All language subtitles for A.Revolucao.dos.Games.2021.dual.por.2

Keith: Looking at
the multi-billion dollar

video game industry today.

Manny: It's a major
entertainment industry

bigger than
the movie business.

Keith: I don't think anyone
could have imagined that

coming from
such humble origin.

Ralph Baer archival demo:
Okay, one to nothing.

Mark Baer: Ralph Baer
built this little machine

in his basement,
that changed the world.

Nolan: Ralph claims
that he invented Pong .

He didn't.

Alsaid,
this patent is [bleep].

Keith:
It was really a free for all.

- There was a lot of pot.

- This is how
we put out games, huh?

- There were all these stories
about sex in the Atari hot tub.

Keith: It was sex, drugs,
and video games.

Jeff: Atari went from being just a hippie-dippie company to,

we were making money.

- Nolan Bushnell, you are
an acknowledged visionary.

- I was young and dumb,
never run a company before.

Manny: Everybody
had the same reaction,

what the [bleep]'s
Nolan talking about?

What is he talking about?

- There were a lot of powerful
characters butting heads.

Michael Fischer: Sega was
David fighting Goliath.

We took Nintendo on.

- I used to get nasty letters
from Howard Lincoln.

- It was just a great fight
between two companies.

Trip:
It was always personal.

- They were a bully.

Phillips: There was nothing
like the rollercoaster ride

of early video games.

Steve: The video game
frontier was wild.

- Well, it was the wild west.

[chatter and laughter]

Nolan: When I was
in engineering school,

I started working
at an amusement park,

in the games department.

Carny: How about you, sir,
take a chance,

three for a dime,
win a beautiful prize.

- So that sort of
qualifies me as a carny.

[laughs]

Carny:
Well hurry, hurry, hurry,

who's going to take
another chance?

Nolan: I got a good cross
section of what people liked,

what they were willing to pay,
and how often they'd play it.

What it was really focused on

is getting people to play
over and over and over again.

Even though they lose.

Carny: Missed again,
how about another chance?

Nolan: And when you're
convincing other people

that they can win,
you convince yourself.

So, over time, you realize

that the future is actually
quite manipulable,

with just force of will.

Henry:
Through this experience,

Nolan Bushnell understood
games as sort of an industry.

And then,
he just so happened

to be an undergraduate
at the very university

that was the center,
Ground Zero,

for development
of computer graphics.

Nolan: I was
an engineering student

at the University of Utah,

and there I played
a game called Space War .

Space War was a rocket ship
against rocket ship,

two-player game,

it had a gravity field
around a sun,

and you basically could
fire missiles at each other.

And I was mesmerized by it.

- Nolan's goal was to

put a coin slot on that

and put it in the arcade.

The only problem was you need
a million dollar machine.

Nolan: Space War was played on
the million-dollar computer,

and the economics
of the coin op business said,

the maximum you could charge
was about 25 cents

for three minutes.

Archival Arcade News Story:
Look what you get

for your money!

If you like
that sort of thing.

Nolan: You just can't
make the numbers work.

And I said, you know,
someday.

Archival News: Across the bay
with its spiderweb of bridges,

the pinnacles of San Francisco
catching the afternoon sun.

Nolan: After I got
my engineering degree,

I got a job at Ampex in
the middle of Silicon Valley.

At the time,

Silicon Valley was more known
for prune orchards,

than for technology.

Archival News: Miles and miles
of fragrant orchards,

spreading in a vista
of never-ending loveliness.

Al: There was no consumer
electronics going on

in the valley,
to my knowledge.

At all.

It was really
semiconductor companies

and aerospace
military companies.

Nolan: Ampex was
white shirt, black tie.

Very stuffy.

It was the '70s,

and we all had
our hippie costumes.

So I wasn't particularly
excited to work for Ampex.

But, my office mate,
Ted Dabney,

was probably one of
the best engineers Ampex had.

nd remember, Space War simmered
in the back of my head.

Well, I blinked, and one day,
the cost of MSI chips

went from $2.80 a piece
to fifteen cents.

