11
The Day of the Jackal

In late 1972, a group of engineers and executives from a Sunnyvale technology company called Ramtek noticed a strange new coin-operated game called Pong in one of their regular hangouts, Andy Capp’s Tavern. After playing the game, one of the executives, H.R. “Pete” Kauffman, attempted to move the unit and found it would not budge, presumably because it was full of quarters.¹ The Ramtek staff sensed this might be the beginning of a new popular form of entertainment and just might present a solution to its current financial problems.

Ramtek was established by a group of partners led by Charles McEwan in September 1971.² After graduating high school, McEwan joined the army in 1954 and received electronics training. After leaving the service in 1956, he became a field engineer for Philco in Palo Alto, California, and later transferred to the New Boston Air Force Station in New Hampshire. In 1967, he joined Data Disc Corporation, where he came to believe advances in color graphics would revolutionize the medical scanning industry. When Data Disc refused to let him work on graphics technology, he left to form Ramtek.³

Ramtek manufactured high-end graphic displays used in products ranging from the earliest CAT scanners to NASA’s Viking II program. Largely funded through “bootstrapping” – i.e., plowing all the money earned back into the company in hopes of keeping revenues just ahead of expenses – the company experienced chronic shortages of cash and often teetered on the edge of collapse. Before long, McEwan decided he needed to explore other product categories to fund his primary business. As McEwan and CFO Tom Adams, who owned a stake in Andy Capp’s, brainstormed ways to keep the company afloat, their minds turned to Pong. Although no one in the company had any experience in the coin-op industry, McEwan realized Pong was an exceedingly simple piece of technology compared to the state-of-the-art display systems his company was producing and figured he could put a similar game into production quickly to generate the cash he needed.⁴

¹ David Ellis, “Of Mouse Traps and Crossbows: The Exidy Story,” GameRoom, August 2006, 48.

² “Articles of Incorporation,” Ramtek, filed September 28, 1971.

³ “Obituary: Charles McEwan,” The Desert Sun, December 6, 2006.

⁴ Smith, 2016, 203.

By March 1973, the month Atari’s Pong finally debuted nationwide, Ramtek was offering its own take on the game dubbed Volly.⁵ That same month, For-Play began shipping samples of its own Pong clone, which it called Rally.⁶ A third company, Allied Leisure of Florida, also released a ball-and-paddle game that month under the name Paddle Battle,⁷ while Midway, the Bally subsidiary that had initially passed on Pong, announced a licensing agreement consummated with Atari late in the previous month to produce its own version of the game.⁸

By the middle of the year, Nutting Associates had introduced Computer Space Ball,⁹ while two Philadelphia-area firms called Amutronics and PMC Engineering had also entered the market. Amutronics was incorporated in October 1972 by Mort Bricklin and industry veteran Fred Pliner, who started as a jukebox operator in the 1930s while still in his teens and later worked as a sales executive for several companies, including Bally and Williams.¹⁰ The company released TV Ping Pong in April.¹¹ PMC Engineering was a PC board manufacturer for companies like RCA and Control Data established in 1965 that dabbled in everything from dental x-ray equipment to photo booths on the side.¹² The company entered the market by establishing a new division called PMC Manufacturing under Amutronics co-founder Pliner and bowed TV Table Tennis in July.¹³ Not since the debut of the first pintables at the beginning of the 1930s had the coin-op industry seen so many companies scramble to copy a hot new game so quickly. An incensed Nolan Bushnell labeled these companies “the jackals.”

⁵ Ibid, 1364.

⁶ “ACA & For-Play Introduce New Rally Video Game,” Cash Box, March 17, 1973, 55.

⁷ “Allied Leisure Pops Paddle Battle; Two Player TV Game is Big on Skill ‘Collections High,’” Cash Box, March 24, 1973, 58.

⁸ “Midway to Pop Hockey & TV Games,” Cash Box, March 10, 1973, 56.

⁹ Computer Space Ball had already been out for some time before June, but was not mentioned in the trades until then. “California Clippings,” Cash Box, June 16, 1973, 58.

¹⁰ Smith, 2016, 283.

¹¹ “Amutronics Bows TV Ping Pong Game,” Cash Box, April 21, 1973, 56.

¹² Smith, 2016, 283.

¹³ “Eastern Flashes,” Cash Box, June 16, 1973, 58.

