19
Chasing the Silver Ball

On May 17, 1969, MCA Records released the latest record by The Who in the United States. Called Tommy, the album represented a departure from previous LPs consisting of largely unconnected three-minute pop songs, instead presenting a complete “rock opera” that told the story of the eponymous troubled boy – rendered deaf, dumb, and blind by a traumatic event in his childhood – as he attempts to overcome his condition and reach spiritual enlightenment.

While grappling with the story of the album, The Who guitarist and Tommy composer Pete Townsend shared an early assembly with noted music critic Nik Cohn, who felt it focused too exclusively on heavy spiritual themes and required a lighter selection to balance the composition. Cohn suggested that Tommy be particularly good at a game. Townsend turned to pinball because Cohn was an aficionado of the coin-operated amusement and composed a new song for the album called “Pinball Wizard.”¹

Released as a single in advance of the full album on March 7, 1969, “Pinball Wizard” shot up the charts in both the United States and the United Kingdom, peaking at 19 and 4, respectively, in the two countries. Pinball and rock & roll had already been tied together in the public mind through the close association of the jukebox and the pin game in bars and taverns and the reputation of both mediums as havens for rebellious or delinquent youth. “Pinball Wizard” rendered this connection even more explicit. The opportunities for cross-promotion appear obvious today, but at the time licensing was simply not done in pinball, and the Depression-era executives still running all the major coin-op manufacturers in the late 1960s were probably barely aware that The Who or their rock opera existed. In 1975, Columbia Pictures announced an adaptation of Tommy to the silver screen with an all-star cast that included Ann-Margaret, Tina Turner, and an up-and-coming piano rocker named Elton John. This time, the rock opera caught the attention of a relatively new member of the sales team at third-largest pinball manufacturer Bally named Tom Nieman.

¹ “The Who’s Pete Townsend Shares the Story Behind ‘Pinball Wizard,’” Guitar World, May 19, 2017, https://www.guitarworld.com/artists/acoustic-nation-whos-pete-townshend-shares-story-behind-pinball-wizard.

Tom Nieman graduated from the University of Michigan in 1972 with a degree in radio, television, and film but had difficulty finding a job in his chosen field. When Nieman’s good friend and son of Bally CEO Bill O’Donnell, Jr. learned of his plight, he arranged a job for Nieman with Bally’s Carousel Time operating subsidiary. The company briefly tried Nieman as a service tech before employing him as a delivery truck driver. While out on delivery, Nieman would analyze the locations on the route to determine which were well run and which were not and share his observations with the staff at Carousel Time. Before long, this led to a full time job analyzing routes for the operator. Shortly after Aladdin’s Castle was merged into Carousel Time, Nieman moved to sales at Bally corporate, where his job was to move excess inventory of the company’s pinball machines.²

As Nieman became more immersed in the pinball world, he came to realize that the teenagers who played pinball also drove the movie and record businesses and wondered why no pinball manufacturers had taken advantage of this fact. He particularly felt that Bally should explore synergy with Tommy because it referenced Bally in the song Pinball Wizard. Nieman mentioned this fact to long-time Bally executive Herb Jones, who showed him a letter the company had received from the company that published The Who’s music asking for permission to use the Bally name in the song. Jones had never heard of the band and did not act on the letter, but with The Who apparently interested in dealing with Bally on some level and the Tommy movie just announced, Neiman was inspired to pursue a license for a pinball machine.³

Despite being unable to generate any enthusiasm for a licensing deal within Bally, Nieman made a series of phone calls to Columbia Pictures over the next few weeks until he connected with Barry Lorrie, the executive responsible for making licensing deals related to Tommy. Lorrie loved Nieman’s plan and concluded an inexpensive licensing deal. Bally management continued to show resistance but eventually gave Nieman leave to move forward with a limited budget. Working from nothing but a script and a few still photos, Nieman collaborated with designer Norm Clark and artist Dave Christensen to create a table dubbed Wizard that sported a colorful playfield and backglass intended to capture the spirit of the movie.⁴

² “Show 54,” TOPcast, podcast audio, March 2008, http://www.pinrepair.com/topcast/showget.php?id=54.

³ Ibid.

⁴ Ibid.

