History of Video Games

Video games have spread to a variety of venues, from arcades and dedicated console systems to computers of all kinds, the Internet, and mobile devices. They are used for entertainment, education, business, job training, and research in psychology and the social sciences. The history of video games begins around the mid-twentieth century, but their development sped up considerably when they became a commercial product in the early 1970s, and a decade after that they were already a formidable cultural force. Video games occupy an important position in the history of public computing, since arcade video games and home consoles were the first computers used and purchased by consumers, introducing computers to the public.

Early Developments

The idea for video games began in 1947, when Thomas T. Goldsmith and Estle Ray Mann filed patent number 2,455,992, which described an interactive game played on a cathode-ray tube; but their patent seems to have been forgotten, leaving little or no impact on the industry. Apart from a few early experiments, certain early mainframe games are generally thought to be the first ones to qualify as video games, with Spacewar! (1962), developed by Steve Russell, Martin Graetz, and Wayne Witaenem at the Massachusetts Institute of Technology (MIT), often considered the first complete game by today’s standards. Mainframe computers were the large computers found mostly in university laboratories, and the first communities of game players and programmers formed around them. The development of mainframe games continued into the 1970s, and also included the first online games, like Maze War (1974) and Spasim (1974), which were among the first games to network players together, allowing them to play from different locations at the same time.

Mainframe games, however, were only available to university students and faculty. But video games would soon become more than just a novelty and reach a broad audience. The two most promising possibilities were television and the arcade. People were already enjoying arcade games, such as pinball and electromechanical games like racing games and those with mounted guns and miniature shooting galleries, so it would be just a matter of adapting video games to the arcades. At home, television sets could be used to display video games, once they were designed for that use.

In 1966, inventor Ralph H. Baer began developing his “Brown Box” series of experiments at Sanders Associates. His prototypes led to the first home video game console, the Magnavox Odyssey, in 1972. The Odyssey included twelve built-in games, activated by plug-in “carts” (unlike cartridges, which actually house the ROM chip that store a game, the “carts” merely completed a circuit with the console, where the games were actually stored), along with colored screen overlays, playing cards, and dice. New versions of the Odyssey continued to appear until 1978. The Odyssey was successful, selling 350,000 units (Baer, 2005, p. 76), and the system was exported to countries around the world, introducing home video games on a global scale, setting the stage for what would quickly become a global industry.

Meanwhile, Bill Pitts and Hugh Tuck made a version of Spacewar!, which resulted in Galaxy Game (1971), the first coin-operated video game, which was installed in Stanford University’s student union. The first mass-produced coin-operated video game appeared a month later; Nolan Bushnell and Ted Dabney’s Computer Space (1971), which was also based on Spacewar!. The controls were too complicated for players, but the game found mild success and allowed Bushnell and Dabney to found Atari, and their next game, PONG (1972), became the first hit video game, and was so popular that for a while it became synonymous with video games.

An Industry Begins

After PONG’s release, video arcade games displaced electromechanical arcade games, becoming the dominant type of arcade game, with the Odyssey and PONG inspiring many copycat games and systems. Integrated circuits reduced the size of electronic components and made many new electronic products possible, like pocket calculators and handheld electronic games. Home and personal computers appeared around this time as well, with the Altair 8800 selling as a mail-order kit in 1975, and Apple I computers in 1976.

In 1976, General Instruments released the AY-3-8500 chip, which included all the components needed to make a ball-and-paddle game. Companies rushed to buy the chip, and dozens of companies produced second-rate products to try to beat their opponents to market. Around seventy companies were among the competitors, and one of the most successful, Atari, was bought by Warner Communications in 1976 for $28 million.

The market flooded with derivative games, while their novelty faded, eventually leading the video game industry to the crash of 1977. The pocket calculator industry had seen a similar crash, and in both cases, there was no lack of consumer demand; it was the large number of competitors coupled with severe price drops and the lack of profits that followed, especially for smaller companies that could not withstand huge losses.