Despite stiff competition from the clone makers, Atari had a bona fide national hit on its hands by the middle of 1973. Indeed, Pong proved so popular the company was able to bypass certain coin-op industry conventions. Generally speaking, new games were sold to distributors on 60- or 90-day credit so they could be sold on to the operator before the distributor was forced to hand over any money. Pong was in such high demand that Atari succeeded in selling the game for cash up front, which was crucial for continuing to finance what was still a fragile and underfunded operation. By collecting payment immediately, Atari could buy components on credit, turn a completed machine around rapidly, and have cash on hand to pay its suppliers before its own bills came due.¹⁴ Furthermore, the cost of components for a Pong unit came to around $400, and the company sold the game to distributors for just over $900, so the profit on each machine was significant.¹⁵ Bootstrapping can be a notoriously difficult way to fund a company – just look at Ramtek – but Atari did so relatively efficiently. By the end of Atari’s first fiscal year in June 1973, it brought in $3.2 million in revenue and achieved a $600,000 profit.¹⁶

Despite this success, manufacturing remained an absolute mess, and Atari proved completely unable to keep up with distributor demand. Ted Dabney continued to oversee production after Bushnell bought him out of the company, but he had no experience in that role and was clearly lost.¹⁷ At the beginning of April, Bushnell hired an industrial engineer and accountant named Bill White, who had just completed an independent audit of the Atari books, as director of operations in an attempt to sort these issues out.¹⁸ Dabney stayed on as vice president of production facilities, but this move marked the beginning of the end of his involvement in the company.

In October, Bushnell offered to renegotiate the buyout of Dabney’s share of their partnership because Atari was having difficulty making the payments. He proposed Dabney acquire the assets of the coin route they had originally purchased from Nutting along with consideration on a smaller promissory note. Dabney took both the route and the Syzygy name and left Atari to run the Syzygy Game Company from a space in the Martin Avenue facility that he leased from Atari.¹⁹ Dabney remained on Atari’s board of directors, but he never attended any meetings before leaving the board in March 1974.²⁰ On May 15, 1974, he sold Syzygy back to Bushnell when Atari proved unable to pay off his note once again. Bushnell then sold the firm to Atari comptroller Ted Olsen.²¹ The departure of Dabney and the relinquishing of both Atari’s original coin route and the Syzygy name severed the company’s last remaining ties to its roots as a small engineering company intended solely to create games on a consulting basis for the big Chicago coin-op manufacturers.

¹⁴ “Atari Sells Itself to Survive Success,” BusinessWeek, November 15, 1976, 120.

¹⁵ Ramsay, 2012, chap. 2. Bulk purchases drove the price lower, but still brought in well over double Atari’s cost.

¹⁶ “Atari Prospectus,” document created by Atari to attract institutional investors, c.1975.

¹⁷ Alcorn, oral history, 2008.

¹⁸ Michael Current, “A History of Syzygy/Atari,” Atari History Timelines, last modified April 28, 2019, https://mcurrent.name/atarihistory/syzygy.html.

¹⁹ Bushnell, Deposition, 1974.

²⁰ Goldberg and Vendel, 2012, chap. 3.

²¹ Nolan Bushnell, Deposition, Magnavox Co. v. Bally Manufacturing Corp., No. 74-1030 (N.D. Ill), June 28, 1978.

In May 1973, Atari moved into a new 30,000 square-foot facility in Los Gatos, California, that consolidated the company’s offices and factory in one location. The company also hired a salesman named Pat Karns away from one of its major suppliers, Cramer Electronics, to serve as its national sales manager and director of marketing.²² By the end of 1973, the company had manufactured over 6,000 Pong games, but still lagged far behind market demand.²³ This gave the jackals just the opening they needed to experience success cloning Atari’s hot game.

***

The most successful Pong clone manufacturer was also one of the first, a Florida company called Allied Leisure controlled by veteran coinmen David Braun and Ron Haliburton. Braun started in the record business in 1944 in partnership with his brother Jules by recording early R&B artists on his own label in Linden, New Jersey. In 1951, he left the music business to work for a local kiddie ride manufacturer named Mars Manufacturing. The next year, he relocated to Florida and established All-Tech Industries to manufacture kiddie rides, grips testers, and pool tables. In the 1960s, Braun designed innovative pieces that combined traditional kiddie rides with other arcade concepts like target shooting and driving games.²⁴

²² “Karns to Atari; New Facilities to Open,” Cash Box, May 19, 1973, and “Meet Pat Karns,” Cash Box, August 11, 1973.

²³ Final sales figures for Pong are unknown. They stood at 6,000 in late 1973 and over 8,000 in mid-1974. It is unlikely they sold many more after that point, though a retrospective on the company in 1997 in trade publication Replay indicated the company sold as many as 12,000 units of the game. “A Red-Hot Market for Video Games,” BusinessWeek, November 10, 1973, 212, and Robert Wieder, “A Fistful of Quarters,” Oui Magazine, September 1974, 60, and “Atari at 25,” 1997, Atari 9.

²⁴ Smith, 2016, 118.