Under Nieman’s direction, Bally and Columbia debuted Wizard alongside the movie in several media markets and gave away several units via promotions to generate interest. The two companies also collaborated on advertising materials, such as a flyer featuring film co-star Ann-Margaret posing with the machine. These tactics helped generate enormous demand for the game from fans eager to imitate the movie’s titular character, leaving Bally in the enviable position of merely needing to supply cabinets rather than solicit orders.⁵ Released in May 1975, Wizard became a 10,000-unit blockbuster to deliver the best showing by a pinball machine since the Great Depression.⁶

With Wizard proving a phenomenal success, Nieman found himself under pressure to produce another hit. Turning to the Tommy movie for inspiration once again, Nieman felt that Elton John left the largest impression on the audience and called the singer’s management – with whom he had previously interacted during promotional work for Tommy – to pitch an Elton-themed machine. John loved the idea, so Bally created a table in 1976 called Capt. Fantastic and the Brown Dirt Cowboy that owed more to John’s character in Tommy than his latest album and moved 16,000 units to prove the sales of Wizard were no fluke.⁷ With these successes, licensed tables became a staple of the pinball industry as all the major manufacturers began emulating Bally. These tables held an appeal with young people from all walks of life that pinball had not experienced in decades and transformed the game into a mass market phenomenon no longer limited to bars and arcades, but now also found in drug stores, candy shops, and other mainstream venues. This in turn helped pinball gain a new acceptance in society.

Even before the debut of Wizard, the elimination of the last gambling elements in pinball, the introduction of new coin-operated amusements like quiz games and video games unburdened by any gambling stigma, and the rise of the family-friendly shopping mall arcade significantly altered the public’s perception of coin-operated amusements as a front for organized crime and engendered hope among operators that the games might be operated legally all around the country. They experienced their first major victory in 1974 when the California Supreme Court upheld a lower court ruling issued in 1972 calling for the ban on pinball in the city of Los Angeles to be overturned,⁸ a decision that hinged largely on testimony from pinball pioneer Harry Williams that demonstrated pinball had evolved over the decades into a game of skill.⁹

⁵ Richard Meyers, “Pinballyhoo: How Pinball Was Hyped into Respectability,” Videogaming Illustrated, February 1983, 41.

⁶ Bueschel, 1988, 241.

⁷ Ibid, 242; Show 54, 2008.

⁸ “Cal. Supreme Court Scores for Trade,” Cash Box, August 10, 1974, 48.

⁹ “L.S. Legalizes Flippers; 1939 Law ‘Unconstitutional,’” Cash Box, February 26, 1972, 45.

Operators brought a similar suit against New York City in 1975, but proved unsuccessful in overturning the city’s 30-year-old ban, so they adopted a different strategy.¹⁰ With New York mired in a fiscal crisis and in desperate need of income, the city had been raising mass transit fares, scaling back city services, and levying taxes on everything from shoe shines to haircuts. In this climate, local operators approached City Councilman Eugene Mastropieri of Queens to introduce a repeal on the city’s decades-long ban on pinball so the city could generate revenue by requiring license fees of $50 per machine.¹¹

An avid pinball player himself, Mastropieri waged a long campaign that culminated in a hearing before the city council consumer affairs committee on April 2, 1976. At the hearing, an associate editor for Gentleman’s Quarterly researching a book on the history of pinball named Roger Sharpe played a Gottlieb table called Bank Shot to illustrate that pinball had long since left behind the pure randomness that had motivated Mayor LaGuardia to attack the game in the 1930s and 1940s and had morphed into a game of skill.¹² Satisfied by the demonstration, the committee unanimously voted to lift the ban,¹³ and Mayor Abraham Beame signed the bill officially authorizing the operation of pinball machines within city limits on August 1.¹⁴ Chicago, the center of the pinball industry and the last major holdout, almost legalized the game the same year, but a powerful city councilman named Ed Burke delayed the bill in committee due to fears about organized crime. The bill finally passed in early 1977.¹⁵ After over four decades of operation, pinball had finally shed its seedy, mafia-controlled image, and the future of the game looked bright.

The introduction of the first solid-state pinball machines cemented the game’s renewed position as the leading game in the coin-op industry. While early efforts like Mirco’s Spirit of ‘76 failed for a variety of reasons, Bally introduced its internally produced solid-state system in its December 1976 game Freedom. While that game only had a moderate run of 1,500 units because it was a conversion of an existing electromechanical game, in February 1977 the company released its first original solid-state game, Night Rider, which sold 7,000 units. Even greater success followed with Evel Knievel in July, which sold 14,000 units off the back of the daredevil’s extraordinary popularity.

¹⁰ “N.Y. Upholds Pinball Ban,” Cash Box, November 8, 1975, 39.

¹¹ Tom Buckley, “Pinball Goes Electronic,” The New York Times, January 23, 1977.

¹² Kent, 2001, 89–90.

