History of arcade video games

The history of arcade games originated in 1971 with the introuction of Computer Space by Nolan Bushnell and Ted Dabney, who followed on that success the next year with Pong. The industry grew modestly until the release of Space Invaders in 1978, creating a Golden Age of arcade games that lasted through 1983. At this point, saturation of the market with arcade games led to a rapid decline in both the arcade game market and arcades to support them. The arcade industry continues to sustain itself on providing more immersive experiences in contrast to console and computer games.

Timeline

Before arcade games

Game of skill amusements had been a staple of fairs since the 19th century. These transitioned into redemption games with the introduction of skee-ball in 1909, in which players paid an operator a small fee to play and attempted to earn points for prizes. Redemption games soon added coin-operated features to automate the process, with the first such game being Baffle Ball in 1931. However, many of these machines were manufactured by companies that had roots in gambling devices such as slot machines, and thus led to many states and cities banning such games.

Coin-operated Pinball machines that included electric lights and features were developed in 1933, but lacked the user-controlled flipper mechanisms at that point; these would be invented in 1947. Though the creators of these games argued that these games were still skill-based, most governments still consider them a game of luck and ruled them as gambling devices, banning them as well. Beyond this, pinball machines drew the younger generation to the games, making morally-concerned elders across the generation gap fear what the youth were doing and considering the machines "tools of the devil", furthering these bans. These bans were slowly lifted in the 1960s and 1970s; New York City's ban, placed in 1942, lasted until 1976, while Chicago's was lifted in 1977. Where pinball was allowed, pinball manufacturers carefully distanced their games from gambling, adding "For Amusement Only" among the game's labeling, eliminating any redemption features, and asserting these were games of skill at every opportunity. By the early 1970s, pinball machines thus occupied select arcades at amusement parks, at bars and lounges, and with solitary machines at various stores.

Arrival of arcade games (1971−1978)

In the video game area, the first recognized video game Spacewar! had been developed at MIT on a PDP-1 mainframe computer in 1962. As the group that developed its migrated across the country to other schools, they took Spacewar!' source code to run on other mainframe machines at those schools. At Stanford University, students Bill Pitts and Hugh Tuck used a PDP-11 mainframe to build an initial prototype of a coin-operated version of Spacewar! which they called Galaxy Game, which they demonstrated at the university in November 1971, making it the first known arcade game. Simultaneously, Nolan Bushnell, while working at Ampex in California in 1969, was invited by a colleague to see Spacewar! running on Stanford University's PDP-6 computer. Bushnell got the idea of recreating the game on a smaller computer, a Data General Nova, packaging it inside a case and adding a monitor, controls, and a coin-operated feature as to make a system that people could pay money to play the game. He and fellow Ampex employee Ted Dabney, under the company name Syzygy, worked with Nutting Associates to create Computer Space, the first commercial arcade game, released in November 1971. More than 1000 units of the game were sold, and while not the success Bushnell had hoped, it proved to him the potential for the coin-operated computer game. Pitts and Tuck had made a second prototype of Galaxy Game at this point, but it was far too costly compared to Computer Space to be profitable, and discontinued their efforts.

Bushnell got the idea for his next game after seeing a demonstration of a table tennis game on the Magnavox Odyssey, the first home video game console that was based on the designs of Ralph H. Baer. Decided to go on their own, Bushnell and Dabney left Nutting and reformed their company as Atari Inc., and brought on Allan Alcorn to help design an arcade game based on the Odyssey game. Pong was first released in limited numbers in November 1972 with a wider release by March 1973. Pong was highly successful, with each machine earning over US$40 a day, far greater than most other coin-operated machine at the time, and over 4000 units shipped by the end of 1974.

With Pong's success, numerous other coin-operated manufacturers attempted to capitalize on the success of arcade games. Most took to trying to copy the games that Atari had already made with small alterations, leading to a wave of clones. Bushnell, having failed to patent on the idea, considered these competitors "jackals" but rather than seeking legal action, continued to have Atari devices new games. Separately, Magnavox and Sanders Associates, through which Baer had developed the basics of the Odyssey, sued Atari, among the other manufacturers, for patent violations of the basic patents behind the electronic game concepts. Bushnell opted to settle out of court, negotiating for perpetual licensing rights to Baer's patents for Atari as part of the settlement fee, which allowed Atari to pursue the development of additional arcade games and bringing Pong in a home console form, while Magnavox continued legal against the other manufacturers. It is estimated that Mangavox collected over US$100 million in awards and settlements from these suits over the Baer patents.