Ron Haliburton came to All-Tech via Nashville, Tennessee, where he spent his teenage years building custom engines for stock cars. Through his NASCAR work, he met an older engineer who took him under his wing, and together they designed a bill changer and sold it to a Florida manufacturer. Around this time, Haliburton noticed the popularity of coin-operated games and designed a coin-operated slot car game. Although he failed to attract sufficient investment capital to build it himself, the game came to the attention of Braun, who offered Haliburton a job at All-Tech. He eventually rose to become president of the company.²⁵

In January 1968, Braun retired from All-Tech and divested himself of his stock in the company, but he soon found himself back in the business on behalf of his son, Robert, who suffered from cerebral palsy and required some meaningful activity to occupy his time. To that end, in March 1968 he established a new firm in Hialeah, Florida, called D & R Braun Company with himself as chairman, his son as president, and Haliburton as secretary-treasurer and chief engineer. That November, the company changed its name to Allied Leisure.²⁶

Far removed from the center of the coin-op manufacturing business in Chicago, Allied did not attempt to compete in traditional pinball or shuffle alleys or any of the standard categories of games that had been manufactured for decades. Instead the company embraced the new solid state and audiovisual machines entering the market. Allied Leisure experienced its first hit in late 1968 with Unscramble, a word game designed to cash in on the trivia craze started by Nutting’s Computer Quiz. In 1970, the company experienced even greater success with Wild Cycle, a motorcycle game in the vein of Chicago Coin’s Speedway that featured one of coin-op gaming’s earliest soundtracks via an eight-track player attached to the machine.²⁷ By 1971, Allied had transformed into a publicly traded company inhabiting a 40,000 square foot facility with revenues in excess of $3.2 million.²⁸

With its reputation for developing advanced audiovisual games, Allied was a logical destination for impatient distributors when Atari could not fill all their Pong needs. Therefore, a California distributor sent Allied one of the earliest Pong units in the hopes that the company would put a copy into production.²⁹ Allied’s manufacturing vice president, Troy Livingston, took the game apart and was horrified by what he saw. While the logic of the game was well engineered, Atari had no experience building a complete coin-operated game, so most of the components from the coin circuit to the power supply were woefully insufficient for the rigors of the arcade market. Livingston redesigned most of these parts himself, but to create a new circuit board, he turned to a Chicago company called Universal Research Laboratories (URL).³⁰

²⁵ Ibid, 118–119.

²⁶ Ibid, 119.

²⁷ Ibid, 120–121.

²⁸ Allied Leisure, 1971 Form 10-K.

²⁹ Gene Lipkin, interview with the author, April 11, 2014.

³⁰ Smith, 2016, 123.

URL founders Ed Polanek and Bill Olliges both worked in electronics at Ampex and Motorola, respectively, before becoming co-workers at Seeburg Corporation. They established URL in 1969 as a contract manufacturer of sound effects PC boards for the new wave of realistic driving and shooting games proliferating in the coin-operated amusement industry. Within 18 months, they had expanded into other products such as car cassette players and alarm systems, but they remained intimately connected to coin-operated games.³¹ Allied contracted the firm to create its Pong clone in February and provided a $25,000 advance.³²

On March 8, Allied Leisure announced its Pong clone, Paddle Battle, in the industry trades. Unlike Atari, Allied operated an efficient production line and even did much of its component manufacturing in house, so the company was able to ramp up production to 150 units a day at a time when Atari was struggling to move beyond a few dozen. Even when the big Chicago companies moved in, Allied maintained an advantage. By the time Midway’s licensed clone Winner and Chicago Coin’s TV Ping Pong arrived in April followed by Williams’ Paddle Ball in May, Allied Leisure had already made enough money on Paddle Battle that it could instigate a price war to stay ahead of its larger competition. Then, in July the company delivered its coup de grace by releasing a four-player variant called Tennis Tourney that largely destroyed the market for two-player Pong games.³³ Therefore, while Midway sold around 7,000 units of Winner and Chicago Coin moved around 5,000 units of TV Ping Pong,³⁴ Allied Leisure topped them all with over 17,000 Paddle Battle units sold This represented more units than any other company, including Atari.³⁵ Allied’s sales rose from $1.5 million in 1972 to $11.4 million in 1973, while the company’s $1.6 million profit for the year looked better than the $838,700 loss posted in that prior period.³⁶

³¹ “Ex-Jukebox Engineers Priming Impressive Audio Equipment Bow,” Cash Box, August 21, 1971, 12.

³² “Letter from Bill Olliges of URL to David Braun of Allied Leisure,” February 19, 1973.

³³ Keith Smith, “Allied Leisure Industries – Designer, Jack Pearson,” GameRoom, accessed, July 29, 2007. https://www.gameroommagazine.com/index.php?main_page=infopages&pages_id=10&zenid=d3064b67d37f361414a0663c306e4e78.