And when I saw
that price drop, I said,

now's the time to build
a Space War clone.

And that was Computer Space.

[shooting noise from game]

The circuit
was coming along nicely.

But, when it came to a cabinet,
I thought, this is Space game.

So, I modeled this
spacey looking thing

and Ted found a fiberglass boat manufacturer to scale it up.

Owen: It was a very futuristic
fiberglass cabinet

which was really amazing,
sparkly colors.

It looked like a kind of
a deco rocket ship.

Nolan:
Next to college campuses,

Computer Space
earned extremely well.

But, put it in a working man's
bar, earned nothing.

Owen: It had all these buttons

and you know,
people couldn't get it.

They didn't understand
how to play it, you know.

Geeks could get it, 'cause
they're used to computers.

Nolan:
It was very disappointing.

That was when I learned
that the core axiom

of good games is:
easy to learn,

difficult to master.

Well, not for a femtosecond

did I think that I was
going to go back to Ampex.

So, I decided to go off
and start a company with Ted

and eventually,
we called it Atari.

My first hire was

a big bear of a man
named Al Alcorn.

He was a brilliant, brilliant man and an anarchist.

Al: I figured it would fail
in about a year

and I'd go back to work
at Ampex, that was my plan.

So, I show up to work and said, what are you gonna do?

Nolan:
The very first day Al started,

I assigned him
a simple training mission.

[game beeping]

Al:
Nolan described a tennis game

with one moving spot,
score digits,

a net, and two paddles.

So, it was just
the simplest possible game

you could ever do.

I understood what it was to be.

Whether it would sell or not,
I assumed it wouldn't.

- I think he had it done
in a week.

And that turned out,
of course, to be Pong.

[game beeping]

Mark: When my dad, Ralph,
first saw Pong ,

he did recognize that
it was a derivative product

from what he had
come up with before.

Jim: You know,
it was always pretty obvious

that my father
had started this stuff,

and this is his idea, gone.

- One of the most important
people in this industry

was Ralph Baer, of course.

- Whip out your handy dandy

sweet tooth scrubber!

Jim: He was always
thinking of ways

to use whatever was around
to do other things.

- And that included things
like, for example,

action games
that we all know.

- Hopefully,
we'll have some fun here.

And if you all gather round,

we will play a game
of Ping Pong together.

Here we go... up...

and down.

And up,
he's getting tricky.

- Did I steal
Ralph Baer's idea?

Yes, and no.

Ralph Baer:
A one, two, three.

Nolan: I thought it was
just barely a game.

- And what we've built

we call the All Purpose Box.

The plug-in modules will cover

a variety of applications
such as TV gaming.

Henry: There's no doubt,
that Ralph Baer invented

the home television
game console, no doubt.

So, I think he's kind
of an interesting guy.

[crowd shouting]

Jim: He was born in 1922
in Germany,

during the rise of Hitler.

[Hitler yelling in German]

My father made it out
of Germany,

just in the nick of time, six months before Kristallnacht.

Most of the Baer family perishes
in concentration camps.

Mark: But Ralph settled
in New York

and he was a radio technician.

He just had a knack
for the technical.

[car honking]

On the 1st of September 1966,

my dad was sitting down
at the Port Authority building

in New York and he had had
ideas of using television

for more than just
a passive machine for years.

But it was at that time,

he sat down,
and he wrote it all down.

It was an eureka moment.

- Ralph really was pioneering
in the way of understanding

how broadly
you could use the TV

for something other than
passive viewing.

- With this box,

when the commercial comes on,
push the button,

a tape recorder starts,
the TV set is recorded.

- His vision was that
everybody already had this TV,

they could do more with it.

- And next morning,
you can't remember

the station
on which you saw this thing

you really wanted
to go out and buy...

- One of the really novel
things that it could do was

impulse buying.

- I go ahead and push
the appropriate number,

dial my 800 number
on the telephone,

and lo and behold,
my order is placed

in a rather painless way.

Mark:
It was Amazon Circa 1969.

The company he was
working for at the time,

Sanders and Associates,
was a defense contractor.