The industry recovered quickly, thanks to the appearance of the second generation of home video game technology; programmable video game consoles which used cartridges, as opposed to the dedicated consoles which had all of their games built in, beginning with the Fairchild Channel F in 1976. But the Channel F was quickly overshadowed by another cartridge-based system released the following year, the Atari VSC 2600. Atari was the only company to produce arcade video games, home console systems, and home computers, allowing it to port its popular titles from one platform to another. The game, however, that really helped to popularize the system was Atari’s home version of Taito’s Space Invaders (1978), the Japanese arcade game that was so popular that Japan suffered a shortage of 100-yen coins and had to mint more of them (Kent, 2001, p. 116).

After Space Invaders, the arcade took off, with many soon-to-be-classic games appearing over the next few years: Pac-Man (1980), Missile Command (1980), Battlezone (1980), Defender (1981), Tempest(1981), Qix (1981), and Q*bert (1982),

Atari’s success led to other new home console systems, including the Coleco Telstar in 1978, the Mattel Intellivision in 1979, the ColecoVision in 1982, and the Atari 5200 in 1982. Over the years, many companies made cartridges for the Atari 2600, including Activision, Imagic, Data East, Mattel, and even companies outside the video game industry, including Parker Brothers, 20th Century Fox, and Quaker Oats. Home consoles were also competing with the other industry sectors, including arcade games, handheld games, home computer games, and online games.

New Technologies and Growing Competition

In 1976, a new toy appeared that started an industry: Mattel’s Auto Racing, a handheld electronic game. The next year Mattel released Football (1977), and other sports games like Baseball and Basketball would appear in 1978. Other companies followed suit: Coleco had its Head-to-Head series of electronic handheld sports games; Milton Bradley’s Microvision, the first cartridge-based handheld system, appeared in 1979; Nintendo entered the market in 1980 with its Game and Watch series; and other companies like Bandai and Mega Corp. had their own series of pocket-sized handheld games.

Home computers also became a platform for video games. The Texas Instruments TI99/4a home computer even had a cartridge slot built into it, and home computers allowed users to write their own games. Atari produced its own line of home computers, including the Atari 400, Atari 800, and the Atari ST series. Home computers also helped video games gain respectability, since they helped teach programming and the logic thinking it required.

Online games had been around since networked games on mainframe computers, and in 1978, the first publicly available bulletin board system (BBS) came online, as well as the first multi-user domain (MUD). BBSs allowed users to post messages to read by other members of the online community, and trade files as well, whereas MUDs allowed real-time interaction between users who were logged in simultaneously. Both became venues for online gaming in the early 1980s, as user interaction was structured into role-playing games.

By the end of the 1970s, video games had become a powerful force in popular culture as their popularity increased. But the home market was saturated with cheap imitations of successful games, and despite slashed prices, consumer interest could only be sustained for so long.

The Great Video Game Industry Crash and Recovery

Warnings indicated that consumer interest in video games was dropping and that the boom would not continue. In the last quarter of 1982, arcade profits fell unexpectedly. The number of arcades had nearly doubled from 1980 to 1982, but in 1983 over 2,000 of them would close (Mehrabian & Wixen, 1983; Alexander, 1983). The market’s oversaturated nature became apparent in 1983, when industrywide profits amounted to only $2.9 billion, down about 35 percent from 1982 (“The Trend Is Back,” 1984).

The crash worsened into 1983 and lasted over two years. Major players like Mattel, who had once been the third largest video game maker, left the market altogether. Atari lost over half a billion dollars in 1983, despite being the market’s major player. Only one new home system appeared in 1984, Rick Dyer’s Halcyon, and it was a failure. Video games’ novelty had worn off, the golden age of arcade games was over, and no one knew how long it would be until the industry bounced back, or even if it would.

The crash finally ended in 1985 when a foreign import assured US game makers that home consoles could still be popular. The system that helped the industry recover appeared in Japan in 1983 as the Nintendo Famicom, and was renamed the Nintendo Entertainment System (NES) for its release in North America in 1985. The 8-bit NES introduced the third generation of home video game consoles, and was a success, with a large library of games.