³⁴ Timothy Jarrell, “Like Old Man River Midway Sales Go Rollin Along,” Play Meter, November 1976, 50 and Baer, 2005, 10. Note that Midway sales director Larry Berke gives a figure of 9,000 for “table tennis-type games” in “A Red-Hot Market for Video Games,” BusinessWeek, November 10, 1973. This almost certainly includes early sales of the four-player variant Winner IV, as the same Berke says in the Jarrell article not only provides the 7,000 figure but also states that their highest run on a game was 8,600.

³⁵ Smith, 2016, 123. Smith got the figure from Troy Livingston in 2001, who was reported as giving a lower figure of 12,000 at Pinball Expo in 2005. “Pinball Expo 2005,” Pinball News, accessed 6/5/2019, https://www.pinballnews.com/shows/expo2005/index8.html. Allied engineer Jack Pearson told Smith that it sold 22,000, but it is likely he was combining sales of Paddle Battle and its four-player follow-up, Tennis Tourney. Smith, 2016, 124.

³⁶ Allied Leisure, Annual Report, 1973.

***

In 1973, an estimated 70,000 coin-operated video games were sold,³⁷ and nearly all of them were Pong clones. These included both the straight copies of the original game as well as variants such as Allied’s four-player Tennis Tourney and Ramtek’s Hockey, in which the players control multiple paddles that represent forwards and a goalie and attempt to knock the ball into their opponent’s goal.³⁸ According to Cash Box, video games were the top earning category of amusement machine despite far fewer video cabinets on location than pool tables and pinball machines.³⁹

There were several factors behind video’s explosive financial success. First, Pong games definitively cemented quarter play in the arcades by following in the footsteps of the quiz and audiovisual games in allowing just a single play for 25 cents rather than the two plays for a quarter that still persisted in pinball.⁴⁰ Furthermore, their solid-state design left video games far less prone to breakdowns than complicated pinball, driving, and target shooting games full of steppers, relays, wipers, and other electromechanical parts, meaning they spent less time waiting for repairs and more time raking in coins. Finally, video games did not carry the same stigma as pinball and pool, both of which had varying ties to gambling since their earliest days. Video units were skill-based contests clearly intended for amusement only, while their advanced technology conjured up the space race and futuristic laboratories rather than seedy back alleys and smoke-filled rooms.⁴¹ Therefore, Video games were considered acceptable in other venues besides working-class bars and inner-city arcades and consequently attracted a wider clientele.

³⁷ The Coin-Operated and Home Electronic Games Market (New York: Frost & Sullivan, 1976), 87.

³⁸ Four-player Pong variants released in 1973 include Midway’s Winner IV, Chicago Coin’s TV Tennis, and Williams’ Pro Tennis. Hockey variants include Williams’ Pro Hockey and Chicago Coin’s Olympic TV Hockey.

³⁹ “1973 Amusement Machine Route Survey,” Cash Box, November 19, 1973, 82.

⁴⁰ “Williams’ Stern Calls for Quarter Play on Flippers,” Vending Times, June 1974, 57.

⁴¹ “The Space Age Pinball Machine,” The New York Times, September 15, 1974.

While the entire coin-op industry focused on Pong clones and variants in 1973, Atari made a concerted effort to expand into new genres. These efforts met with only limited success. The second game the company created was the first it conceived, Bushnell and Dabney’s racing game in space. Dubbed Asteroid and actually implemented by Al Alcorn, the game places two players in control of spaceships that race from the bottom of the screen to the top while dodging dots representing asteroids. Each time a player reaches the top of the screen, he scores a point, while each time he hits an asteroid, he is deposited back at the bottom of the screen. Whoever scores the most points within the time limit claims victory. The players control their ships using joysticks, but can only move the ship up or down, not left or right, perhaps in an effort to avoid the confusing movement and control scheme that had dogged Computer Space.

Bushnell presented Asteroid to Bally, which accepted the game in fulfillment of Atari’s development contract.⁴² Bally decided not to manufacture the game itself and passed it on to Midway,⁴³ which agreed to pay a royalty on each unit sold. Bushnell also decided to release the game himself through Atari, which brought it to market in July as Space Race several months before Midway put Asteroid into production. A furious Midway complained, so Atari agreed to forego royalties on the game as compensation.⁴⁴ This was hardly a big sacrifice, as the game sank in the Pong-obsessed coin-op marketplace. Midway managed to sell only around 2,000 units of Asteroid, which was still more than the roughly 1,500 units of Space Race put on the market by Atari.⁴⁵