¹³ “New York City Council Votes 6-0 to Lifet City’s Pinball Ban,” Cash Box, April 17, 1976, 39.

¹⁴ “Beame Signs Bill, Pinball Machines Are Legal Again,” The New York Times, June 2, 1976.

¹⁵ Smith, Chicago Reader, 2018.

In September, Bally released Eight Ball, which highlighted the advantages of transitioning to solid state as the first pinball machine to incorporate scoring memory. While previous multi-player pinball games could keep track of each player’s score, they could not transfer any score multipliers accumulated through play from ball to ball. Eight Ball could remember the state of the board when a player’s turn ended and pick right back up where the player left off in the next round. This capability helped transform the game into a sensation, and it set yet another new post-war record with sales of 20,320 units.¹⁶ With these games, Bally cemented its position as the number one pinball company in the world.

***

The rising fortunes of solid-state pinball in the late 1970s came at the expense of other forms of coin-operated amusement, particularly video games. In 1976, coin-op video game revenues peaked as Sea Wolf, Gun Fight, Breakout, and Sprint 2 led a robust group of games that sold somewhere between 70,000 and 75,000 units.¹⁷ This performance obscured underlying problems, however, as operators became more selective in the video equipment they would buy, the secondary market for used games largely collapsed, and several smaller manufacturers went out of business.¹⁸

In 1977, the coin-op video game market declined as sales dipped to around 50,000 units.¹⁹ While most companies in the industry embraced the microprocessor, the driving, dueling, and shooting gallery games produced that year failed to generate the same sales or excitement as their predecessors. For the next two years, the popularity charts of both Replay and competing trade publication Play Meter remained clogged with games that premiered in 1976. The average weekly earnings of video games fell behind both pinball and pool,²⁰ while overall revenues came to just over $334 million, which put the category in second place behind pinball’s massive $1.4 billion take.²¹

¹⁶ Bueschel, 1988, 244.

¹⁷ Institute of Electrical and Electronic Engineers, 1977 Electro Conference Record: Presented at Electro 1977, New York, NY, April 19–21, 1977 (New York: Electro, 1977), 46.

¹⁸ Gene Beley, “Business Preview ‘77: One Western Opinion,” Play Meter, January 1977, 22.

¹⁹ The Video Game Industry: Strategic Analysis (New York: Sanford C. Bernstein & Co., 1982), 63.

²⁰ Vending Times Census of the Industry, July 1981, 63–66.

²¹ Ibid, 56.

Atari remained the leading arcade video game manufacturer with an estimated 44% market share.²² Compared to the dual successes of Sprint 2 and Breakout in 1976, however, sales of individual games were modest. The two biggest successes were the company’s latest entries into the popular target shooting and racing genres, Starship 1 and Super Bug. Programmed by Ron Milner at Cyan Engineering, Starship 1 took its primary inspiration from the television show Star Trek. It incorporated a first-person perspective and forward scrolling starfield inspired by the main viewscreen of the USS Enterprise to give the player the sensation of flying a ship through space while shooting at ships and space monsters inspired by the show.²³ Super Bug, programmed by new hire Howard Delman based on a design by Lyle Rains, featured the same basic gameplay as Atari’s previous driving games, but this time with a zoomed in view, larger, more detailed graphics, and both horizontal and vertical scrolling – a rare feature in games of the period – to depict a larger course. The two games sold roughly 3,500 units apiece.²⁴

In 1978, Atari remained the market leader, though its share declined to 29%.²⁵ The company’s biggest hit of the year grew directly out of the development of Super Bug. When the game became successful, the next logical step was to create a two-player version. This proved impossible because the car remains fixed in the center of the screen at all times while the track scrolls around it.²⁶ The solution came from Steve Mayer at Cyan Engineering, who was interested in exploring cooperative play and developed the idea of having two players drive a hook-and-ladder truck, which has a second steering wheel in the rear due to the vehicle’s length.²⁷ After the basic parameters of the game were laid out at Cyan, Howard Delman and hardware engineer John Ray completed the game. Called Fire Truck, it requires one player to sit down in the arcade cabinet and control the front of the engine, while the other stands behind him and uses his own steering to control the rear section. Together, the players guide their fire engine around a scrolling playfield while keeping it on the road and avoiding oil slicks. Deployed in June 1978, Fire Truck was the first video game in which two players played together cooperatively rather than competitively and sold around 4,000 units.²⁸

²² Bernstein, 1982, 66.

²³ Milner, 2018.

²⁴ Atari Production Numbers, 1999.

²⁵ Bernstein, 1982, 66.