Jim: He got Sanders
to let him build a lab.

He just said, I have this idea
and let me play with it.

Mark: Back in those days,

you could just pull people
off the line.

So, he pulled
a couple of guys,

he said he had a secret room
up on the sixth floor,

and he's starting to tinker
with television games.

- So he had his own area
with a couple of people

who worked for him,

and essentially did
everything on his own

to develop the Brown Box.

Mark: The original
Brown Box prototype

did many, many things.

Ping Pong ultimately was the one
that really ca on.

Jim: My father brought home
one of the prototypes

and my brother
and I played it.

We were the first kids
to play video games.

And we had the first video
game parties and I won.

- I think the record's clear
that he lost all of the time.

- I defeated my brother,
regardless of what he says.

Mark: But Sanders management decided,

we are not a consumer
electronics company.

We're not going to build this.

Jim: Sanders
was looking for a licensee,

'cause they were
not in the business

of doing consumer products.

Mark: And he finally sits down
with Magnavox

and they produced a
commercial product

called the Magnavox Odyssey.

The first-line Odyssey
was a black and white console

and it had
two separate apparatus

where you control the spots.

You couldn't project
things on your screen

without having a supercomputer.

So, what they did is
they made plastic sheets

and it would look
like a tennis court.

Odyssey was shown
in 1972 in Silicon Valley.

It was a demo.

There were a lot of people
who came,

including people,
in other businesses.

Henry: Nolan Bushnell
definitely saw

the Magnavox Odyssey there.

He signed the guest ledger
and he was there.

- I had heard
there was a video game

being displayed
and I thought that's my area,

who has the affront
to do a video game?

But I was unimpressed
from the minute I saw it.

It was fuzzy.

The gameplay was funny,

because you had control
of the ball after you hit it.

It had no score,
it had no sound.

To me, it was
an incomplete project.

So I improved upon it.

I made it functional,
and I made it better.

The thought that it was
going to cause me some problems

didn't even enter my mind.

I was unimpressed.

And I said,
let's make this game and fix it.

It was meant as an exercise,
and so, I assigned it to Al.

I went to the blackboard
and drew out what we wanted

and he says, okay,
I can do that.

- We got it to work

but it was terrible,

it was clearly no fun,

'cause it was either too fast

and you couldn't get
the hang of it

or it was too slow
and it was boring.

- Al Alcorn looked at
what the Odysseygame was

and found ways to make it
a more compelling experience.

Nolan: The first thing
we had to do is make sure

that the game had an offense

and that was created
by the angle

that the ball left the paddle

be dependent on
where on the paddle it hit.

That's when we decided
that we would increase

the ball speed after
x number of volleys.

- And he says, oh,
it's got to have sound.

I said, okay,
I'll be right back,

and I poked around
and found some sounds

that were already
in the sync generator

and put them out.

[beeping noise from the game]

Since then, there have been
articles written

about how brilliant
the sound was,

which I think is hilarious.
- [loud beep]

Nolan: In probably three weeks, it became so fun,

we were staying after work
to play the damn thing.

Al: At some point,
Nolan and Ted said,

that's pretty good,
let's put it in a box

and put it on location
at Andy Capp's Tavern.

And just see
what the public thinks of it.

- It was a peanut shell
on the floor beer bar.

You know, and it had
a bunch of games in the back.

Three days later,

we got a service call.
- [phone ringing]

And so, we thought, oh, geez,

we've got a reliability problem.

- So, I went over there
to my surprise,

when I opened the coin box,
all these quarters gushed out.

It wasn't broken, it was just
so full of quarters

it wouldn't take any more.

- People were waiting
for the bar to open

o they'd come in and play Pong.

They were playing it all day.

Al: I remember sitting
at Andy Capp's Tavern

and Nolan basically says,

we're gonna be in
the manufacturing business.

And Ted and I said,
"No way, we're engineers,

we don't know anything
about manufacturing!"

- I said, you know,

I think
we can sell these things.

We had enough money,
300 bucks,

to buy the parts for 12 units.