Home computers were growing stronger as a market sector and had advantages when it came to games; better storage capacity due to floppy disc drives, the ability to save games, online capabilities, and the potential for hobbyists to write their own homebrew games. These advantages encouraged certain genres, like adventure games, which had longer stories and playing times, and sports games and simulations that required more detailed graphics and interfaces.

Computer data storage also advanced during the 1980s, with new media like the 3.5-inch diskette, and in 1985, the CD-ROM, which allowed room for full-motion video (FMV) to be incorporated into games. A few years later, home console systems began the changeover to CD-ROM technology, and the Nintendo 64 would be the last major system to use cartridges for some time. Greater computing power also helped three-dimensional graphics become possible, and growing numbers of arcade games, and later home games, began using them.

New Innovations

During the 1990s, three-dimensional graphics became the new standard in arcade games. Many genres switched over from two-dimensional graphics to three-dimensional graphics, especially racing games, fighting games, sports games, and shooting games. An increasing number of home games also featured three-dimensional graphics as well, both pre-rendered graphics and those rendered in real time.

Arcade video games fought back by introducing new features that home games did not offer. The number of three-player and four-player arcade games increased dramatically; there were even some six-player games, like Sega’s Hard Dunk (1994), Atari Games’s T-Mek (1994), Konami’s X-MEN (1992), Namco’s Galaxian 3 (1990), and Attack of the Zolgear (1994). Some racing games accommodated up to eight players when the cabinets were networked together, and one game, Sega’s Daytona USA 2: Power Edition (1999), could network up to forty players (Wolf, 2007, p. 137).

Many arcade games also featured innovative interfaces and cabinet designs, which players could sit on, ride in, or balance on, and two games even involved virtual reality; Virtuality’s Dactyl Nightmare (1992) and its sequel, Dactyl Nightmare 2: Race for the Eggs! (1994). Sports games had interfaces with fishing rods, soccer balls, bowling balls, pool cues, boxing gloves, and more, and rhythm-and-dance games introduced new interface devices like dance pads, full-sized guitars, sets of miniature drumheads, short piano keyboards, and DJ turntables. The popularity of these games would lead to similar peripherals for home games, bringing home games even closer to arcade games.

Home game consoles grew more powerful with each new generation of technology. After the NES and other consoles of the third generation, a new generation of 16-bit machines appeared, including the NEC PC-Engine/Turbogrfx-16 in 1987, the SEGA Mega Drive/SEGA Genesis in 1988, and SNK Playmore’s Neo Geo and the Super Nintendo Entertainment System (SNES), both released in 1990. Fourth generation home consoles were also the first to be regularly sold in Europe, where imports were expanding the market.

The fifth console generation was mainly 32-bit machines, including the Fujitsu’s FM Towns Marty in 1991; the 3DO Interactive Multiplayer and the Atari Jaguar, both released in 1993; the SEGA Saturn and the Sony PlayStation, both released in 1994; and one late entry, the 64-bit Nintendo 64, released in 1996. Competition between these systems was fierce, with claims and comparisons being made as each company asserted the superiority of its own system over others.

The rise of the Internet paved the way for new opportunities for the video game industry. After 1995, when the Internet was commercialized, multiplayer online games grew, accommodating larger numbers of players, eventually becoming known as massively multiplayer online role-playing games (MMORPGs), with hundreds of thousands of players playing together around the world. Handheld games and portable gaming systems constituted another market sector of games that grew in popularity during the 1990s. Nintendo’s Gunpei Yokoi developed a handheld console system in 1989, the Nintendo Game Boy; that same year that the Atari Lynx was released, and in 1990 the SEGA Game Gear followed. These systems, with their tiny screens and limited graphics capabilities, proved simpler games with low resolution graphics still could attract an audience.

The global reach of video games made the industry even more competitive, as technology advanced and more venues for video games appeared, including new kinds of handheld games. The first cell phone game appeared in 1994 (a version of Tetris (1985) for the Hagenuk MT-2000), and other mobile devices like the iPod (introduced in 2001) would become platforms for games. Just as cell phones came to be the dominant communication medium in countries without land-line infrastructures, mobile games provided an alternative to console-based gaming. Mobile gaming is thus a major market sector in developing and undeveloped regions, where higher-priced console systems have less of a foothold.