²⁶ Scott Stilphen, “DP Interviews Howard Delman,” Digital Press, 2011, http://www.digitpress.com/library/interviews/interview_howard_delman.html.

²⁷ Mayer, 2018.

²⁸ Frost & Sullivan, 1979, 176. While unit sales for the game are not recorded, it is noted as the third highest selling game of the year between Space Wars and Sea Wolf II. Other sources indicate that Space Wars sold 4,000–5,000 units that year and Sea Wolf II sold about 4,000 units, which allows a rough estimate of Fire Truck’s sales. Atari also created a single-player version called Smokey Joe because the full Fire Truck cabinet proved too large for many street locations. Smokey Joe is identical to the original game save that one player controls the truck by himself. Stilphen, 2011.

The second biggest manufacturer in the coin-op video game business remained the Midway Manufacturing subsidiary of Bally, the only major Chicago coin-op company that took the video segment of the coin-op market seriously throughout most of the 1970s. Unlike Atari, Midway relied almost exclusively on outside developers to create its products. The most significant of these firms remained Dave Nutting Associates, responsible for the hits Gun Fight and Sea Wolf in 1975 and 1976, respectively. Over the next two years, DNA’s – and by extension Midway’s – most significant games were sequels to those two products. In 1977, DNA created Boot Hill, which enhanced Gun Fight with improved graphics and a colorful backdrop of a stereotypical Western town. As in Tornado Baseball the year before, the company created this backdrop by sculpting the town in plastic and then incorporating a mirror into the cabinet to superimpose the computer graphics over top of it. For a brief time, this mirroring technique became a popular method to create elaborate graphical elements beyond the capability of coin-op hardware.

The next year, DNA hardware designer Jeff Frederiksen finished an important upgrade to the company’s microprocessor-driven hardware system. While the introduction of microprocessors greatly simplified PC board design by allowing many functions to be executed in software, early microprocessor-based arcade systems still required a great number of TTL circuits for display elements, I/O controls, and sound. To further simplify board design, Frederiksen reduced all these circuits to their own chips that could work in tandem with the processor.²⁹

Frederiksen’s original board was developed around the 8080 microprocessor created by Federico Faggin at Intel. In 1974, Faggin left Intel to establish his own company called Zilog with fellow Intel engineer Ralph Ungermann. Faggin planned for the company’s first product to be a single-chip microcontroller, but quickly realized margins would be slim in the crowded market. Therefore, he worked with Ungermann and Masatoshi Shima to develop a microprocessor called the Z80. Released in 1976, the Z80 was both cheaper and more capable than the Intel 8080 but maintained complete compatibility with the chip. As a result, it eclipsed Intel’s earlier designs and remained one of the most popular processors of the 8-bit era.³⁰

²⁹ Thacker, 2011.

³⁰ “Chip Hall of Fame: Zilog Z80 Microprocessor,” IEEE Spectrum, June 30, 2017, https://spectrum.ieee.org/tech-history/silicon-revolution/chip-hall-of-fame-zilog-z80-microprocessor.

For his new coin-op hardware, Frederiksen paired the Z80 with a custom-made graphics chip built by American Micro Systems that allowed for full-color graphics at what was then considered high resolution, 320 × 204.³¹ The first game created using this new system was Sea Wolf II, which played similarly to the original but featured colorful graphics and more ships and torpedoes on the screen at one time thanks to its advanced hardware. While not as big a seller as the original due to the generally depressed video game market, Sea Wolf II became one of the biggest video game hits of 1978 and sold 4,000 units.³²

Behind Midway came Exidy,³³ which rode the Death Race controversy to an increased national profile and larger distribution network. Like Atari and Midway, Exidy moved to embrace microprocessor-driven hardware in the wake of the success of Gun Fight. VP of engineering Howell Ivy led the push to adopt the new technology, as he had been working with microprocessors since developing a solid-state pinball prototype based around the 4004 processor for Ramtek in late 1974.³⁴ When others at Exidy proved skeptical of the new technology, Ivy purchased a 6502 processor from MOS Technology with his own money to demonstrate the capabilities it possessed.³⁵

For his first microprocessor-driven game, Car Polo, Ivy decided to make a splash by incorporating a full-color display, still highly unusual in the industry at the time due to the expense. Essentially a soccer match between four cars of different colors set against a bright green background, the game left little impact on the marketplace. A bowling game called Robot Bowl followed and experienced more success, remaining a top-ten earner on location for two years, but Ivy’s microprocessor-based hardware experienced its real breakthrough when he decided to liven up the game of Breakout with a new variant called Circus.