By the end of 1974, more than fifteen companies, both in the United States and Japan, were in the development of arcade games. A key milestone was the introduction of microprocessor technology to arcade games with Taito's Gun Fight (Western Gun as released in Japan), which could be programmed more directly rather than relying on the complex interaction of integrated circuitry (IC) chips.

Video games were still considered to be adult entertainment at this point, and treated as with pinball machines as games of skill, "For Amusement Only", and placed in locations that children would likely not be at such as bar and lounges. However, the same stigma that pinball machines had seen in the prior decades became to appear for video games. Notably, the release of Death Race in 1976, an arcade game influenced by the 1975 film Death Race 2000 and which involved driving over gremlins on screen, drew criticism in the United States for being too violent, and created the first major debate on violence and video games.

The Golden Age (1978-1982)

Main article: Golden age of arcade video games

In 1978, Taito released Space Invaders, first in Japan followed by its North American release. Among its novel gameplay features that drove its popularity, the game was one of the first to maintain a persistent high score table . and though simplistic, used an interactive audio system that increased with the pace of the game. The game was extremely popular in both regions. In Japan, specialty arcades were established that featured only Space Invader machines, and Taito estimated that they had sold over 100,000 machines in the country alone by the end of 1978, while in the United States, over 60,000 machines had been sold during 1980. The game was considered the best-selling video game and highest-grossing "entertainment product" of its time.

Space Invaders led to a string of similar games over the next five years that are considered the "Golden Years" for arcade games. Among these titles include:

• Asteroids (Atari, 1979)
• Galaxian (Namco, 1979)
• Berzerk (Stern Electronics, 1980)

• Defender (Williams Electronics, 1980)
• Pac-Man (Namco, 1980)
• Missile Command (Atari, 1980)

• Rally-X (Namco, 1980)
• Centipede (Atari, 1981)
• Donkey Kong (Nintendo, 1981)

Of these, Pac-Man had even a larger impact on the popular culture when it arrived in 1980; the game itself was popular but people took to Pac-Man as a mascot, leading to merchandise and an animated series of the same name in 1982. The game also inspired the Gold-certified song "Pac-Man Fever" by Buckner & Garcia. Pac-Man sold about 400,000 cabinets overall by 1982.

These games, along with numerous others, created dedicated video game arcades around the world, often located in shopping malls, bowling alleys, and skating rinks, as well as standalone facilities. Bushnell established his chain of Chuck E. Cheeses pizzerias and arcades, while Craig Singer expanded his Tilt arcade from Six Flags Mall to numerous malls across the United States. Time reported in January 1982 that there were over 13,000 arcades in the United States, with the most popular machines bringing in over US$400 in profit. Twin Galaxies, an arcade opened by Walter Day in Ottumwa, Iowa, became known for tracking the high scores of many these top video games, and in 1982, Life featured the arcade, Day, and several of the top players at the time in a cover story, bringing the idea of a professional video game player to public consciousness.

Arcade machines also found their way into any area where they could be placed and would draw children or young adults, such as supermarkets and drug stores. Pinball machines also saw a small resurgence, sharing common space with arcade games and providing a niche experience that could not be provided by video games. The Golden Age was also buoyed by the growing home console market which had just entered the second generation with the introduction of game cartridges. Atari had been able to license Space Invaders for the Atari 2600 which became the system's killer application. Licensing of arcade hits became a major business for the home markets, which in turn spurred further growth in the arcade field. By 1981, the arcade game market had an estimated global value of US$8 billion.

The decline of the arcade (1983-1990)

Though 1982 was recognized as the height of success of the video game arcade, many in the industry knew the success could not last too long. Walter Day had commented in 1982 that there were "too many arcades" by that point for what was really needed. Additionally, players required novelty and new games, and thus required older games to be discontinued and replaced with new ones, but not all new games were as successful as those at the height of the Golden Age. Knowing that players were seeking more challenge, game manufactures designed the newer games to be harder, but this caused less-skilled mainstream players to be turned away.