And literally,
in three weeks,

we built the 12 and sold them
all for a thousand bucks.

I went to Al and I said,

you know, we've got to ramp up,
two hundred a day.

He says, you've lost
your mind, Nolan.

- Insane.
Whenever I see a new idea,

I immediately think of
all the reasons it can't work.

I'm a pessimist.

- But I'm an optimist

and I really do believe,
if you think you can do it,

it will get that way.

- We had no experience,
we had no employees,

we had no money,
we had no space.

Nolan: We rented an old
defunct skating rink.

That was our
manufacturing facility.

Al:
But, how do you hire people?

The only thing
that occurred to us

is just go to
the unemployment office

and get people and uh,
what could go wrong?

- I didn't realize that
all these people were derelicts

and of course,
we didn't have security.

- It was crazy time.

Nolan:
But, piece by piece by piece,

we actually started to know
what we were doing.

[♪♪♪]

Atari Archival: Here is where
it all takes place.

The Atari engineering building

in its bucolic surroundings
in picturesque Sunnyvale,

staffed by a group
of technical people

who are truly outstanding
in their field.

Ed: I walked into Atari

and I saw a bunch of people
having just a blast working.

They were excited about
what they were doing.

They were my age.
It was just exciting as heck.

Elaine:
It wasn't like work.

We had rock and roll music
blasting through the factory,

which was totally awesome.

I remember Steve Miller,
the Moody Blues.

Nolan:
We felt we could hire anyone,

no matter how strange they were.

Atari Archival:
Fully factory condition

with genuine Atari parts stolen direct from the Atari factory.

Nolan: I wrote a manifesto

that encapsulated
the values of our company.

We wanted to treat everyone as equally as we possibly could.

For example, I wouldn't allow

reserved parking spaces
for the executives.

We don't care how you dress,

we don't care
when you come to work,

we don't care
if you come to work;

get your job done,
and everything's fine.

We had this attitude of;

people were adults
and free to do as they wished.

- We were young horny engineers

and we'd ogle and
there was funny banter.

Elaine:
I remember one girl,

made bikini tops out of leather that some people wore,

but you didn't wear
bikini bottoms,

that was uncalled for.

- Did a lot of people
go home together, absolutely.

- But it was the '70s,

and that was part of
American culture in the '70s.

I think it's difficult
to look at that

through today's lens,

because it was
a very different era.

Archival News:
What do we want?

- ERA!
- When do we want it?

- Now!

Nancy: The '70s were really
the birth of feminism,

and Atari led the way
in all that.

Atari had an equal pay
for equal work policy.

Elaine:
I never thought

the women or men
were treated any different.

And I had like 48 people
working for me one time

and nobody treated me
any different,

because I was a woman.

- There was also this whole idea
of hot tub culture.

Something that through
the lens of today

probably looks
a little bit promiscuous.

People would get naked
and get into the hot tub

at the end of a party.

I mean, it was kind of normal.

- I think it was a woman
who installed it.

Loni: I was in charge of
picking out colors

for all the different parts

and that included the tiles
for the hot tub,

which were a blue and orange.

They had the Atari logo
on the back wall.

- I remember the day
Nolan and I decided

we're going to break
the hot tub in.

Owen: There were times
where it was locked

and people were in it,

so you can use
your imagination

what might've been going on
in the hot tub room.

- I was never
in that hot tub.

Other hot tubs,
but not that one.

- We actually had
a board meeting one time

in the hot tub.

We didn't think about it.

[coarse beating noise]

Atari Archival: One more!

Now he's really
eating cornflakes!

Hup, two, three, four!

Elaine: The Atari, to me,
kind of set the standards

for how to have a fun company.

- Every two weeks,
if we met quota,

there was a beer bust
with free pizza and beer.

- By this time,
we were pretty well known

as the most fun place
to work in Silicon Valley.

Trip: We were hearing
stories about Atari,

I mean, it had kind of
a legendary culture.

They're all doing dope
on the assembly line.

Nolan was probably high
a good chunk of the time too.

- There was a funny smell
to the air.

Atari Employee Archival: This is how we put out games, huh?

