Videogames entered the world not with a bang, but as a series of stutter steps that culminated in the humbly-named Brown Box. From such humble beginnings, a dynasty strides forth, a multi-billion dollar a year industry birthed almost entirely by a persistent television engineer named Ralph H. Baer . His idea was a simple one: Make a box that attaches to television sets and provides some kind of additional entertainment, the kind that people will pay for, and if even 1 percent of TV owners purchase one, a business is born. It was a simple idea, but the execution took quite a bit of work.
The idea first came to him in the summer of 1966 , but from there, it was a start and stop affair. The late '60s weren't a good time for playful things, especially among weapon-makers not working on making weapons. His work started at Sanders Associates (a defense contractor), in "late '66," Baer says, but progress moved in fits and starts. This was largely because Sanders had bigger projects on hand, Baer's was "a couple guys in a room, and they were called away half the time to go do more important work. ... [We had] engineers and techs worrying about military programs [and] putting stuff on the moon. Not games. The only reason I did it was because I'm a TV engineer by degree."
The business logic was easy to see, he said. "If I can license somebody to build a box that attaches to 1 percent of [TVs], in any sense, we've got a business. It turned out to be a lot more than 1 percent." They made progress through the years, and "for the better part of two and a half years, we went through a series of models, which finally wound up with the Brown Box." A problem remained with the prototype, which was: "Now that we've got it, what the hell do we do with it?"
Convincing TV set manufacturers that the Brown Box would make them a mint took some work, he says. A number of deals fell through with big television manufacturers, like RCA and Zenith. "Everybody was impressed, but only RCA tried to give us a contract," Baer said, adding, "But they tried to snooker us, and we finally decided to walk away from that." Fortune smiled upon them after "somebody [Bob Enders] on the RCA team left and became a VP of marketing for Magnavox." Enders worked to arrange a meeting at Magnavox, and the company executives were impressed enough to start production. The humbly-named Brown Box would create an industry, in 1972, as the Magnavox Odyssey, the first widely-available, commercially-backed game console.
"The Odyssey came out in May of '72," Baer says. "By December, 100,000 of them had been sold. That probably means that 2-300,000 people had [access to] one," though they shared his earlier dilemma. "They had to figure out what the hell videogames were in the first place, simultaneously." The arcade business soon followed. "The Pong arcade game showed up in fall of '72. It was a knockoff of the Odyssey game, because Nolan Bushnell, he'd played an Odyssey game at a dealership, a Magnavox dealership, in May of that year, and he started the arcade business going." Magnavox would go on to win a patent infringement lawsuit against Bushnell, but the electronic gaming genie was out of the bottle. "By the time '74 came, the Odyssey was already obsolete," Baer says. "We'd sold 350,000 of those, which wasn't too shabby," especially considering it was the first of its kind.
Unlike the cutting-edge consoles of today, Baer describes his first effort as "primitive. We repurposed stuff with discrete transistors when integrated circuits were already available, but we couldn't use them. ... It was too expensive. So, in a sense, we already built the stuff one generation behind [the] current technology. Now, four more years passed before we could get a license fee. Now we're two generations behind." That gap has narrowed over time, he says. It's "extremely small nowadays, compared to what it was 20 years ago," though that's largely because "so much money is thrown into every product."