Atari’s next original game, Gotcha, faired only slightly better than Space Race. The idea for the game originated with Al Alcorn due to a bug in the scoring chips on the original Pong, which when defective would spew randomly shifting garbage across the screen. Alcorn figured these shifting patterns would make an interesting maze, so he outlined a game in which one player chases another player through the randomly changing playfield.⁴⁶ Atari created three versions of the game, a straight black-and-white model, a version that gave the illusion of color through use of an overlay on the screen, and a full-color version that represented the first use of color graphics in a video game.⁴⁷ While the game moved 3,000 units after being launched in October, its sales paled in comparison to the hit Pong clones, and the game was quickly forgotten.⁴⁸

⁴² While Bally, or rather its Midway subsidiary, ultimately licensed Pong, this was a separate deal from the existing contract between Bally and Atari, so Pong did not fulfill that original contract as reported in some sources. Britz, 1974, 25.

⁴³ Britz, 1974, 34.

⁴⁴ Henry Ross, Deposition, Magnavox Co. v. Bally Manufacturing Corp., No. 74-1030 (N.D. Ill), June 25, 1974, 26.

⁴⁵ Baer, 2005, 10.

⁴⁶ Paul Drury, “In the Chair with Allan Alcorn,” Retro Gamer, no. 83, 2010, 86.

⁴⁷ The color version only saw a very limited production run of probably fewer than 50 units. Ed Fries, “Fixing Color Gotcha,” blog, May 25, 2016, https://edfries.wordpress.com/2016/05/25/fixing-color-gotcha and

⁴⁸ Today, Gotcha is largely remembered only for the unusual pink rubber domes that encased the joysticks in the early production models, which eccentric Atari industrial designer George Faraco designed to resemble breasts. Drury, 2010, 86.

With original product fairing so poorly, Atari embraced the ball-and-paddle market as aggressively as any of its competitors. The company released the four-player Pong Doubles in September in response to the collapse of the two-player market. In October, the company deployed the more innovative Elimination, a four-player Pong variant in which each player guards a goal on one side of the screen and is eliminated from play if the ball enters his goal four times.⁴⁹ Volleyball variant Rebound followed in February 1974, in which the players’ paddles are situated at the bottom of the screen, and they attempt to hit the ball in a parabolic arc over a net. In August, the company manufactured a limited run of a game called Puppy Pong in which the basic Pong game is housed in a cabinet shaped like a doghouse to entice pediatricians to place the game in their waiting rooms. Another short-lived Pong experiment was Barrel Pong, which repackaged the game in old wine casks to provide more aesthetic appeal for higher-end venues.

By the middle of 1974, Atari had largely left the ball-and-paddle market behind as it once again moved on to other genres, but many of its competitors persisted in the category. While most of these were content to continue releasing variations on the same old products, the video game division of Ramtek, led by Charles McEwan’s brother Melvin,⁵⁰ attempted to innovate in the field. In March 1974, the company released a game called Wipe Out featuring the same basic gameplay as Elimination but with the addition of a “frustration bumper” in the middle of the playfield that causes the ball to ricochet in unexpected directions. Because Ramtek did not have a well-developed nationwide distribution network, it augmented its own manufacturing run bylicensing the game to Midway, which produced it under the name Leader.⁵¹ Ramtek followed Wipe Out with an even more innovative ball-and-paddle game in April from a new engineer named Howell Ivy.

⁴⁹ Technically, Elimination was produced by a secret subsidiary company called Kee Games. Atari released its version, dubbed Quadrapong, a few months later.

⁵⁰ Howell Ivy, interview with the author, April 10, 2018.

⁵¹ Ivy, 2018.

A military veteran who spent seven and a half years in the U.S. Air Force, Ivy was stationed at the satellite test facility on Onizuka Air Force Station just outside Sunnyvale, California, in 1972 when he discovered Computer Space. A specialist in telemetry systems, Ivy felt he could create a video game himself and designed a Pong clone in his two-bedroom apartment.⁵² When he finished the game, he offered it to Ramtek, which paid him $2,000 for the design and offered him a job.⁵³ Ivy remained in the military as he designed a ball-and-paddle variant game called Clean Sweep for the company over nights and weekends.