Engineering in action!

Elaine:
There was a lot of pot.

- So, I don't know if you know
the name, Rolling Papers,

it was S.D. Modiano, right.

So, anybody in the company
could use the pager

to page the whole building.
And you would hear...

Atari Employee Archival:
S.D. Modiano to the upstairs

conference room, please.

- And that was the key
that anybody wanted to go out

and smoke a joint.

Jeff: I remember the day
they said, don't smoke pot

in front of the building.

Just go out back,
and so we did.

It was a great place to work.

[clatter]

I would do it all over again.

Absolutely,
without the drugs.

[laughter]

Odyssey Commercial:
What does your family do

on those stay-indoors
rainy afternoons?

Or on those cold,
blustery winter days?

Entertain themselves
with Odyssey !

Mark: Odyssey finally
came to market in 1972.

It took a while.

Magnavox did drag their feet.

Henry: By the time
it did come out,

the technology
underneath the hood

was no longer as current
as it could have been.

Mark: They sold 'bout
350,000 of these units.

Pretty good sales, but it certainly didn't blow up.

Henry: The Magnavox Odyssey
was not a failure,

but it was not a great success.

A part of that was Magnavox.

Magnavox TV Commercial:
Want to save $50

and solve two gift problems
at once?

Get Odyssey by Magnavox.

- Ralph would have liked to
have seen it marketed better.

Magnavox TV Commercial: This $99.95 value is only $49.95

when you buy any Magnavox TV,
17 inches or larger.

Henry:
Magnavox made televisions

and many people assumed

they would need
a Magnavox television

to operate this device.

- They limited the potential,
my father was very annoyed.

agnavox TV Commercial: Odyssey,
now at your Magnavox dealer.

- I think Ralph thought
they had compromised too much.

So, it didn't get out into the consciousness of the nation

the way that something novel
might get out today.

I think Ralph felt
a little bit neglected

and left in the dust.

Keith: And he felt that Magnavox should have been doing more,

and he pushed them
to call their lawyers.

Nolan:
Pong was a phenomenon.

So, sales were easy.

The distributors would say,
send me 10, send me 10,

and all of a sudden,
I had a backlog of 4,000 units.

The problem was
that anybody could climb

into the business.

- Everybody was
copying our machine.

But in those days,
we didn't think much of patents.

Nolan: Because in
the video game business,

technology is moving so quickly

we always had
better things to do

with our time
than patent litigation.

Henry: Atari's commitment
to innovation was so great,

that they really
weren't concerned

about controlling the industry.

Nolan: We had a strategy
of just doing better

and better and better.

And so, from Pong,
we went to Pong Doubles,

and Quadra Pong
and then Space Race .

We just kept them coming.

Elaine: There was Tank ,

which ended up being
a really big game for us.

[video game playing]

Ed: Gotcha,
Night Driver .

Sprint , a great driving game,
a lot of fun,

it had nothing to do
with reality.

Nolan: I had a game that wanted built called
Breakout ,

which is a ball and paddle game,

and none of my engineers
wanted to do it.

But one day, a guy
came into the lobby and said,

I'm not leaving
until you hire me.

He was, scruffy,
ill-kempt, and brash.

It was Steve Jobs.

I asked Steve to do Breakout
on the night shift

because I knew, if Steve
was on the night shift,

Steve Wozniak
would come over after work

at Hewlett Packard.

And I knew
that the two of them

could get this game
knocked out

in really good time.

And they did.

[video game playing]

Steve Wozniak: We both
stayed up all night long,

four nights in a row.

We both got mononucleosis
from it.

We were really
stressing ourselves,

but we felt we actually
did design it.

Nolan: They ended up
getting a $5,000 bonus.

Twenty years later, Wozniak
was sitting in my kitchen

and I said, hey, you know,
when you got that bonus,

what did you do with it?

$2,500?

He shook his head and he says,
Steve did it to me again.

Steve had told Wozniak
that it was a $500 bonus.

And so, he gave him 250
and kept the rest for himself.

