as Service Games (or, simply put, Sega) of Japan in 1952. The move made it easier for the company to supply coin-operated machines to U.S. military units stationed in Japan. Some years later, in 1965, Service Games merged with Rosen Enterprises, another company that dealt with everything from instant photo booths to mechanical arcade games. Rosen Enterprises had been founded in 1954 by Korean War veteran David Rosen. Rosen experienced firsthand the popularity of mechanical coin-operated machines (like the world-popular pinball machine) in U.S. bases stationed in Japan. Rosen began exporting them to Japanese territory under the name Service Games, or Sega. As the business took off, Rosen started producing his own games by purchasing a Tokyo-based slot machine and jukebox company.

The rest is history. Sega began producing arcade machines first and later expanded its operations to home consoles and game development.

However, it wasn't Nintendo, Sony, nor even Sega that led the way to electronic entertainment. These companies entered the emerging game industry following the footsteps of the true pioneers who came up with the initial designs and business model proposals. Clearly, someone with the vision of how games would be played on electronic devices was required to spark the process. That vision came from researchers working for universities and the military because they were the ones with access to cutting-edge hardware (according to the 1950s standards, that is).

The first of these early-day pioneers worked as a nuclear physicist at Brookhaven National Labs in New York. His name was William Higinbotham and he was a self-confessed pinball player. In the 1950s, Brookhaven was a government-supported research facility that focused on nuclear energy. Visitors toured the facilities, where peaceful uses of atomic energy were showcased. These included pictures and equipment displays, illustrating everything from power plants to radiation-based medicine.

Higinbotham, who thought those visits were boring, designed a strange device by using spare parts from the lab: an oscilloscope, some capacitors, two potentiometers, and a small analog computer. He dubbed the invention "Tennis for two" (see Figure 1.2). It was a simple two-player table-tennis game where the court and ball were displayed on the oscilloscope. The player could change the angle by which the ball was hit by turning the potentiometer. The game was mostly hard-wired, so it wasn't game programming just yet.

Figure 1.2. Tennis for two.


As with most geniuses, Higinbotham did not realize what he had achieved, not even when people started waiting in line to play the game at Brookhaven. The year was 1958, and by then other people had reached similar results worldwide. As early as 1952, A.S. Douglas presented his Ph.D. thesis on human-computer interaction at Cambridge, UK. As an example, he coded a tic-tac-toe game on an EDSAC computer to illustrate his principles.

Dozens of stories like these have been found relating to the 1950s decade, but Higinbotham's example is one of the best documented complete works from these early days.

Another visionary worth remembering is Ralph Baer, who came up with the home console concept as early as 1951. While working for Loral (an airborne electronics company), Baer got the assignment to create a cutting-edge TV set, which he proposed to enrich by using some kind of playable game. The company management ignored the idea, but 15 years later, while working for a different contractor, Baer gave his idea a second try. He succeeded this second time, and work began on what would become the world's first home console, the Magnavox Odyssey.

As a summary of this early age of development, by the late 1950s/early 1960s, some companies had developed solid positions in classic games (Nintendo, Sega, and so on). Other key players such as Sony and Matsushita were exploiting the benefits of solid-state technology. Additionally, some early pioneers were already aware of the potential of technology as a tool for play. Some test games surfaced—all implemented in specific hardware: Machines that effectively were the game. Game programming hadn't really appeared yet because programmable devices were rare. By 1960, a catalyst between traditional games, technology providers, and researchers was needed—a single successful game that would show where the three trends would merge to create meaningful business opportunities.

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