Video Game Wars

by Dan Gutman

Who Will Be The Big Winner After The Video Game Companies Finish Slugging It Out? (You Will!)

The scene: a television studio. George Plimpton is toping on Intellivision commercial.

Plimpton: “I’ve been making more comparisons between Mattel and—”

Suddenly, six ten-year-old kids with horn-rimmed glasses, The Atari Anonymous SWAT Team, enter the studio with machine guns. Plimpton falls in a hail of bullets and lies bleeding all over his Astrosmash cartridge. Pathetically, he tries firing a few laser shots at the youngsters before expiring. The kids split, shouting, “That’s the last comparison he’ll ever make!”

Sound ridiculous? Well, it’s only a slight exaggeration of the war that is swirling around you—The Video Game War.

Fact—last year Americans spent six billion bucks on video games. That’s more than we spent on baseball, football and basketball combined. More than we spent on movies and records combined. More than twice the take of all the casinos in America combined. It is truly the Gold Rush of the 1980’s.

Can you imagine twenty billion quarters? That’s what dropped into the slots of area games last year, including two million dollars a week into Pac-Man alone. Pinball manufacturers like Stern and Williams have switched to cranking out hit videos like Berzerk and Defender. At least thirty companies have signed sublicensing agreements with Midway to make Pac-mugs, Pac-watches, Pac-greeting cards and Pac-bedsheets. More than twenty books on video games have hit the shelves. Hell, you wouldn’t be holding this magazine in your hands if somebody wasn’t pretty sure you’d pay hard cash for it.

Six billion dollars is a big pie and everybody wants a slice. This means war—a war that is being fought in the arcades, in the homes, and more often than not, in the courtroom. By the time all the manufacturers elbow their way to the front lines, there will be some casualties.


We’re not even talking about the war against arcades by the people who equate video games with the decline and fall of Western civilization. We’re talking about the war for your quarters. Everybody wants to invent next year’s Pac-Man, but if they can’t do that, how about last year’s Pack Man or Puck-Man? After the Great Yellow One hit it big, suddenly everybody and his brother was coming out with a maze game where you just happen to get chased around until you eat something, then you get to chase the chasers. That’s fine, but if some burly guys enter your arcade and roughly remove one of the games, chances are another “Crazy Kong” or “Congorilla” (illegal copies of Donkey Kong) is being seized. Look for “Hopperty.” It’s a Frogger ripoff. Somebody in England had the nerve to make a Pac-Man copy called, simply, “The Copy.” When Space Invaders was number one, there were sixty Japanese companies making copies of it. Of the 100,000 Pong games that were sold, only a tenth of them were made by Atari, who originally produced Pong.

So what’s the big deal? Copies give us more games to play. Yeah, but they’re generally inferior products, and if you were a manufacturer, would you want to spend millions of dollars to research and develop great games only to make some other guy a millionaire? That’s why video game designers in the U.S. have the same copyright protection as book authors. There is no copyright law in England, and video games are dying there.

But copyright laws don’t stop the copiers. In the days of Pong, it took a long time to get the parts for Pong copies. But now, it’s simple to copy a game. In fact, when Cinematronics’ Naughty Boy was unveiled at a convention in St. Louis this year, the convention’s attendees were led to a back room where a Naughty Boy pirate version was already standing. The copy actually beat the real game out onto the street!


Video game players are a masochistic lot. They hate to win. When they win, they stop playing the game. This means less dollars for the arcade owner, who is at war with the manufacturers. The issue—enhancement, or “Speedup” kits. These kits change a game’s program to make it harder. When the “easy” game gets harder, it makes more money from players like you who dig pain. More money for everybody.

Except for one thing—since video games are copyrightable, anything that modifies the program is illegal. Speedups are now against the law. Put yourself in the arcade owner’s shoes—you buy Asteroids for $3,000. It makes big bucks until your players get the hang of it and move on to something else. You can’t buy a speedup kit. A few months later, Atari comes out with Asteroids Deluxe and nobody is playing Asteroids anymore. You’re lucky if you made back your original investment. And it doesn’t help any when the home version of Asteroids comes out. Who wants to wait in line for a game at your arcade when they can play a similar version in the privacy and comfort of home? If anything kills the arcades, it won’t be the anti-arcade fanatics—it’ll be the exploding home video game revolution.


The first salvo was fired by Odyssey back in 1972, but since then, the superpowers, Mattel and Atari, have been slugging it out. Last year Mattel sold 600,000 Intellivisions. Pretty impressive, but Atari sold three million of their VCS. Atari, owned by Warners, owns about 80% of the hardware market right now. Last year Atari grossed six times the Warners record division, five times the Warners film division, and 47 times Warners Oscar-winning movie, Chariots of Fire!

Even so, only ten percent of American homes have a video game system, so 90% of America has yet to be conquered. And Atari and Mattel are gunning for it, with the best TV commercial war since Avis took on Hertz.

Last November a smug George Plimpton hit the airwaves and demonstrated how Atari’s sports games looked like day old oatmeal. Atari struck back with an equally smug twerpy kid who claimed he couldn’t compare Intellivision’s space games with Atari’s because Intellivision didn’t have any, nyah, nyah. Mattel, which had covered just about every sport short of bocce ball, quickly cranked up some space games and Plimpton was back on the air, firing missiles at Atari. By that time, Atari had become disgusted with the whole mess and stopped giving Mattel the free advertising. But it was great fun while it lasted. Now, Mattel is making cartridges that will fit into the Atari VCS, which is the equivalent of Israel recognizing the PLO.

