31
Intelligent Television
On August 9, 1977, a group of engineers from Cyan Engineering and the microelectronics department of the Atari Consumer Division promulgated the basic parameters for a new hardware project codenamed Colleen after spending several months brainstorming the next step for Atari after the VCS.1 While Atari’s first programmable console was only just being launched, the pace of video game development had progressed rapidly between 1975 and 1977 from simple dedicated consoles to full-fledged programmables, and the Atari engineers worried the VCS would already be obsolete after just three years on the market. During the same period, the microcomputer market began its transition from kits to fully assembled systems suitable for the general consumer. Atari now faced a dilemma: should its new system be a more advanced video game or a home computer? When presented this question, Nolan Bushnell and Joe Keenan decided it should be both.2 “Colleen” was the result: a new home system planned to ship in two configurations as both an entertainment machine and a serious computer.
Jay Miner once again led the design of the new Atari system, ably assisted by Joe Decuir. One of the primary areas they wanted to upgrade compared to the VCS was its graphics capability by including more RAM and a frame buffer to allow for a bitmapped screen. As a bitmap was not necessarily the best option to render graphics in all situations, they also decided to incorporate character-based graphics and boost the machine’s sprite-generating capability.3 To achieve these graphics, Miner and Decuir designed two new chips.
The new ANTIC chip was designed to control the background graphics, which could either be bitmapped or character based. The chip could also switch graphics modes on the fly as it drew the screen so that, for example, a player score could be displayed at the top of the screen in a character-based mode while the main playfield was portrayed as a bitmap. The second chip was an improvement on the video chip in the VCS called the CTIA, which provided the colors for the background graphics from a palette of 128 and generated up to four 8-bit player objects and four 2-bit missile objects that could be superimposed on the background and update independently from the rest of the screen. The combination of these two chips would allow for fast action gameplay set against detailed, colorful backdrops.4
As breadboarding began on the chips, a brainstorming meeting was held at Pajaro Dunes on November 29 in which the specifications for the two systems were finalized. The computer system, which retained the name “Colleen,” would feature 4K of RAM, a built-in keyboard, four controller ports, an audio cassette interface, and a serial interface allowing it to connect to peripherals like printers and disk drives. The low-end system, dubbed “Candy,” would be a pure video game console lacking the serial interface or keyboard, though it would be possible to connect a keyboard through two of the controller ports.5
By January 1978, a large team was tackling the chips for the system under the leadership of Jay Miner, including Joe Decuir and Francois Michel on the ANTIC, George McLeod on the CTIA, and Doug Neubauer on the POKEY chip designed to handle paddle control and keyboard inputs as well as audio. The architectures of both Colleen and Candy were largely complete by the middle of the year, and in November they acquired their official names: the Atari 400 and 800 Personal Computer System.6 Atari revealed the 400 and 800 to the world at a press conference in New York on December 14 at which Nolan Bushnell emphasized their capabilities as game machines. The company announced the computers would be available in August 1979 and priced at $500 for the 400 and $1,000 for the 800.7 The line between video games and home computers had already begun to blur and now looked like it might disappear entirely.
***
By 1978, the transition from kits to fully integrated computers like the TRS-80 and Apple II appeared to presage a world in which pure video game systems would be supplanted by home computers that could play all the same games and balance the checkbook too. This line of thinking produced the Bally Professional Arcade and the Odyssey2, which both promised to offer certain features of a home computer like a keyboard or a tape drive as either a core component of the system or an add on and were marketed as intermediate products to ease the transition to a home computer. It also spurred APF, still hanging in the programmable market despite negligible market share, to release a docking station in 1979 called the Imagination Machine to transform its MP-1000 game console into a home computer through the addition of 8 KB of RAM, a tape drive, and a keyboard at a cost of $499. Atari did little to reposition its system as a computer, merely supplying “keyboard” controllers for the VCS in 1978 and a Basic Programming cartridge developed by Warren Robinett in 1979, but it was also developing its 400 and 800 computers.
For Mattel Electronics, the emergence of console-computer hybrids presented an opportunity to enter the video game space by establishing its own niche through a system featuring better graphics than competing systems from Fairchild and Atari while offering longer and richer gameplay experiences. In May 1977, Mattel Electronics head Ed Krakauer worked with Richard Chang and David Chandler from the Mattel Toys Design & Development Department to define the basic parameters of such a system, after which Chandler was charged with developing it.8
Chandler began by surveying the current state of video game chip technology. At the time, National Semiconductor was just breadboarding a new graphics chipset that appeared promising but was expensive at $46.00 per unit. At the June CES, Chandler examined two more chipsets, one from MOS Technology that did not incorporate sprites and a chip created by Stephen Maine of General Instruments called the Standard Television Interface Adapter, or STIC, that was cheap at $25.00 a pop, but lacked graphics RAM. Over the next couple of months, Chandler worked with National to develop a simplified version of its chip and with GI to add video RAM and make a few minor modifications to STIC. These changes altered the price of the two chips to $33.00 and $30.00, respectively. Chandler decided to go with the National chipset, but the meeting to close the deal in August turned into a panicked National telling Mattel that entering the video game business was no longer a good idea.9
Mattel Toys President Ray Wagner decided to place the console project on hold, but Chandler remained in contact with GI. After GI delivered a more positive report on the state of the video game industry in October, Wagner reinstated the project with a mandate to have something ready to show at Toy Fair in February 1978.10 With little time to complete a prototype, Chandler approached a firm called APh Technological Consulting Company established by Caltech graduates Glen Hightower and John Denker in 1975 to connect Caltech students with businesses that could benefit from their services.11 APh had already been working on Mattel’s handheld line; now it turned its attention to developing the software for what was currently being called the Mattel Electronics Cartridge Video Game.