[applause]

Steve did break out

and then got this idea
to do a personal computer.

And he came to me and said,

do you want a third of
Apple Computer for $50,000?

And I turned it down,

which I've subsequently
regretted.

[chuckles]

Just a little.

TV Reporter:
Nolan Bushnell,

you are an acknowledged
visionary

in this part of the world.

Did even you foresee
what Pongwould bring?

- Well, I'm not sure
that I thought

it was going to be quite
this big this quickly.

We had talked about
a home version

of our stuff a lot,

but the economics
of our technology

couldn't allow it.

was to put everythinge
on a single piece of silicon,

a custom chip.

- But Al came into me and said,

I've just found
some new technology.

And so, all of a sudden,

the opportunity of putting
Pongon chip was real.

It was a small
little console, two knobs.

And it was cute.

I think we ended up
building about 180,000.

Sold every one of them.

[video game playing]

- At this point, Ralph Baer
is still the company man

at Sanders Associates,
coming up with new inventions,

but the phenomenal success
of home Pong

would not escape his attentions.

- A lot of people,
made a lot of money

off of Dad's inventions.

- You wanna score, Bill?

Mark: Did it annoy him

that other people took
credit for his work?

I mean, as it would anybody.

Ralph Baer:
Get closer than that,

make it a little faster.

Bob: It was very important
to him that people understood

that it was his idea originally.

- It's clear that Ralph Baer
was the designer

of the first working game.

Nolan: I never had
a problem with Ralph

until he started claiming
that he invented Pong .

He invented Odyssey and it was very different than
Pong .

- Nolan Bushnell is claiming
that he invented video gaming

and my father did resent someone trying to steal the credit.

Mark: If Ralph had truly
been a great promoter,

self-aggrandizing kind of guy,

yeah, he would have gotten
a lot more recognition,

probably got a lot more money

and had a lot more people
behind him,

but that just wasn't him.

Jim: Ralph Baer
is the father of video games.

- The father of video games
is a construct

that I kind of think
is specious.

I don't feel any animosity
to Ralph, whatsoever.

I think he was a brilliant
analog engineer

that did some
very, very good work.

But in terms of
commercial success,

it's me, period.

I think I had
at the right time,

the right place,
technical skills,

and the business smarts
to launch an industry.

Owen: Ralph got that
you could play a game on a TV.

Nolan figured out
how to make it fun.

Henry: It wouldn't
surprise me one bit

if Ralph agitated
Magnavox executives

that they needed
to go after Atari.

Mark:
It might've been the 1970's,

but business is business and if there's money to be made,

they went after the infringers.

- Nolan Bushnell
and the people at Atari

were more focused on coming up
with new and exciting ideas

to stay ahead
of the audience

than they were trying to protect
the ideas of games.

But Ralph Baer felt very differently about patents.

Ralph Baer was an engineer,
and engineers live on patents.

- Ralph Baer and Magnavox
sent us a letter

noticing that they had a patent on the whole thing

and wanted us
to stop making them, you know.

Nolan:
I thought it was specious,

because their technology was
different as cheese and chalk.

Al:
Oh, when I read that letter,

I said, this patent is [bleep]

because the patent
was very broad.

- And the reason
it could be broad

was because it was the first one
that was out there.

It was definitive.

Nolan: They were asserting
that a spot

colliding with another spot
on a video screen

was protected
by their patents.

Bob: Ralph was extremely good
at keeping notes.

He wrote everything down,

which actually
was great in the end,

because there's no way

that he would have been able
to have the success that he did

had he not done so.

Jim: He could come up
with an idea

and write it down
in the form of disclosures

that the lawyers can translate
directly into the forms.

He got very good at that.

- That helped enormously
for patent enforcement.

- Our attorney's saying,

we could fight them,
we could win.

And Nolan said, fine,
how much would that cost.

Oh, at least
a million dollars.

Nolan: I didn't want to spend
a lot of time litigating it.

And so, I agreed
to a paid up license,

- Ironically,
this settlement

was one of the keys
to Atari's success.

Nolan: Here's the trick, I decided that we would settle,

but only for a de minimis
amount of money.

