During the days of the arcade, developers sought a way to bring the same experience into the homes of millions. The development of the home console was introduced and became the driving force in the market and development of video games.
Although video games emerged in the arcade and the home market during the 1970’s, they were created several decades earlier. The first known crated video game was created in 1952 at the University of Cambridge by A.S Douglas. Douglas created a game of tic-tac-toe while working on his PhD. The game was programmed on a vacuum-tube computer (Bellis, 1). The second known game was created in 1958 and was called “Tennis for Two”. Tennis for Two was created by William Higinbotham and was programmed on an oscilloscope. In 1962 “Space War!” was created by Steve Russell and unlike the previous games this game was created for multiple computer use (Bellis, 1).
The newly found concept of video games provided new technology that captured the interest of the government. In the 1960’s the US government wanted to further develop this technology in order to better develop soldiers’ reflexes. The program was picked up by Ralph Baer, an employee of a defense company called Sanders Associates (Miller, 1). Baer designed a unit that could be attached to any normal television set and called his design “The Brown Box”. The Brown Box ran on D-cell batteries and a black and white television (Orlando, 1). Sanders Associates rejected the prototype and Baer was able to gain the legal rights to the machine. He took his patent to Magnavox where it was bought and then commercially released as the Odyssey. In 1972 the Odyssey was the first home console system ever released. The system contained 12 games programmed inside the unit, but was described as “clunky” and “not challenging” (Miller, 1). Despite public interest in video games that originated in arcades, the system sold poorly due to a false claim from Magnavox that the console would only work on a Magnavox television set. The system only sold 200,000 units (Miller, 1).
In the same year that the Odyssey was released a new game had emerged in arcades and was becoming a major hit among gamers. Atari founders Nolan Bushnell and Ted Dabney released PONG in 1972. PONG became a big hit and in 1975, Atari worked with Sears to create a home version of the game. The game was originally a Sears exclusive item but was later released everywhere. The game was so popular that it became the best selling item at Sears during the 1975 Christmas season with sales grossing over 40 million dollars (Miller, 1).
After the success of the first generation consoles the second generation had much to live up to. The second generation was able to offer consoles which had better graphics, more games, and were programmable meaning that they ran games that were not built into the system unlike there previous counterparts. The consoles in the second generation also encountered competition from each other, something that was lacking in the first generation. The main competition emerged between the Atari VCS 2600, The Mattel Intellivision, and The Colecovision. During the course of the consoles production the Atari 2600 managed to out sell the competition, despite having poorer graphics. The consoles success was due to its amount of games (Miller, 2).
Although it was the high number of game titles that attributed to the success of the Atari 2600, the industry itself became over saturated and was the caused the market crash of 1982. Due to the success of video games, many new developers emerged and released games that were of poor quality. This sparked a drop in sales. Before the crash, the gaming industry grossed an upwards of $3 billion a year in America alone. During the crash, the industry only grossed $100 million world wide in both the arcade and home markets. Third party companies went out of business and established companies lost large amounts of money. For example, Atari’s stock dropped 32% on December 7, 1982 (Miller, 3).
The video game industry was close to collapse, However with the introduction of the third generation of video games, also known as the 8-bit era, the industry saw a turnaround. This turnaround was sparked by better technology available at a cheaper price and graphics that were comparable to arcades. The most popular system of this generation was the Nintendo Entertainment System or “NES”. The NES was a major success due to its support of its first and third party titles. In the consoles life span the NES sold over 65 million units and over 500 million cartridges. Nintendo also released the Gameboy in 1989, the first programmable handheld system. The Gameboy came packaged with the game Tetris and sold for $100. It sold over 100 million units in its various configurations and has been recognized as the all time best selling video game system (Miller, 4).
The fourth generation introduced the 16-bit era which featured better graphics, more consoles and more unique games. During this generation seven consoles were released. Although there were so many consoles, many of them only had a short shelf life due to high prices and/or lack of quality games. The new generation also offered games in cartridge and CD format. The two major systems in this era were the Super Nintendo and the Sega Genesis. Both consoles had a plethora of first and third party games. It was the amount of quality games and the price of them that led to the large success of the consoles. However, this was the major reason why other systems failed. For example, The SNK NEO GEO was one of the most expensive consoles available at a launch price of $650 and featured games that sold for up to $200 (Miller, 5).
Fifth generation consoles featured powerful systems that produced 3D graphics that were rivaled only by the PCs of the generation and often out preformed them. The first of these systems released was the Sega Saturn. The Saturn featured games that offered 3D graphics but due to a lack of quality games and the over shadow from the Playstation, the system failed. The Playstation was Sony’s first attempt to enter the video game market. Sony backed up the Playstation with a massive marketing campaign and exclusive support from certain third party developers. The Playstation’s main competition came from the Nintendo 64. The Nintendo 64 also featured a number of successful games from third party developers in addition to first party games. Near the end of the fifth generation, Sega released the Dreamcast. The Sega Dreamcast featured a powerful 26MB processor and a large amount of first and third party games. In addition to a powerful processor and the games, the Dreamcast also featured online gaming. Online games offered a multiplayer experience that did not require players to be on the same system to play each other. The Dreamcast had strong sales until the release of the Playstation 2 one year later (Miller, 6).
Sixth generation consoles featured competition between only three consoles, two of which were made by veterans Sony and Nintendo and introduced a newcomer in the form of Microsoft to the market. The Playstation 2 had support from many third party developers and featured online play. IT sold over 60 million units in its first three years, making it the most dominant selling system of the generation. The Nintendo Gamecube was designed to be the system devoted to hardcore gamers. The system was Nintendo’s first non-cartridge game system and sold for $200, $100 less than both the Playstation 2 and Xbox. However, despite having successful first party games, the system lacked quality third party developers and ultimately finished last among the systems of its generation. The Microsoft Xbox was Microsoft’s first attempt to enter the video game market and also Microsoft’s first hardware product, offering a large amount of third party games and the most developed online service in the form of Xbox Live (Miller, 7).
The home console market has advanced greatly over several generations and continues to make advancements. New innovations, technology, and games keep the interest of gamers alive, and will continue to advance. Current generation systems include multiple innovations that take advantage of various multimedia formats and introduce new concepts to reach gamers of all types.
Nintendo Gamecube |
Sony Playstation 2 |
Microsoft Xbox |
Magnavox Odyssey 
Pong 
Atari VCS 2600 