Hightower assigned David Rolfe, late of Technical Magic, to develop an Exec program for the system to handle basic software functions. Needing a game to test the Exec, Rolfe also began developing a baseball game at the same time. Graphics were provided by David James, the Mattel designer who supplied the art for the Mattel handheld games as well. Drawing on his experiences developing Star Fire for Exidy, Rolfe developed routines for moving objects around the screen, creating sound and music, loading graphics from RAM, and other essential elements of creating a video game to ease the burden on the creators of individual titles. For Toy Fair, where Mattel displayed its technology behind closed doors, Rolfe created a basic running man demo to highlight the capabilities of the system.12
After Rolfe finished the Exec, APh hired four Caltech students to program the first round of games for the system.13 In May, Mattel announced it would unveil the Mattel Electronics Cartridge Video Game at the June CES, and that a limited release would follow in the fall at a wholesale price of $160.14 Just a few weeks later, delays in completing the chipset at GI forced Mattel to cancel the unveiling and scratch a 1978 release entirely.15
In September 1978, Mattel Electronics was elevated from a marketing unit to its own division within Mattel Toys. Ed Krakauer remained with the division as its general manager, while another executive, Jeffrey Rochlis, was elevated to the presidency.16 A theater major in college, Rochlis spent three years in the Army before breaking into the advertising business with Benton and Bowles in 1970. After spending time as an account supervisor at McCann-Erickson, he became the vice president of marketing for the Aurora Products Division of Nabisco in 1973. In late 1976, Krakauer recruited Rochlis to serve as marketing director for new business development at Mattel Toys.17 In this role, he was integral to marketing Mattel’s handheld game line and championed the programmable console project with upper Mattel management.
In December, Rochlis announced the full extent of Mattel’s console plans. In addition to a base console expected to retail for $230, the company planned to introduce a keyboard add on that would turn the system into an entry-level computer for a total cost of $500.18 The plan was to have the system on the market by the second quarter of 1979, but in truth Mattel was unlikely to meet this release schedule because the STIC and RAM chips for the system were still not ready.
The console was publicly unveiled at the January 1979 CES. By the June CES, the retail price of the system had risen to $250 and deliveries were promised by August.19 That month, Mattel announced GTE Sylvania would be manufacturing the system,20 which was now being called the Intellivision, a combination of the words “Intelligent Television.” Production was subsequently delayed to September. In October, the console was still nowhere to be seen as Mattel announced a final price hike to $275 and the imminent start of test markets in New York, Chicago, Los Angeles, San Francisco, Philadelphia, Baltimore, and Washington, DC.21
In November, Mattel finally had to admit that Intellivision would not roll out in large numbers in 1979. While the chipset was finally ready to go, GI had not yet been able to ramp up production and produce it in large quantities.22 Rather than multiple test markets across the United States backed by print and television advertising as originally planned, Mattel’s manufacturing partner Sylvania introduced a limited number of units under its own name through a single department store chain, Gottschalks headquartered in Fresno, California. Mattel and Sylvania partnered with the store because they could not guarantee how many systems would reach retail, and Gottschalks proved an understanding partner.23 Mattel sold 50,000 systems on the year.24
Upon release, the Intellivision was powered by a 16-bit GI CP1610 microprocessor with a 10-bit bus. The heart of the unit was the oft-delayed STIC chip, capable of a display resolution of 159 × 96, colorful tiled backgrounds of up to 16 colors, and the generation of eight hardware sprites, which GI called MOBs. Like the Odyssey2, the system stored a set of alphanumeric characters and basic shapes in a ROM chip, but it also included 512 bytes of graphics RAM to allow individual games to load custom graphics into memory. Additional system memory included 352 bytes of system RAM and 240 bytes of scratchpad RAM to temporarily store calculations. The Exec occupied two 2K ROM chips of its own. Sound was provided by a programmable sound generator (PSG) capable of outputting three channels.
Four games were available for the system at launch, Las Vegas Poker & Blackjack, which was bundled with the system, Backgammon, Math Fun, and a Tank variant called Armor Battle featuring colorful background graphics and varying movement speeds on different types of terrain. To control these games, Mattel developed a novel controller consisting of a directional pad in the shape of a disk that allowed movement in 16 directions, four action buttons on the sides of the controller, and a 12-button keypad to perform special functions in individual games. To help players keep track of special commands, each cartridge that used the keypad shipped with an overlay outlining the commands for each button.