Atari is the fastest growing company in America’s history, so naturally competition is spreading like brushfire, even from within the company itself. Disgruntled game designers, who are now superstars and millionaires, don’t think twice about looking for a new job. Imagic, which makes software for both Intellivision and the Atari VCS, was formed by two ex-Atarians and two defectors from Mattel. The president of 20th Century Fox video games is an ex-Mattel man. The three guys responsible for Atari’s “Battlezone,” Howard Delman, Ed Rotberg, and Roger Hector, have left Atari to form Videa, which is making arcade games. Rumor has it that Atari’s design stable has been severely depleted.

“Video games took in six billion dollars in 1981, and some people will do anything to get a piece of the action.”

Why should a hot 25-year-old game designer who reportedly starts at $60,000 a year plus royalties leave his cushy job? Eugene Jarvis, who invented Defender and also once worked for Atari, told Playboy that when Defender became a hit, “they (Williams) offered me a bonus of cash and stock options spread out over four years. It didn’t seem like enough to me. The more I thought about it the more I realized game designers can get ripped off. The companies make millions and the designers get only a few thousand.” Jarvis left Williams to form his own company, Vid Kidz.

Perhaps the most painful loss to Atari came when four of its designers left in 1979 to form Activision. Between them, Al Miller, Larry Kaplan, Bob Whitehead and David Crane are said to have created more than half of Atari’s home games up until that point. They had a great idea—form a company to make games that will be played on the Atari system.

That makes sense. You can make a lot more money selling razor blades than you can selling razors and the same is true with video game software and hardware. Since Atari was only releasing about a game a month, there was a tremendous demand for new games. As with the recording business, a $2,000 stereo system isn’t much good if you have to listen to the same records over and over. Activision games were big hits right away.

While Activision felt (and rightfully so) that forming the new company was simply fair competition, Atari felt (also rightfully so) that Activision was taking money out of daddy’s pants pockets. Atari filed a twenty million dollar suit for conspiring to appropriate company trade secrets. The litigation was settled in December, with Activision agreeing to manufacture video games under a technology license from Atari, whatever that means.

For obvious reasons, Atari keeps an eye on its employees like the KGB watches ballet dancers. Security is tight and workers are asked to sign confidentiality agreements. In the Atari labs, you have to use a magnetic ID card to get from one locked corridor to another. While Activision touts its designers on each cartridge box, the names of the Atari designers are off limits. One of them cleverly got around this—if you perform a complicated series of maneuvers in the Atari game Adventure, the screen lights up with the words, “Created by Warren Robinette.” Atari didn’t know about the kink until the game was in the stores. Customers got such a kick out of finding Robinette that Atari has loosened up and plans to plant more clues in future cartridges.

Being this young industry’s founder and leader, it is necessary for Atari to have a legal commando team whose mission is to seek out copyright infringements. To boldly sue where no one has sued before, so to speak. They really sunk their teeth into Odyssey’s K.C. Munchkin. Owning the home rights to Pac-Man, Atari sued in Chicago Federal Court when Odyssey attempted to get their home gobbler game out first. The court agreed that K.C. was rather Pac-like and must be taken off the market. Odyssey appealed and won—the Munchkin sold like hotcakes. But then Atari appealed that decision and poor K.C. went back to the warehouse. Odyssey says they’ll appeal. Stay tuned.

It has certainly cost millions in legal fees, but Atari has successfully kept various gobblers, munchmen, and other assorted Pac-Clones off the market. They did lose one battle, though. The computer game Jawbreaker refused to be engulfed by the Atari attorneys. Though the game closely resembles Pac-Man, Jawbreaker has a set of teeth, while Pac-Man gums his way through the maze.

The video game companies seem to be issuing as many lawsuits as new games. Astrocade went so far as to send Mailgrams to the press proclaiming they would announce a “major patent infringement lawsuit” at this summer’s Consumer Electronics Show. Oh yes, the Mailgram added, “Astrocade will also unveil its new line of video game cartridges.”

The Astrocade suit charged Atari and Commodore had allegedly infringed on the patent covering the video display technique of “bit” mapping. I asked some Atari people about the case, and basically they responded, “Astro-who?”

Topping the Astrocade case, Walt Disney Productions has filed suit against Williams because of the game Robotron 2084. Disney claims they own all rights to the word “TRON.” The next thing you know, all electrons and other atomic particles will have to be recalled unless they have pictures of Mickey Mouse on them.

Ah, one harkens back to the days of Space Invaders when being a consumer was peaceful. Now we have to decide between Space Duel, Space Chase, Space Battle, Space Fury, and Communist Mutants From Space. We’ve got companies we’re never even heard of, like Spectravision, Tigervision, CommaVid, and Data Age, pouring out games. We’ve got the big software companies waiting to license hit arcade games Like vultures circling over dead meat. I guess this is what they call American capitalism.

And when you think about it, it’s a good system. It’s survival of the fittest. There’s a lot of money out there to be made and a lot of people want to make it. They are all competing for your quarter, your dollar. And they had better be good. When Atari comes out with their new 5200 game system, Mattel comes out with their Voice module. And you can bet Atari has something fantastic up its sleeve to try and top it. If they don’t, somebody else will. ln The Video Game Wars, some of the weaker soldiers will no doubt perish. But there will be one clear winner—you!

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