³¹ Thacker, 2011.

³² Kent, 2001, 102.

³³ Frost & Sullivan, 1979, 176.

³⁴ The game, called Lucky Dice, sported programming by Ivy and a playfield design by Bob Jonesi. Ramtek ultimately declined to release the game due to the high cost of establishing a pinball manufacturing line. McEwan, 1980.

³⁵ Smith, 2016, 216.

Circus retained Breakout’s basic conceit of bouncing one object off another to clear the top of the screen of targets, but it added sophistication to the experience by transforming the solid rows of bricks into colorful balloons moving across the screen,³⁶ the paddle into a seesaw, and the ball into two acrobats launching each other into the air. While the characters were little more than stick figures, their limbs flailed comically in the most impressive display of animation yet seen in a coin-operated video game. The added charm captured the attention of the industry when the game debuted at the 1977 AMOA Expo and spurred brisk sales as Exidy ramped up production to 100 units a day and resorted to storing cabinets in the parking lot as they ran out of space in their building.³⁷ By the end of its run, Circus sold over 7,000 units to become the best-selling game of 1978 and inspired its own round of clones.³⁸ Like Breakout, Circus also proved a big hit in Japan, where it was licensed by Taito as Acrobat for release in both an upright and table-top version and was widely cloned by other manufacturers as video continued to assert itself in the country’s shifting coin-op marketplace.

***

Rounding out the top five coin-op manufacturers were two relative newcomers to the business both based in the San Diego area: Gremlin Industries and Cinematronics. A science enthusiast from a young age, Tennessee native and Gremlin co-founder Frank Fogelman studied engineering at East Tennessee State in the heart of Appalachia in the late 1940s and early 1950s, interrupted by a stint in the U.S. Navy during the Korean War. Well versed in electronics during his military tour of duty, he gained employment with a Tennessee TV company after leaving the service. A visit to a friend in California led him to fall in love with a state in which it did not rain all the time.³⁹ After bouncing around several companies in San Diego and Los Angeles, he established his own firm in San Diego in 1959 called Aeromarine Electronics that focused on temperature controls for spacecraft and missiles and later expanded into marine navigation aids. The company fell on hard times in the mid-1960s when Fogelman developed a battery-powered phone that two different manufacturing firms he contracted ended up stealing from him to make on their own.⁴⁰

³⁶ Unlike in Car Polo, the color in Circus was achieved using overlays.

³⁷ Ellis, 2006, 49.

³⁸ Frost & Sullivan, 1979, 182.

³⁹ Frank Fogelman, interview with Ethan Johnson, November 18, 2016.

⁴⁰ Smith, 2016, 249.

Frustrated at his lack of control over the entire production process, Fogelman established a small contract electronics firm in 1970 with a friend from the aerospace industry named Carl Grindle. The duo decided to name their company after themselves as “Grindleman Industries,” but when they went to incorporate, the people they were working with in Delaware to set up the corporation misheard them say “Gremlin Industries” over the phone, and the name stuck. Over the next two years, Gremlin produced products ranging from integrated circuit testers to the French fry timers used by the Jack-in-the-Box fast food chain.⁴¹

Most of the early employees of the company came from Grindle’s former firm, Cohu Electronics, including the VP of engineering, Jerry Hansen. One day in 1972, a customer approached Hansen with a broken wall game and asked him to fix it. This was at the height of the wall game boom in the coin-operated amusement industry, and Hansen was shocked to learn from the customer that despite the primitive circuitry and limited gameplay of the unit, it was immensely profitable. Hansen figured he could create a better wall game himself and set to work designing a baseball variant called Play Ball. Released in 1973, the game proved a hard sell at first as the wall game market was in the midst of collapse, but the quality of the product won through, and it became such a massive success that Gremlin abandoned its other products to focus exclusively on coin-operated games.⁴²

Gremlin followed Play Ball with a skeet-shooting-themed wall game called Trapshoot that once again proved a hit. The company was beginning to run into trouble, however, because the circuit boards of the game were fairly complicated and straining the limits of TTL hardware. Hansen knew he would need to transition to a microprocessor-driven system, but no one at the company had the necessary programming expertise. A solution emerged when Hansen attended a presentation by chip company Signetics and met an engineer named Lane Hauck.⁴³

A math and physics major who loved technology, Hauck became a computing convert in the early 1970s when he beheld some of the earliest minicomputers. Hauck worked for Lockheed at the time and lobbied heavily for the firm to purchase a PDP-8. When the company refused, he shelled out $5,500 to buy one for himself. Soon after, he moved to San Diego to work for Spectral Dynamics and placed the computer in his back bedroom. He began playing games on the machine to help him understand the new technology and became particularly fascinated with the logic game Moo, a computerized version of the code-breaking game Bulls and Cows. Eager to share the game with his friends, he built a custom circuit board roughly the size of a handheld calculator dedicated to playing the game.⁴⁴

⁴¹ Ibid, 249–250.