Coupled with this was increased pressure on possible harmful impacts of video games on children. Arcades had taken steps to make their venues as "family fun centers" alleviate some concerns, but parents and activists still saw video games as potentially addictive and leading to aggressive behavior. The U.S. Surgeon General C. Everett Koop spoke in November 1982 about the potential addiction of video game by young children, as part general moral concerns around youth in the early 1980s. These fears not only affected video game arcades, but other places where youth would normally be able to hang out without adult supervision such as skating rinks.

Further impacting the arcades, the rising popularity of home consoles threatened the arcades, since players did not have to repeated spend money to play at arcades when they could play at home. But with the 1983 video game crash which drastically affected the home console market, the arcade market also felt its impact as it was already waning from oversaturation, loss of players, and the moral concerns over video games, all stressed by the early 1980s recession. For about eight years, arcade games were relatively dormant. Arcades still existed, and new games were released but with little novelty in gameplay and without the financial success of the Golden Age. Competition from the new consoles like the Nintendo Entertainment System that had revitalized the home console industry were drawing players away from the arcades. By 1991, the arcade game market has fallen to US$2.1 billion.

Arcade game manufacturers still brought in technology improvements that were being made in computer technologies. Sega AM2's Hang-On, designed by Yu Suzuki and running on the Sega Space Harrier hardware, was the first of Sega's "Super Scaler" arcade system boards that allowed pseudo-3D sprite-scaling at high frame rates, and considered one of the first 16-bit arcade games. Hang-On also used of arcade cabinet that included a mounted motorbike-like control unit on a hydraulic system, which the player used to control the game by tilting their body to the left or right. This game began the "Taikan" trend, the use of motion-controlled arcade cabinets in many arcade games of the late 1980s, two decades before motion controls became popular on consoles.

Ongoing technological improvements (1991−1999)

Arcade games gained a resurgence with the introduction of Street Fighter II by Capcom in 1991, as it introduced modern elements to the beat 'em up genre and creating the fundamental one-on-one fighting game, featuring numerous characters to select from and a wide range of special moves to use. Street Fighter II sold more than 60,000 cabinets worldwide and drew other arcade manufacturers to make similar fighting games, including Mortal Kombat in 1992, Virtua Fighter in 1993, and Tekken in 1994. In 1993, Electronic Games noted that when "historians look back at the world of coin-op during the early 1990s, one of the defining highlights of the video game art form will undoubtedly focus on fighting/martial arts themes" which it described as "the backbone of the industry" at the time. Mortal Kombat, however, led to further controversy over violence in video games due to its gruesome-looking finishing moves. When the game was ported to home consoles in 1993, it led to U.S. Congressional hearings on violence in video games, which resulted in the formation of the Entertainment Software Ratings Board in 1994 to avoid government oversight in video games. Despite this, fighting games remained the dominate style of game in arcades through the 1990s.

3D polygon graphics were popularized by the Sega Model 1 games Virtua Racing (1992) and Virtua Fighter (1993), followed by racing games like the Namco System 22 title Ridge Racer (1993) and Sega Model 2 title Daytona USA, and light gun shooters like Sega's Virtua Cop (1994) and Mesa Logic's Area 51 (1995), gaining considerable popularity in the arcades. By 1994, arcade games in the United States were generating revenues of US$7 billion

Around the mid-1990s, the fifth-generation home consoles, Sega Saturn, PlayStation, and Nintendo 64, began offering true 3D graphics, improved sound, and better 2D graphics, than the previous generation. By 1995, personal computers followed, with 3D accelerator cards. While arcade systems such as the Sega Model 3 remained considerably more advanced than home systems in the late 1990s, the technological advantage that arcade games had, in their ability to customize and use the latest graphics and sound chips, slowly began narrowing, and the convenience of home games eventually caused a decline in arcade gaming. Sega's sixth generation console, the Dreamcast, could produce 3D graphics comparable to the Sega NAOMI arcade system in 1998, after which Sega produced more powerful arcade systems such as the Sega NAOMI Multiboard and Sega Hikaru in 1999 and the Sega NAOMI 2 in 2000, before Sega eventually stopped manufacturing expensive proprietary arcade system boards, with their subsequent arcade boards being based on more affordable commercial console or PC components.