And in our settlement,

I required them to go
after our competitors.

Mark: So Magnavox sued
all of the players of the day.

Nolan: It was going to
weaken our competitors

and it was strengthening me.

No harm, no foul.

And so, I wasn't that concerned

about the Sanders Magnavox
lawsuit,

because I knew I had
other things up my sleeve.

Henry: In the beginning
of the home console,

the machine played one game.

Ralph Baer:
Missed it, one up.

Henry: The next step
would be,

what about a machine
that can play multiple games?

Al: We had a research group
up in Grass Valley.

And we had given them the task

of designing this system.

Nolan:
Everything that was up there

was a little bit hush hush.

- They were like our
secret group, we called them.

Nolan: They worked together
like a fine Swiss watch.

I mean, it was a dream team.

Joe: I was hired
because I could write a game

and design chips

and without knowing
what my mission was,

my mission was to help prove

that a programmable design
would work.

Al: The Grass Valley group
had developed this prototype,

for this home
cartridge-based video game

that was called the Atari VCS,
or the 2600.

Nolan:
It was a great prototype.

The problem was, we just
didn't have enough capital

to bring it into the market
the correct way.

- And so,
they looked for a buyer

in the entertainment space.

Atari Archival:
It is my privilege

to invite you inside Atari.

During the next few minutes,
I will show you

why this is
such an exciting company,

and tell you about some of
our plans for the future.

Elaine: Bankers and everybody
started coming through

and so the company
tried to clean us up

and make it a little bit
more corporate,

giving us a little bit
better dress code

and no bare midriffs.
[laughs]

Nolan: We talked to Intel,
National Semiconductor,

the Silicon Valley neighbors,
really.

Nobody saw it.

And then we got
introduced to Warner.

Manny: I got a call one day,

would you be interested
in a fast growing

technology based
entertainment company?

And those words sounded good,
so I said, yes.

[chuckles] And that was
my introduction to Atari.

They showed me
early prototypes of the 2600,

which was a programmable
video game.

It was an "Aha" moment
for me.

I said, I have seen the future
and it's called the 2600.

I said, this is
a [bleep] big deal.

Al: We had a flash meeting
at Nolan's house

in the hot tub
and he said,

Warner's offered
28 million dollars

to buy the company.

Holy Moly,
this was just mind-blowing.

- I thought, all of a sudden,

I've got a bigger sandbox
I can play in.

[laughter]

Al: It was wonderful
in the beginning.

[laughter and chatter]

But it was a very strange
marriage,

because this is
a very conservative

East Coast classic
public company,

and we were not.

Atari Archival:
The snake eats the gun.

[indistinct chatter]

And the snake gets
one segment longer.

[laughter and indistinct
chatter]

It's a bug shooter!

Manny: I remember writing
a memo that said,

the problem here is these guys
are all a little out of control

and if we give them
too much money,

I don't know
how I'm going to control them.

Daniel: Why?

- Why?

[laughter]

[clatter]

Nolan: I don't believe
there was understanding

on the part of Warner management of how fast tech moves

and that a breakthrough piece
of technology today

is trash in three years.

And I felt that we needed
to start work immediately

on the replacement for the VCS.

Manny: I think it was 1978,

we used to have budget meetings in New York in December.

And you'd have all the Warner
people in the room,

and all the company people
in the room,

and this is for every division.

And at some point,
Nolan said...

- We've got to start
immediately

on the next generation
of the VCS.

Manny: Get rid of
all the inventory, it's over.

- And they said,
we just bought this!

Why would we do that?

Well, it wasn't new technology.

I mean, the VCS only had
128 bytes of RAM,

that's nothing.

I wanted to sell as many VCS'
as quickly as possible

and then move on
to new technology.

- I mean, the Atari people
were looking at me

like I'm supposed to know
what this is all about,

and everybody
had the same reaction,

what the [bleep]'s
Nolan talking about?

What is he talking about!

I got called
into Steve Ross' office,

who's the CEO of the company,
the next morning

and Steve was kind of panicky.