⁴² Ibid, 250–251.

⁴³ Ibid, 251–252.

⁴⁴ Jeannette DeWyze, “San Diego’s Gremlin: How Video Games Work,” San Diego Reader, July 15, 1982.

Hauck followed his Moo handheld by constructing a computer the size of a bread box that could hook into a television to play blackjack. This contraption impressed Fogelman and Hansen when Hauck invited them to his home after their chance meeting at Signetics. They commissioned Hauck to create a new wall game for them, and he drafted a plan for a game called FoosWall that incorporated an Intel 8008 microprocessor.⁴⁵ Gremlin offered him a job, and he completed the game with help from George Kiss, the son of a former co-worker.⁴⁶

By 1976, Gremlin controlled 95% of the wall game market, but it was clear the coin-operated world was moving in a different direction. Hauck lobbied hard to enter the video game business, but Hansen and Fogelman demurred because they were hesitant to enter a volatile field in which their expertise was limited. Undeterred, Hauck began tinkering with a video game board on his own time in the hopes of winning them over. To test the system, he programmed a random walk process, a mathematical object that models the path of a succession of random steps. After watching an arrow move around the screen for a time, he got bored and decided to add a wrinkle to the exercise: the arrow could not visit the same square twice. After watching the arrow become trapped after a few steps, he realized he had a viable game idea.⁴⁷

Hauck and Kiss further developed this concept into a two-player game called Blockade, in which each player controls a cursor that moves around the screen while leaving a trail behind. Running into the trail of either cursor causes the player to crash and his opponent to score a point. The first player to score six points wins the game. Fogelman and Hansen were impressed with the game and agreed to put it out on test at a local miniature golf center. When the earnings from the prototype proved substantial, Gremlin brought the game to the AMOA show in November, alongside a four-player variant called CoMotion.⁴⁸

⁴⁵ Ibid.

⁴⁶ Ibid, and George Kiss, interview with the author, August 14, 2018.

⁴⁷ Smith, 2016, 253.

⁴⁸ Ibid, 254.

Blockade proved the hit of the show and generated orders for 3,000 units. Unfortunately, Gremlin had never produced a video game before, so by the time it could bring the game to market it faced an array of clones, including Barricade from Ramtek, Bigfoot Bonkers from Meadows, Checkmate from Midway, and Dominos from Atari. Gremlin did patent the concept and sued some of these companies for infringement, but the process of working through the courts moved too slowly to provide the company relief. With Gremlin unable to keep up with manufacturing, it lost most of its orders. The gameplay ultimately proved relatively unpopular with the public anyway, so the concept was essentially dead by the end of 1977.⁴⁹

Gremlin rebounded from the Blockade disappointment with a string of modestly successful games, but failed to score a major hit over the next two years. Consequently, sales lagged behind the company’s rapid growth, particularly after bad winter weather in 1977 prevented many of its games from reaching distributors. While the company pulled through, the exact same thing happened in 1978 and left the company teetering on the edge of collapse.⁵⁰ Fortunately, this was the period Sega was looking to improve the performance of its North American operations. Gremlin appeared a good fit due to its expertise with microprocessors, so in September 1978 Sega purchased Gremlin to serve as its primary R&D and manufacturing hub in North America.⁵¹

As Gremlin struggled to come up with a major hit after its misadventure with Blockade, its crosstown rival released one of the biggest games of 1978. Cinematronics was established in 1975 in Kearny Mesa, California, as a sideline business by two San Diego Chargers football players, Gary Garrison and Dennis Partee. The origins of the firm are a bit hazy, but it appears to have been formed to penetrate the cocktail Pong market that was already starting to fade by that date. Partee and Garrison apparently had no desire to manage their company day-to-day, as they acquired a third partner, a former beet farmer with a knack for salesmanship named Jim Pierce, to serve as president. Over the next two years, the company lost money as neither its cocktail Pong game nor a knock-off of Exidy’s TV Pinball called Flipper Ball sold well.⁵²

Despite these early difficulties, Pierce resolved to transform the company into a success. In mid-1976, he hired Cinematronics’ first game designer, Robert Shaver, who produced a game called Embargo that played similarly to Blockade and its many clones but featured graphics of ships and mines. In early 1977, Pierce joined with a mortgage company owner named Ralph Clarke to buy out Garrison’s share of the company and hired a veteran of recently defunct manufacture Chicago Coin named Bob Sherwood as his sales manager, providing the company with experienced coin-op management for the first time.⁵³ The key to the company’s turnaround, however, was a deal Pierce made with an MIT graduate named Larry Rosenthal to bring an accurate and cost-effective rendition of Spacewar! to the arcade for the first time.