With Clean Sweep, Ivy’s main goal was to create a more dynamic playfield featuring greater action on the screen, so rather than pit two or four players against one another, the game features just one paddle at the bottom of the screen and rows of dots arrayed across the rest of the screen. The player’s objective is to clear the screen of dots by bouncing a ball off the paddle Any dots struck by the ball disappear.⁵⁴ Technically, Clean Sweep was quite advanced for the time. It was one of the earliest video arcade games to incorporate ROM memory, which was used to store the paddle graphic so it could be rendered with a distinctive curved shape to illustrate that the ball would launch at different angles depending on which segment of the paddle it hit. It also featured the first random access memory (RAM) used in an arcade video game to facilitate the disappearance of the dots. Released by Ramtek in April 1974, Clean Sweep sold roughly 3,500 units and re-entered production twice after its initial run as it continued to find success.⁵⁵

After he completed Clean Sweep, Ivy left the Air Force to work for Ramtek full time as its only game engineer. He continued to pursue innovative designs with his next game, Baseball, which adapted the basic mechanics of the ball and paddle genre to the traditional pitch-and-bat electromechanical game, complete with multiple pitch types and controllable fielders represented as crude silhouettes. The game was initially released in a wooden cabinet that sat lower to the ground than most games of the time to give the effect of looking into a stadium from above, though the next year it was rereleased in a standard arcade cabinet as Deluxe Baseball. The additional complexity of the game over ball-and-paddle concepts required two circuit boards instead of one, which led to problems during the manufacturing run. The first 1,500 of roughly 2,000 units proved defective because the wooden housing containing the two boards proved too flimsy to handle the job. Ramtek ended up having to replace the wooden housing with a metal one at considerable cost.⁵⁶ As with Wipe Out, Ramtek licensed Baseball to Midway, which released it as Ball Park. Ramtek also licensed a third game to Midway that it did not release itself, TV Flipper, which debuted in December 1974.⁵⁷ In this pinball-inspired game, 20 square targets are arrayed in a 5×4 grid across the center of the screen and a series of rectangular targets are placed around the edges. Players score points by knocking out the targets.

⁵² Howell Ivy, interview with the author, July 24, 2009.

⁵³ Ramtek never actually released the game. Paul Drury, “In the Chair with Howell Ivy,” Retro Gamer no. 125, 2014, 92.

⁵⁴ Ivy, 2018.

⁵⁵ Charles McEwan, deposition, Bally Manufacturing v. Williams Electronics, No. 78-2246 (N.D. Ill), January 31, 1980 and Baer, 2005, 12–13.

⁵⁶ McEwan, 1980 and Ivy, 2018.

⁵⁷ McEwan, 1980.

***

The Pong craze was not solely an American phenomenon, as Europe embraced video games just as enthusiastically as the United States – at least for a short time. As in the United States, the European market first developed in 1973, but Atari largely ceded the continent to the clone makers because it proved unable to set up effective international distribution before the middle of the year. In Britain, Nutting Associates was one of the first companies on the scene with Computer Space Ball, imported by a distributor named Vic Leslie, but it was Allied Leisure’s Paddle Battle that dominated the market after being imported by a major distributor called London Coin.⁵⁸ In France, the Amutronics clone TV Ping-Pong arrived first in summer 1973 and was quickly followed by a host of other games.⁵⁹ In Spain, ball-and-paddle games proved so popular for a time that they were blamed for a decline in the country’s vibrant slot machine market.⁶⁰ Within four or five months, however, the markets in Europe completely saturated as operators rushed to place machines in as many locations as they could, and the demand for new games collapsed.⁶¹

⁵⁸ “U.K. Salesman High on Video,” Play Meter, August 1976, 13.

⁵⁹ Blanchet, 2015.

⁶⁰ Manuel Garin and Victor Manuel Martínez, “Spain,” in Video Games around the World, ed. Mark J.P. Wolf (Cambridge, MA: The MIT Press, 2015), iTunes.

⁶¹ “U.K. Salesman,” 1976, 13–14.

The U.S. manufacturers were not willing to give up on Europe and soon made a second attempt to enter the market through ball-and-paddle takes on the game of soccer. Ramtek and Allied Leisure introduced the first soccer games in late 1973, Soccer and Super Soccer, respectively, while Atari created a game called World Cup specifically for Europe that launched in April 1974.⁶² During this second wave of ball-and-paddle games, a small number of European companies in France, Germany, and Italy began manufacturing their own ball-and-paddle games, but in the end the market only oversaturated again as many distributors imported everything they could regardless of quality and completely flooded the market.⁶³ After two boom-bust cycles in rapid succession, European coin-op distributors imported video games only in small quantities over the next several years as they refocused on more traditional coin-operated equipment like jukeboxes, slot machines, pool tables, and pinball.⁶⁴

Back in the United States, it appeared video games might suffer a similar fate. Despite its popularity, the widespread success of Pong and its many clones and variants in 1973 did not immediately result in the birth of a sustainable video game industry. By the end of the year, the market for ball-and-paddle games was completely saturated and demand for new product sharply declined. As 1974 dawned, a continuing global recession and an energy crisis precipitated by the oil embargo enacted by Arab countries in response to U.S. support for Israel during the Yom Kippur War served to curtail consumer spending on leisure activities, and erode demand still further.⁶⁵ As a result, coin-operated video game sales fell by over half to just 30,000 units in 1974,⁶⁶ while pool narrowly beat out video to reclaim its traditional ranking as the most profitable coin-operated amusement on location.⁶⁷

As video appeared destined to become just another novelty product that would fade from the arcade after a year or two like so many concepts that had come before it, many of the larger manufacturers abandoned the market entirely. Williams did not release any new models in 1974, while Allied Leisure opted against re-entering the business after a devastating fire destroyed much of its factory on January 31, 1974.⁶⁸ The company was able to return to full production on coin-operated games by March after a miraculous recovery,⁶⁹ but by then Dave Braun felt that the video game market was played out.⁷⁰ Among the well-established coin-op firms, only Midway and Chicago Coin continued to manufacture games into 1974.

