In January 1982 Time put video games on its cover and tried to measure the noise coming out of America’s arcades. It reckoned that 20 billion quarters had “poured last year into the arcade monsters”, some $5 billion, and that players had spent 75,000 man-years at the machines. That, Time said, was twice the take of Nevada’s casinos and almost twice the $2.8 billion gross of the American film industry. It also admitted that the figure “may be the public relations roar of a healthy young industry beating its chest”. Coleco liked the passage enough to quote it at length in an advertisement.
The boom had started four years earlier, in Japan, with Taito’s Space Invaders. It peaked in 1981 and 1982, when games that are still played today arrived one after another. By the summer of 1983 the trade press was reporting a slump, and within two years some of the makers had left the business.
Fast facts
- Began: with Space Invaders, released in Japan in July 1978.
- Peak: 1981-82, the years of Pac-Man’s American success, Defender and Donkey Kong.
- Size: about $5 billion in American arcades in 1981, according to Time; other estimates differ widely (see below).
- Slump: reported by the trade from mid-1983.
- Main makers: Taito, Namco, Atari, Williams, Nintendo, Konami and Sega, with Midway building Japanese games under licence for America.
How big was it?
Nobody counted the quarters, so the boom’s size depends on who is estimating and what they include. Time’s $5 billion for 1981 covered arcade machines only, and the magazine set an estimated $1 billion for home consoles and cartridges alongside it. Video Games Player repeated the 20 billion quarters in September 1982, inside a larger claim that Americans had spent “six billion bucks on video games” the year before. David Sheff’s history of Nintendo put the coin-op business at “$8 billion per year” when Nintendo of America opened in 1980, “the largest entertainment industry in the United States”. Looking back in 2010, Edge gave much smaller numbers for home and coin-op games together: $454 million in 1978, rising to $5,313 million in 1982. The figures cannot all be right, and none of them comes with a published method, so they are best read as signs of scale, not measurements.
The sales of single games are firmer, because the manufacturers counted cabinets:
| Game | Maker | Machines sold | Source |
|---|---|---|---|
| Space Invaders (1978) | Taito | over 100,000 in Japan within a year | Creative Computing, 1980 |
| Asteroids (1979) | Atari | more than 70,000 | Video Games, 1982 |
| Pac-Man (1980) | Namco; Midway in America | 100,000 in American arcades by August 1982 | Video Games, 1982 |
| Defender (1981) | Williams | 60,000 in America | Eugene Jarvis, in Edge, 2010 |
| Scramble (1981) | Konami; Stern in America | about 10,000 in its first two months | US Court of Appeals, 1982 |
| Donkey Kong (1981) | Nintendo | about 60,000 more after the first 2,000 | David Sheff, Game Over |
Jarvis did the sums for his own game. The average Defender cabinet in America took about 2,500 quarters a week, he told Edge, “so you would have up to 150 million quarters in the games every week”.
The games
Each hit of the period showed the others something new. Space Invaders gave the player targets that fought back. Namco’s Galaxian (1979) brought colour and aliens that peeled off to dive at the player. Atari’s Asteroids (1979) drew its rocks with a vector display, a technique Cinematronics had brought to the arcade with Space Wars two years before (see vector graphics). Pac-Man (1980) replaced shooting with eating, and its designer, Toru Iwatani, set out to draw women into the arcades. In 1981 Defender and Scramble took the shoot-’em-up off the single screen and made it scroll, and Donkey Kong gave players a carpenter to climb girders; Nintendo of America named him Mario. Sega’s Zaxxon (1982) looked down on its fortress at an angle.
The trade did not always know what it had. At the Chicago trade show in 1980 the industry expected Namco’s Rally-X to be the hit, not Pac-Man. Defender’s five buttons and a joystick frightened them too. “They played for ten seconds and died,” Jarvis said, and they wrote it off as too hard.
Everywhere
“Arcade locations were like Starbucks back then — literally everywhere,” Scott Miller, who wrote about video games for the Dallas Morning News, told Edge. Coin-op games stood in launderettes, cinemas, hotels and restaurants, and even supermarkets installed them. Iwatani believed Pac-Man had caused some of it. It “brought the female audience into the arcade”, he said, “and made the amount of income so great that businessmen started opening up arcades”.
The games spilled out of the arcades. Pac-Man appeared on pyjamas, lunch boxes and watches, and Buckner & Garcia’s “Pac-Man Fever” sold more than a million copies as a single; the Pac-Man entry has the details. Walt Disney Pictures released Tron, a film about a man trapped inside a video game, in 1982. Players became news too. In Ottumwa, Iowa, Walter Day’s Twin Galaxies arcade began keeping world records, and the new American games magazines printed his tables. “The media, in particular, was amazed by players who could actually beat the games,” Day said.