⁴⁹ Smith, 2016, 254–255.

⁵⁰ Ibid, 258.

⁵¹ “Gremlin Acquisition Boosts Sega Profile in U.S. Market,” Cash Box, October 28, 1978, 72–74.

⁵² Smith, 2016, 270–271. Cinematronics apparently attempted to offer its Pong game in the home as well in 1976 according to a newspaper ad, but no details have emerged about this product.

⁵³ Ibid, 271–272.

An electrical engineering prodigy, Larry Rosenthal built his first circuit when he was four and earned a HAM radio license at 11. He was first exposed to computing in 1967 as a junior in high school as part of a group of students allowed to program on an IBM 360 computer owned by Sandoz Pharmaceutical once a week. Rosenthal first saw the game Spacewar! in May 1968 while paying a visit to MIT as a 17-year-old high school senior freshly accepted by the university. While the encounter proved memorable, he did not play the game again during his years at the school. After graduating in 1972 with a BS in electrical engineering, Rosenthal travelled across the country to the University of California at Berkeley to complete a master’s degree. That Christmas, he paid a visit to MIT and beheld a Computer Space unit in the student union. Rosenthal was shocked, but not due to amazement over this new technology. Rather, he was disdainful because he could not understand why the birthplace of Spacewar! would host such a primitive derivative of the landmark computer game.⁵⁴

After completing his masters in June 1973, Rosenthal was uncertain what to do with his life. A professor at MIT offered him a lab job, but he loved California and was not sure he really wanted to head back east. After spending the summer contemplating his situation, he resolved to remain in California and create a home version of Spacewar! based on his memories of seeing the game five years before. At the time, the only microprocessors on the market were Intel’s 4004 and 8008 models, which were not powerful enough to drive a display, so Rosenthal built his own custom computer out of TTL logic. When it came time to hook up the system to a television, however, he discovered the spaceships looked terrible at the standard resolution of 320 × 256. To make the game viable, Rosenthal would need to incorporate a vector display.⁵⁵

⁵⁴ Kevin Butler, “Space Wars,” Old School Gamer Magazine, September 2019, 14.

⁵⁵ Smith, 2016, 273.

Since the invention of the television in the 1920s, the standard method of creating a picture using a CRT has been to generate a raster image in which the electron gun rapidly traverses the entire screen from top to bottom, one horizontal line at a time, to produce a complete image as a collection of pixels. In contrast, a vector scan system aims the electron gun at a single point and then provides it a vector in order to draw a line before deflecting the beam in another direction, allowing it to draw wireframe models. This method is far too slow to draw an image that fills the entire screen like a television picture, but because the whole screen does not have to be redrawn in each frame, it allows the creation of individual shapes and models at a higher resolution than a comparable raster scan. While no longer necessary due to the capabilities of modern displays, vector monitors were often used to create high-end computer graphics in the 1970s and 1980s. They were not used in early arcade video games, however, because the monitors cost tens of thousands of dollars.⁵⁶

By using a standard television rather than a monitor and cutting a few corners in areas that did not matter for a video game, Rosenthal managed to cobble together a working vector graphics system that could sell for just $2,000 and programmed a version of Spacewar to run on it. In December 1976, he put his game out on test in a Berkeley arcade called the Pinball Palace owned by a friend, where it became a smash success that collected $500 in ten days. Nonetheless, trying to find a manufacturer for the game proved exceedingly difficult. Rosenthal met a Bally engineer at a Bay Area game conference and invited him to see the game at its test location. The engineer was impressed and invited Rosenthal to Chicago to demonstrate his technology, but the Bally executives were unhappy that the game used a multi-button control scheme rather than a joystick and offered a paltry 0.5% royalty, so Rosenthal turned them down.⁵⁷

Rosenthal began lugging a prototype of his hardware around the Bay Area in a suitcase to provide demonstrations to distributors but continued to find no takers. Finally, he approached an arcade cabinet manufacturer called Tempest Products and asked them to help him form a company to manufacture and market the game. The Tempest executives were impressed, but they had just been bought out by Ramtek and could therefore not provide Rosenthal the support he needed. They did, however, call in an attorney to help Rosenthal work out a deal somewhere else, which is how the game landed at Cinematronics.⁵⁸

⁵⁶ Ibid, 274–275.