⁶² Smith, 2016, 141.

⁶³ Larry Siegel, interview with the author, February 10, 2015 and “U.K. Salesman,” 1976, 14.

⁶⁴ “Briton Depicts Operating Methods in UK,” Play Meter, February 1976, 47–48.

⁶⁵ The Coin-Operated and Home Electronic Games Market (New York: Frost & Sullivan, 1976), 90.

⁶⁶ Ibid, 87.

⁶⁷ “Route Survey,” Cash Box, November 2, 1974, MOA 17.

⁶⁸ “Blaze Destroys Hialeah Plant,” The Miami News, January 31, 1974.

⁶⁹ “Hialeah Firm Will Reopen,” The Miami News, March 1, 1974.

⁷⁰ David Braun, Deposition, Magnavox Co. v. Bally Manufacturing Corp., No. 74-1030 (N.D. Ill), June 14, 1974, 9.

With traditional coin-op venues completely saturated with Pong clones, some manufacturers began looking to other establishments in which to place their games. While coin-operated amusements traditionally filled working-class bars and taverns, the broad appeal of Pong among all classes of society engendered hope that higher-class lounges, restaurants, and hotels might host Pong games as well. These establishments would never accept traditional upright cabinets, however, because they would attract a transient clientele who would noisily crowd around the game without necessarily ordering any food or drinks. This would not only fail to provide the establishment with any custom, but would also discourage regular patrons from entering the premises. The solution to this dilemma was to create a sit-down table-style game that would be unobtrusive while also encouraging patrons to order food and drinks while they played. As this new style of arcade cabinet was particularly targeted at cocktail lounges, it was called a “cocktail table” cabinet.⁷¹

Perhaps the first person to see that cocktail tables could open up new venues for coin-operated amusements was Bob Runte. In August 1973, Runte established a company called National Computer Systems in Des Plaines, Illinois, that later changed its name to Fascination, Ltd. The company introduced its first cocktail model in October 1973, but rather than sell through distributors, who proved skeptical of the viability of the lounge market, Runte sold directly to operators through “business opportunity seminars” attended largely by affluent professionals like doctors and lawyers looking to invest their money into something tangible rather than letting it sit in the bank and be consumed by a spiraling inflation rate.⁷²

A second entrepreneur named Dick Januzzi entered the business at roughly the same time as Runte by approaching Atari to build a cocktail table he could market. Always interested in expanding his business, Nolan Bushnell agreed to manufacture a test run of 200 tables in late 1973. Januzzi sold them largely through ads placed in the classified section of the newspaper.⁷³ Atari and Januzzi chose to terminate their arrangement after those first units,⁷⁴ but in March 1974 Januzzi joined with William Wasson and David Perry to establish a company called National Entertainment in San Jose California. National Entertainment became the exclusive worldwide sales agent for the most successful game of the cocktail era, Flim Flam by Meadows Games.

⁷¹ Gene Beley and Sonny Albarado, “Cocktails, Anyone? The Boob Tube Pays Off,” Play Meter, April 1975, 26.

⁷² Ibid, 27–28.

⁷³ Ibid.

⁷⁴ Januzzi claimed he cancelled his deal with Atari over quality issues, while Nolan Bushnell claimed he terminated the deal because Januzzi had not delivered full payment for the initial units.

Meadows Games was a coin-operated amusement spinoff of a company called Meadows Manufacturing established by Dan Meadows in 1958 as a contract manufacturer for local electronics firms like Ampex and Western Electric. In 1966, Meadows sold the firm to employee Harry Kurek. In the early 1970s, Kurek correctly predicted that an economic recession was on the horizon and decided to diversify his operation into a “recession proof” business. He chose coin-op after learning how successful the pinball manufacturers had been in the face of the Great Depression and incorporated Meadows Games in Sunnyvale in January 1974.⁷⁵