The slump
The slump was first reported from inside the trade. When Video Games reported from the Amusement Operators Expo in the spring of 1983, it began by noting that “the coin-op industry is experiencing a slump”, which was narrowing the choice of games in any one arcade. The talk of the show was a new kind of machine, Cinematronics’ laserdisc game Dragon’s Lair, which “many believe may well be the future direction of coin-op games”. There was also, the magazine noticed, “a renewed interest in conversions”: kits that turned an existing cabinet into a new game. The money mattered: JoyStik put the price of a new game at $2,000 to $5,000 that September, and the cost of updating an old one at about $500 to $1,000.
By November 1984 Electronic Games was writing of “what is being dubbed ‘the great arcade slump’”. One arcade owner it interviewed blamed the boom itself: “due to ‘pie-in-the-sky’ reports by the media, many people jumped into operating videogame arcades”, spreading the players too thinly. At the end of September 1984 Columbia Pictures closed Mylstar Electronics, the former D. Gottlieb & Co., whose Q*bert had been a hit the year before. Its chairman, Francis Vincent Jr., blamed “adverse market conditions and the persistent deterioration of the markets for our products”.
The slump in the arcades ran alongside the collapse of the home console market, the 1983 video game crash, but it was a separate story with its own causes. Atari’s coin-op side survived the break-up of Atari in 1984 and carried on as Atari Games.
Afterwards
The period became history quickly. At the end of 1984 Electronic Games reported that the Smithsonian’s National Museum of American History had accepted coin-op machines for its collection, among them Pong, Pac-Man and Dragon’s Lair. The arcades did not disappear. In 1991 Capcom’s Street Fighter II started what Capcom called the “Street Fighter II boom”, and fighting games filled arcades around the world again, a decade after Pac-Man.
Sources
- Time, 18 January 1982, cover story, as quoted in a Coleco advertisement in Electronic Games vol. 1 no. 4, June 1982, p. 12: 20 billion quarters, $5 billion, 75,000 man-years, the $1 billion home market, the Nevada casinos and the $2.8 billion film gross, “the public relations roar”. Edge issue 217, August 2010, p. 83, quotes the cover line: “Gronk! Flash! Zap! Video Games Are Blitzing The World”.
- Dan Gutman, Video Games Player vol. 1 no. 1, September 1982, p. 38: “six billion bucks on video games” and “twenty billion quarters”.
- David Sheff, Game Over (GamePress edition, 1999), chapter 5, “Coming to America”: the coin-op business “at $8 billion per year”.
- “When Videogames Ruled the World”, Edge issue 217, August 2010, pp. 83-87: the $454 million and $5,313 million figures; Scott Miller and the places coin-op games stood; Walter Day on the media; the 1980 trade show and Rally-X; Jarvis on the Defender show, 60,000 machines and 150 million quarters a week; Iwatani on the female audience and new arcades; Tron; Space Wars in 1977.
- Creative Computing vol. 6 no. 9, September 1980, p. 18: Space Invaders, over 100,000 machines in Japan within a year.
- Video Games vol. 1 no. 1, August 1982, pp. 23-26: Pac-Man’s 100,000 American machines.
- Steve Bloom, “The incredible, incredible story of Atari”, Video Games vol. 1 no. 3, December 1982, p. 48: Asteroids, 70,000 machines.
- Stern Electronics, Inc. v. Kaufman, 669 F.2d 852 (2d Cir., 20 January 1982): Scramble’s 10,000 machines in two months.
- Video Games vol. 1 no. 10, July 1983, p. 41: the Amusement Operators Expo, the slump, Dragon’s Lair and conversion kits.
- JoyStik vol. 2 no. 1, September 1983, p. 12: the cost of new games ($2,000 to $5,000) and of updating old ones ($500 to $1,000).
- Steve Madwed, Electronic Games vol. 2 no. 16, November 1984, p. 62: “the great arcade slump” and “pie-in-the-sky” reports.
- Electronic Games vol. 3 no. 1, January 1985, p. 14: the closure of Mylstar Electronics and Francis Vincent Jr.’s statement; the Smithsonian’s acquisition of Pong, Pac-Man and Dragon’s Lair.
- Capcom, company history (web): “Mar. 1991 Released the arcade video game ‘Street Fighter II’ and it triggered the ‘Street Fighter II’ boom”. https://www.capcom.co.jp/ir/english/company/history.html
- For Space Invaders, Galaxian, Asteroids, Defender, Donkey Kong, Scramble, Zaxxon and Twin Galaxies, see those entries and their citations.