In March 1980, Mattel executed a limited launch of the Intellivision under its own name in select department stores around the country.25 Full nationwide distribution began that August.26 Mattel supported the system with television advertising in select markets that emphasized its potential as a cheap, easy-to-use computer.27
By the end of 1980, 19 games were available for the system. To raise the profile of these products, many of them sported licenses from organizations relevant to the subject of the game, the first widespread use of licenses in the video game industry. Baseball was rebranded Major League Baseball, while Backgammon was renamed ABPA Backgammon after a backgammon player’s association. Other branded games in the launch lineup included NFL Football, NBA Basketball, NASL Soccer, PGA Golf, NHL Hockey, and two education titles sponsored by The Electric Company, Math Fun and Word Fun. Other titles included Checkers, Horse Racing, Las Vegas Roulette, Tennis, Auto Racing, and two action-strategy games that combine movement on a strategic map with arcade-style combat, Space Battle and Sea Battle.
The long delay in bringing the Intellivision to market took its toll on the Mattel Electronics staff. The company originally hired Malcom Kuhn as sales director soon after his dismissal from Atari, but he left the company mid-1979 as he grew frustrated at the continued delays in getting the Intellivision to market.28 In mid-1980, Mattel Electronics Marketing VP Tim Huber left the company as well. The exodus reached its high point in the fall when both Jeff Rochlis and Ed Krakauer left the company. Rochlis left to create a new electronic game company with the Doyles, who had brought Parker Brothers into electronic games, while Krakauer returned to consulting. These defections wreaked havoc with Mattel’s sales and marketing plans and contributed to low-consumer awareness and sluggish sales. The situation was exacerbated by a high defect rate on the first manufacturing run and the initial positioning of the product as a low-cost home computer despite the keyboard component still being nowhere in sight.
In September 1980, Joshua Denham assumed the presidency of Mattel Electronics.29 A Mattel veteran who joined the firm in 1965,30 Denham had at various times run distribution and Far East operations and since 1972 had been serving as VP of Operations for Mattel Toys,31 where he played a critical role in holding the company together alongside Ray Wagner as the legal drama surrounding the Handlers unfolded in the mid-1970s. In his operations role, Denham became intimately familiar with the electronic handheld business,32 making him a logical choice to succeed Rochlis and Krakauer at Mattel Electronics.
Denham’s new VP of sales and marketing was Frank O’Connell, a Cornell graduate with broad experience in consumer product marketing who knew Ed Krakauer from their shared time in the food products industry. O’Connell’s first move on joining the company was to run market research on Intellivision and its main competitor, the VCS. In the process, he discovered that consumers were not particularly interested in the Intellivision as a home computer but did see it as a superior video game machine to the VCS due to its improved graphics.33 O’Connell and Denham decided the best way to proceed was a series of head-to-head commercials showcasing the superior graphics of the Intellivision vis-à-vis the VCS.34
Head-to-head advertising had recently made waves in the toy industry in December 1979 when Coleco ran a commercial comparing Electronic Quarterback to Mattel’s Football game to point out the advanced features of its handheld compared to the older Mattel model.35 That commercial notwithstanding, comparative advertising was simply not done in the toy industry at the time. Indeed, when Denham brought the concept to the advertising agency, it initially refused to produce such an ad and tried to convince Denham that it was a terrible idea. Denham responded that he was leaving on a four-day trip to Japan, and when he returned, he would have a comparative concept or would be looking for a new agency.36
Once the concept was in place, Mattel Electronics required a spokesperson to lead the commercial. Someone recommended George Plimpton, who had become a minor celebrity as a literary critic and sportswriter known for his erudition and adventurous spirit. O’Connell called Plimpton, who turned out to be an avid gamer. O’Connell brought some games to Plimpton’s club, and the duo played them all night. Plimpton agreed to do the commercials on the spot, though formal negotiations still had to go through Plimpton’s agent. In the end, Plimpton agreed to do the ad for an incredibly reasonable rate.37
Denham and O’Connell felt they had one real shot to turn around perception on Intellivision before it became the latest in a long line of also-rans in the programmable console market. Therefore, they convinced Mattel it was critical to blanket the airwaves during the holiday season and secured a $3.5 million advertising budget.38 Starting in late November,39 millions of Americans watched as Plimpton walked up to two screens demonstrating Atari’s and Mattel’s baseball and football programs side-by-side. The Atari products featured crude, mostly black backgrounds and a small number of flickering players, while the Mattel games sported colorful playfields and sharp, well-animated character graphics. Plimpton declared Mattel the winner, and many consumers could not help but agree.
The Plimpton commercials had an immediate impact on sales of Intellivision, which by the end of the year sold out its complete stock of 190,000 units alongside 1 million cartridges. This gave Mattel roughly 20% of the console market by dollar volume and 11% of the cartridge market.40 While it still trailed Atari, it looked set to become the biggest threat to the market leader’s total dominance. Meanwhile, a second threat was brewing as Atari suffered a series of defections by members of its programming staff who pioneered a new concept in video game development: the third-party software publisher.