Flim Flam, released that August, was Meadows’ first game. This four-player Pong variant incorporated joysticks for control rather than dials, so the paddles could move forwards and backwards as well as up and down. The paddles could also be adjusted to three different lengths to make the game easier or more challenging depending on the skill level of the player. Finally, each player had a “flim” and a “flam” button to alter the speed and course of the ball to make gameplay more unpredictable. Flim Flam arrived just in time to ride the wave of the cocktail boom and remained in production for nearly two full years. By the time the last unit rolled off the assembly line in July 1976, Meadows had sold nearly 12,000 units.⁷⁶

Other companies rushed to follow the lead of Fascination, National Coin, and Meadows by introducing their own cocktail games as sales reached 10,000 units in 1974. In 1975, the number of units sold increased to 26,000, but that proved to be the high-water mark of the business.⁷⁷ Many of the cocktail manufacturers were shady fly-by-night businesses preying on a new breed of inexperienced operator through exorbitant pricing and inadequate service and support. These so-called “biz op” or “blue suede shoe” salesmen succeeded in growing the market for Pong-style games in the short term, but did nothing to drive innovation in the cocktail space forward. By 1975, some traditional distributors and operators began embracing the new market as well, but more companies merely led to the same market saturation that had already crippled the original ball-and-paddle market.

⁷⁵ Smith, 194–195.

⁷⁶ “Meadows Games: From California to the World,” RePlay, July 1976, 28.

⁷⁷ Frost & Sullivan, 1976, 88.

***

By the mid-1970s, the coin-operated amusement industry had moved past the ball-and-paddle genre, and many of the smaller companies that had never expanded beyond that market shut down. Amutronics was bought out by PMC Electronics in 1974, while For-Play disappeared before the end of 1975.⁷⁸ PMC managed to limp along in the cocktail market long enough to spin off its video game division as PMC Industries in February 1976,⁷⁹ but it never moved beyond ball-and-paddle games and was gone before the end of the year. Perhaps the most significant loss of the period was Nutting Associates, which despite being the first company to release a video game and one of the first to release a Pong clone after Atari never managed to gain any traction in the new marketplace. In November 1973, Nutting attempted to make a splash with a standard four-player tennis variant called Wimbledon designed by a contractor named Gerald Gleason and finished by Dutch engineer Miel Domis.⁸⁰ The game incorporated a color monitor to display a bright green playfield and paddles in four different colors,⁸¹ but adding color was not enough to jump-start the declining ball-and-paddle market. By summer 1974 Nutting was forced into Chapter 11 bankruptcy.⁸²

With his company in dire straits, Bill Nutting turned to the cocktail market with a ball-and-paddle game called Table Tennis and did well enough to pull Nutting Associates out of bankruptcy by October 1975.⁸³ The company displayed two new games at the MOA show that year, but continued to struggle.⁸⁴ In July 1977, a gambling machine manufacturer based in Reno, Nevada, called A-1 Supply purchased Nutting Associates to serve as a West Coast conduit for its gray-market video blackjack machines. Nutting debuted its final video game that October: a cocktail game similar to Midway’s three-year-old TV Flipper called Ricochet. By 1979, Nutting Associates had been merged into A-1 to create a new company called Sircoma, and Bill Nutting moved to Reno to serve as a production manager.⁸⁵ After nearly dying in a serious plane crash, however, Nutting connected with a group called Mission Aviation that served as an air-taxi service for Christian Missionaries. Impressed with his background as a pilot and a businessman, the group hired him to manage its office in Nairobi, Kenya. When that job ended in 1985, Nutting retired to Arizona.⁸⁶ He never worked in the coin-op industry again.

⁷⁸ Smith, 2016, 283.

⁷⁹ “PMC Spins Off Games Line; Bender Heads New Company,” Vending Times, February 1976, 48.

⁸⁰ Gerald Gleason, email correspondence with the author, September 15, 2018 and “Electronics Review,” Electronics, June 1976, 32.

⁸¹ Electronics, June 1976.

⁸² “What’s News?” Marketplace, August 30, 1974, 24.

⁸³ Letter from Bill Nutting to Bill Gersh, reprinted in Marketplace, July 30, 1975, 7.

⁸⁴ While the games are not named in show coverage of the time, they were probably two cocktail ball-and-paddle cabinets called Table Tennis II and Paddle Derby.

⁸⁵ Smith, 2016, 183.

⁸⁶ Petersen, 1992.

***

The ball-and-paddle market may have been completely dead by 1976, but the video game itself did not vanish with it as some had predicted. While the collapse of the Pong market drove several companies out of the business, those that survived started broadening their reach into new genres like racing and target shooting that had traditionally been served by a wide array of electromechanical products grouped into the catch-all categories of “arcade pieces” or “novelty amusements.” Distributors and operators meanwhile, followed up on the momentum of the short-lived cocktail lounge market by expanding out of traditional bar locations into a more sustainable new venue: the shopping mall.