In 1997, Konami began releasing a number of music-based games that used unique peripherals to control the game in time to music, including Beatmania and GuitarFreaks, culminating in the 1998 release of Dance Dance Revolution (DDR) in Japan, a new style of arcade game that used a dance pad and required players to tap their feet on appropriate squares on the pad in time to notes on screen in synchronization to popular music. DDR later released in the West in 1999, and while it did not enjoy the same popularity in Japan initially, it led the trend of rhythm games in arcades.

Regional divergences (2000−present)

Worldwide, arcade game revenues gradually increased from US$1.8 billion in 1998 to US$3.2 billion in 2002, rivalling PC game sales of US$3.2 billion that same year. Arcade video games continue to be thriving industry in both Japan and China, where arcades are widespread across the country.

Since the 2000s, arcade games and arcades in the United States have generally had to continue as niche markets to adapt to remain profitable, competition against the allure of home consoles. Most arcades were unable to sustain on operating arcade games alone, and have since added back redemption systems for prizes along with non-arcade games for these, such as Dave & Busters. Arcade games were developed to try to create experiences that could not be had via home consoles, such as motion simulator games, but their expense and space required was difficult to justify over more traditional games. The US market has experienced a slight resurgence, with the number of video game arcades across the nation increasing from 2,500 in 2003 to 3,500 in 2008, though this is significantly less than the 10,000 arcades in the early 1980s. As of 2009, a successful arcade game usually sells around 4000 to 6000 units worldwide.

The relative simplicity yet solid gameplay of many of these early games has inspired a new generation of fans who can play them on mobile phones or with emulators such as MAME. Some classic arcade games are reappearing in commercial settings, such as Namco's Ms. Pac-Man/Galaga: Class of 1981 two-in-one game, or integrated directly into controller hardware (joysticks) with replaceable flash drives storing game ROMs. Arcade classics have also been reappearing as mobile games, with Pac-Man in particular selling over 30 million downloads in the United States by 2010. Arcade classics have also begun to appear on multi-game arcade machines for home users.

Main article: Video gaming in Japan

A man playing a drumming arcade game (Drummania) in Tsukuba, Ibaraki, 2005.

Girls playing The House of the Dead III in an amusement arcade in Japan, 2005.

However, in the Japanese gaming industry, arcades have remained popular since the 2000s. Much of the consistent popularity and growing industry is due to several factors such as support for continued innovation and that developers of machines own the arcades. Additionally, Japan arcade machines are notably more unique as to US machines, where Japanese arcades can offer experiences that players could not get at home. This is constant throughout Japanese arcade history. As of 2009, out of Japan's US$20 billion gaming market, US$6 billion of that amount is generated from arcades, which represent the largest sector of the Japanese video game market, followed by home console games and mobile games at US$3.5 billion and US$2 billion, respectively. According to in 2005, arcade ownership and operation accounted for a majority of Namco's for example. With considerable withdrawal from the arcade market from companies such as Capcom, Sega became the strongest player in the arcade market with 60% marketshare in 2006. Despite the global decline of arcades, Japanese companies hit record revenue for three consecutive years during this period. However, due to the country's economic recession, the Japanese arcade industry has also been steadily declining, from ¥702.9 billion (US$8.7 billion) in 2007 to ¥504.3 billion (US$6.2 billion) in 2010. In 2013, estimation of revenue is ¥470 billion.

The layout of an arcade in Japan greatly differs from an arcade in America. The arcades of Japan are multi-floor complexes (often taking up entire buildings), split into sections by game types. On the ground level the arcade typically hosts physically demanding games that draw crowds of onlookers, like music rhythm games. Another floor is often a maze of multi-player games and battle simulators. These multi-player games often have online connectivity tracking rankings and reputation of each player; top players are revered and respected in arcades. The top floor of the arcade is typically for rewards where Players can trade credits or tickets for prizes.

In the Japanese market, network and card features introduced by Virtua Fighter 4 and World Club Champion Football, and novelty cabinets such as Gundam Pod machines have caused revitalizations in arcade profitability in Japan. The reason for the continued popularity of arcades in comparison to the west, are heavy population density and an infrastructure similar to casino facilities.

Outside of Sega Arcade, a famous arcade located in Akihabara, Japan

Former rivals in the Japanese arcade industry, Konami, Taito, Bandai Namco Entertainment and Sega, are now working together to keep the arcade industry vibrant. This is evidenced in the sharing of arcade networks, and venues having games from all major companies rather than only games from their own company.