an early history of digital entertainment

An Early History of Digital EntertainmentAssociate Professor Roberto Dillonroberto.dillon@jcu.edu.au

How the industry started

1972: Magnavox Odyssey

1971:Computer Space

1972: Atari Pong

October 1977:

The VCS was a HUGE success

• Home consoles became mainstream• BUT….• Bushnell had sold Atari to Warner in 1976

– More cash was needed for funding mass scale VCS production

• Atari new (Warner appointed) management was very “old fashioned”– CEO Ray Kassar: “I understand creative people: I

worked with towel designers before”

– No royalties were paid– No credits were given

Consequences…

• First Easter Egg (Adventure, 1979)We are a brave knight seeking a lost Enchanted Chalice that has been stolen by an evil wizard…

Consequences…

• Defections:• October 1, 1979:

Birth of third party software houses(obviously Atari didn’t like it and sued Activision, but lost)

1979: Intellivision: First Console War!

• General Instrument CP1610 (16-bit) CPU running at 895 kHz• 1456 bytes of SRAM• 160 x 96 resolution (broken into 8x8 cells)•16 color palette, all of which can be on the screen at once •8 sprites

PlayCable (1981)

• First downloadable game service in history

• Continuously broadcasted code through cable channels

• Small games only: maximum 4K per game

First Sport licenses & first game playing as a “bad” guy

NBA Basketball (Mattel,1979),NFL Football,NASL Soccer,MLB Baseball,NHL Hockey,PGA Golf Dracula

(Imagic,1983)

First implementation of Fog of War and D&D licenses

Advance Dungeons & Dragons: Cloudy Mountain (Mattel, 1982)

Advance Dungeons & Dragons: Treasure of Tarmin (1983)

Utopia (Mattel, 1981)

Civilization (Microprose, 1991)

Melody Blaster (Mattel, 1983) Guitar Hero (Harmonix, 2005)

Public Perception

• Videogames more popular than ever• Love or Hate reactions…

– Since the very beginning games were seen as “detrimental” and bad for the youth

• 1976: Exidy releases “Death Race” in the arcades

• Drive a car to run over zombies and score points.• Only 500 cabinets were made

► 1981: In the Philippines, President Marcos actually banned videogames, giving people two weeks to “surrender” any videogame to the army and police forces

► Violators faced a fine of $600 or 6 months to 12 years in jail.

► 1982: Several small towns in the USA closed their game arcades

Low Quality Games• Everyone wanted to be a 3rd party developer…

Low Quality Games• 1982: Atari feeling invincible…

• Paid exclusive rights for consoles • Development rushed in 6 weeks• Installed user base: 10 million• Units manufactured: 12 million!

• Results:• 5 million units unsold• 7 million unsatisfied customers

Low Quality Games• 1982: Atari feeling invincible…

• Warner forced Atari to buy exclusive rights from Spielberg for $25 million• Rushed in 5 weeks• 4.5 million units manufactured• 1.5 million units sold

A new competition

1983 Crash

• On December 7th 1982 Atari missed its overly optimistic financial forecast (10% profit increase vs. 50%). Stock tumbled 33%. Panic ensued.

• Video Games were officially classified as a “fad”• Industry revenue in NA dropped from $3.2 billion to $100 million

(1985)

Meanwhile, in Japan…

• In 1977 Nintendo releases an Odyssey inspired console in Japan: Color TV Game 6 and 15

Donkey Kong (1981)

Failed deals: Nintendo, Commodore and Coleco

• 1981: Mr. Tomczyk at Commodore realizes the potential of Nintendo arcade games on home computers. Nintendo likes the idea of expanding its market but the deal is cancelled at the last minute by Jack Tramiel.

• 1982: Just before the Crash…

• Nintendo noted that its arcade games ran very well on ColecoVision and asked to buy the console for 10% above production cost to sell it in Japan.

• Coleco wanted to give only a 10% discount on retail price.

Failed deals: Nintendo, Commodore and Coleco

• 1983: Nintendo Famicom released in Japan…

1985: A New Strategy

• Avoid direct competition with computers and differentiate it from old systems: It’s not “just a video game”!

• Need to be presented as an innovative toy/entertainment system for the whole family

• From “Family Computer” to “Nintendo Entertainment System”

1985: A New Strategy• Avoid the overcrowded low quality market that

characterized the Atari 2600 days– Developers had to ask for a license– Nintendo manufactured the games themselves

• to include a security system and enable the game to work

– No one could publish more than 5 games per year– Games had to be approved first

1985: A New Strategy• The strategy worked. And the NES build a terrific catalog.

• In a few years, it’s market share in North America reached 89%, leaving competition far behind.

A winning strategy?

• Like Atari, now Nintendo also felt invincible and in full control.– And did anything it could to

maintain the status quo

A winning strategy?

• Developers and Publishers became more and more unhappy with Nintendo and its strict and controlling policy.

• This created a new opportunity…

• No matter how powerful, HW needs SW!

• Main CPU: Motorola 68000 running at 7.67 MHz (NTSC) or 7.61 MHz (PAL)• Yamaha YM2612 FM synthesizer and a Texas Instruments SN76489A PSG, controlled by a Z80•72kB of RAM, as well as 64 kB of video RAM• up to 64 colors at once from a palette of 512

(1988)(1989)

A new strategy!• Offering everything Nintendo was forbidding:

– Publish as many games as needed!– Could discuss higher royalties and even own cart

manufacture on a case by case basis– More open to adult content

– Seal of quality recommended but not required

Lessons learntSport Licenses (Tom Kalinske: from Mattel to Sega)

Sonic The Hedgehog (1991)

• Needing a mascot as strong as Mario

Lessons learnt• Aggressive marketing

Results• SNES (released in 1991) and Genesis went

head to head till 1993

SEGA America vs. Japan• Sonic: with easter egg, yet again!

Credits are hidden on the “Sonic Team Presents” screen, and completely unseen in every region outside of Japan. If you have a Japanese Megadrive you can use the code C, C, C, C, C, C, Up, Down, Down, Down, Left, Right then enter Down + A + B + C to turn the screen's background to white, making the text visible.

SEGA America vs. Japan

• In 1994 Sega started fragmenting its offering (32X and Saturn), losing market share as result.

Sony and Nintendo• Since 1988 Sony worked on the

audio chip for the SNES• Agreement with Nintendo for a

SNES CD add-on– Sony owning the rights for CD

based games– Plus their own new SNES-clone

system, “Play Station” to play both cd and carts

• Sony announces the agreement at CES 1991…

Sony and Nintendo• The day after, Nintendo announced a partnership

with Philips for the CD add on, publicly humiliating Sony!

• In the end, the cd add-on didn’t happen– In another anachronistic move, Nintendo decided

to stick to carts, further losing market share.

PlayStation (1994)

• CD based (cheaper, more storage than carts)– Aggressive price policy ($299)

• Focus on 3D graphics, action and story oriented games.• Aggressively buying existing studios

– Psygnosis

• Setting up a 3rd party friendly environment– 250 studios signed on day one in Japan alone

PlayStation (1994)

• Quickly taking over a huge share of the market.– First console to sell more than 100 million units– And more than 1,000 games in its catalog!

32.93 million 9.5 million

102.5 million

In conclusion…

40 years in the video game industry feel like 4,000 years in human civilization!

Keep things simple (UI/UX)

• We need to constantly evolve to remain competitive: can never rest on laurels!

• Failed deals can point us to even bigger successes

Thanks for your kind attention!

roberto.dillon@jcu.edu.au