⁵⁷ Ibid, 275–277.

⁵⁸ Ibid, 277.

By early 1977, Cinematronics was desperate for a hit, so not only did Jim Pierce agree to manufacture the game and give Rosenthal a 5% royalty, he also allowed Rosenthal to retain the rights to his vector hardware technology, which he had patented back in 1975.⁵⁹ Cinematronics debuted the game at the AMOA show in October 1977 under the name Space Wars in a calculated effort to ride the popularity of the recently released film Star Wars. The game became a surprise hit of the show and generated $2 million in orders. The struggling manufacturer teetered on the brink of bankruptcy and did not have the funds, facilities, or expertise to deploy a product on a massive scale, so to ramp up production Pierce installed a new management team in early 1978 led by Tom Stroud, a veteran operator in Indiana and California who had most recently been running Par Tee Golf in San Diego. Stroud bought out remaining co-founder Dennis Partee’s share of Cinematronics to become a co-owner of the company.⁶⁰

Pierce and Stroud tapped veteran coin-op salesman Bill Cravens as their new marketing director, who worked his distributor contacts in Los Angeles to raise the money needed to keep the firm running while Space Wars was built. He also brought in an old friend and Atari veteran named Kenneth Beuck to whip the assembly line in shape. By February, Cinematronics was producing 75 units of the game a week, which did not come close to meeting demand. In April, the company added more manufacturing space before moving to a new larger facility in June. With its fantastic graphics and engaging competitive gameplay alongside a renewed interest in space combat themes after the success of Star Wars, Space Wars became the biggest video game hit the industry had seen since Breakout in early 1976. By the end of 1978, Cinematronics had manufactured between 4,000 and 5,000 units and remained in full production of the game.⁶¹ By the end of its run, the company had produced over 7,000 units of Space Wars,⁶² which became the first video game not made by Atari or Midway to top the operator polls of both Replay or Play Meter and remained a top ten earner into the middle of 1980. The success of the game was an outlier in this period, however, as video continued to lose ground to pinball.

***

In 1978, video game collections declined from an estimated $334 million in 1977 to $304 million. Units on location also declined from 173,700 to 164, 600.⁶³ Space Wars was the top earning game on location, but the next two best earners were Sprint 2 and Sea Wolf, both of which debuted in 1976. Few games released over the preceeding two years offered more than cosmetic changes or minor gameplay tweaks over previous top earning games and therefore proved unable to sustain earnings for more than a couple of months. Operators consequently became more selective in their purchases, and sales of new games stagnated at around 62,000 units.⁶⁴ According to a survey conducted by Replay in the fall, 47% of operators planned to buy fewer video games in 1979, while just 28% planned to buy more.⁶⁵

⁵⁹ Reports that Rosenthal demanded a 50% royalty appear to be greatly exaggerated.

⁶⁰ Ibid, 278–279.

⁶¹ Frost & Sullivan, 1979, 184.

⁶² Smith, 2016, 279–281.

⁶³ Vending Times Census of the Industry, 1981, 63.

⁶⁴ Home & Coin Operated Electronic Games (New York: Frost & Sullivan, 1979), 177.

⁶⁵ Smith, 2016, 338

In addition to lack of innovation the main factor in the decline of coin-operated video games was the phenomenal rise in the sale of pinball machines spurred by the introduction of solid-state hardware that promised fewer maintenance headaches and more flexible scoring mechanics to completely transform the game. The average weekly take of a pinball game hovered somewhere between $50 and $65 in 1978 to become the highest earning game on location for the first time in years, far beyond video, which earned in the low $40 range, and even beating out the usual champion, the pool table. While no video game reached sales of 10,000 units in 1978, Bally alone introduced seven machines that would ultimately reach that figure, the most popular of which was a Playboy-themed game that debuted in December and sold over 18,000 units. In 1979, over 200,000 pinball machines were sold to set a post-war industry record.

Even Atari, the originator of the coin-operated video game industry, realized it would need to evolve to stay relevant in the new business climate. In early 1976, the company established a pinball division under the auspices of manufacturing VP Gil Williams, which debuted its first table, The Atarians, at the MOA show that November. Over the next two years, Atari focused on building solid-state pinball machines with extra wide playfields in an attempt to stand out from the competition. The company also stepped up its efforts in the home, where the microprocessor was poised to lead a technological revolution just as great as the one currently sweeping through the arcade.