A Diversified Industry

By the end of the 1990s, home console competition was reduced to only a few major players who could afford the necessary research and development. Atari left the industry, no longer producing hardware, and the first system of the sixth generation, the SEGA Dreamcast, released in 1998, would be the company’s last console system. The Dreamcast was the first console, however, with a built-in modem, a feature that all later consoles would have. Other systems of the sixth generation included the Sony PlayStation 2, the Nintendo GameCube, and the Microsoft Xbox, with Microsoft being the first new console manufacturer to enter the market in over a decade.

The sixth generation quickly gave way to the seventh generation of consoles, which included the Microsoft Xbox 360 released in 2005, and the Sony PlayStation 3 and Nintendo Wii, both released in 2006. All three systems had online capabilities and services, could play other media like audio CDs and DVDs, and in the case of the PS3, also introduced high-definition gaming on Blu-ray discs. More recently, an eighth generation has appeared, which includes the Nintendo Wii U, the Sony PlayStation 4, the Microsoft Xbox One, and the Nintendo Switch.

During the 2000s, dozens of new MMORPGs came online, with the numbers of players rising into the millions. Web-based games became a new type of online game, one often associated with casual games, and were played on personal computers as well as cell phones, and eventually iPods, iPads, and other devices used for mobile gaming. Thus, the video game industry has now diversified into new venues, technologies, countries, and market sectors, ensuring the continued growth of the industry for some time to come.

In 2022 the global video gaming industry has been estimated to be almost $400 billion. The mobile gaming segment of this market was placed at almost $250 billion. An area that could see a rise in popularity is Virtual Reality (VR). VR is an immersive 3-D technology where early iterations were available as early as the mid-1980s. VR is characterized by placing a user in a 360-degree environment. In the mid-decade of the 2010s, VR re-emerged in more interactive forms that suggested to many a revolution in terms of visualization and gaming experience. While VR has made significant inroads in many areas, it has not had its predicted impact on video games. Nonetheless, the VR gaming market was estimated at over $32 billion in 2023. New technologies, such as more capable headsets, can potentially turn VR into a more popular gaming space.

Projections are that Artificial Intelligence (AI) will begin to make its presence felt in video games. AI can be used in game development and add to more dynamic universes that will emerge in future generations of games. Another predicted avenue will see the continued popularity of professional leagues where participants play sports-themed video games and win monetary prizes. Many of these leagues are now sponsored by established global sports organizations. A prediction is for e-gaming to evolve into a paid profession. Collaborative video gaming is another trend many predict for the future. This type of gaming allows multiple participants to work as teammates to accomplish objectives.

About the Author

Mark J. P. Wolf is a professor in the Communication Department at Concordia University Wisconsin. He is author or editor of over twenty academic books, including The Medium of the Video Game (2001), The Video Game Theory Reader (2003), The Video Game Explosion: A History from PONG to PlayStation and Beyond (2007), The Video Game Theory Reader 2 (2008), Before the Crash: Early Video Game History (2012), Encyclopedia of Video Games: The Culture, Technology, and Art of Gaming (two-volume first edition, 2012; three-volume second edition, forthcoming), The Routledge Companion to Video Game Studies (2014), Video Games around the World (2015), the four-volume Video Games and Gaming Cultures (2016), Video Games FAQ (2017), and two novels for which he is looking for a publisher. He has been invited to speak in North America, South America, Europe, Asia, and Second Life. He lives in Wisconsin with his wife Diane and his sons Michael, Christian, and Francis.

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Marr, Bernard. “Game On! The Top 10 Video Game Trends in 2024.” Forbes, 29 Sept. 2023, www.forbes.com/sites/bernardmarr/2023/09/29/game-on-the-top-10-video-game-trends-in-2024/?sh=6c21242e381d. Accessed 3 May 2024.

Wolf, Mark J. P. The Video Game Explosion: A History From PONG to PlayStation and Beyond. Greenwood Press, 2007.