He said, the guy
you bought the company from,

has just told him,
it's all over but the shouting.

But I said, Steve, you don't know what you're talking about.

In my opinion, on December 26th,
there will not be a 2600

on any shelf
in any store in America.

And if that is true,

this business
is about to take off.

And by the way,
if it's not true, we're [bleep].

And of course,
it was a feeding frenzy.

It was the hottest product
in America.

Woman on PA:
Attention, shoppers!

The new Atari cartridge game
is in!

- You can get nine cartridges,
187 games.

- Ooh, I'd like an Atari.

- Sorry,
only our demonstrator's left.

- Mine!

- No, George.

Mine!

Keith:
Atari took off like a rocket.

It was the faster growing
company

in the history of
the United States at that point.

Manny: In that six-month period after we bought Atari,

the consumer division
started to take off.

- Three years ago,
the video ga industry

was practically unknown.

Now it's producing one of
the hottest consumer items

of the Christmas season.

Manny: The 2600 was
one of the great businesses.

It was an amazing business.

Nolan: Manny was able to
nurse two years more

than I would've ever guessed.

But that doesn't say
that I wasn't right.

- Of course I was right.

- Manny was right,
he called it right.

- I wasn't wrong about it,
maybe by two years.

[chuckles]

- There were definitely clashes
between Nolan and Manny.

Manny: It was a freewheeling
wild place,

and the company was growing,

but I don't think
you can run a company

making money hand over fist
in the wild west.

I think honestly,
it was just hard

for Nolan to let go.

- Piece by piece by piece,

there was a disillusionment
setting in,

this wasn't my company anymore,
and I wasn't the chief architect

and PT Barnum
and Disney of this.

- I have vivid memories
of screaming board meetings.

Nolan had vehement disagreement with the direction of things.

Manny: Well, it's not
that he was a pain in the ass,

which he was, at times.

But Nolan has
100 ideas a minute

and he believes
they're all wonderful,

and they're not.

There are sometimes
soso really good ones,

but he loves them all because
they're all his children.

He was not meant
to manage an enterprise

as big as this one became,
period, end of comment.

- Ah, screw 'em.

Manny: My mission was to find
adult supervision.

Nolan: Warner had a relationship with a guy named Ray Kassar.

They said, this guy
might be the perfect guy

for head of consumer division.

Manny: And we hired him.

'Cause Ray had
the kind of background,

in terms of just general
business that made sense to me.

- Those of us in the lab

could see that it was not
going in good directions.

Nolan was moved out of
day-to-day operations,

promoted, quote unquote,
to "Chairman of the Board."

Owen: I don't know how
Ray Kassar was picked

to be put in charge of it.

He didn't understand
the video game industry at all.

Joe: Ray came from being
the CEO of a fabric company.

- Ray just didn't seem
to get it at all.

Manny: Let me explain
Atari engineers to you;

one day I was
in the engineering building

in the men's room,
standing at a urinal,

and I saw a pair of bare feet
next to me

and it was a guy standing there
in a bathing suit.

I walked out,
I said, "Who was that?"

Oh, that's so and so,
he doesn't like clothes, okay,

but that's how
you manage engineers.

Nolan got that.

I mean, even I got that.

But that never made
Ray comfortable.

I've reflected a lot on
the mistakes we made at Atari,

'cause we made some big ones.

But the biggest one
I think Ray made was,

there was a complete disconnect.

They didn't like him,
he wasn't one of them.

- Uuuuuh, I believe the saying
is, Ray Kassar was an ass.

Nolan: Ray wanted to have
an executive dining room,

reserved parking spots
for the executives,

which was just against
the DNA of the company.

[phone ringing]

- Good afternoon,
Atari sales.

Nolan: I mean,
it all just felt bad to me.

- My group
in marketing services

is responsible to achieve
maximum visibility

for video games.

- We must take
into consideration

the ease of comprehending
the objective of the game.

Loni: It was unpleasant.

They were trying to make
Atari more like New York,

like a corporate
Wall Street company.

- What we've just shown you
are some of the programs

that prepare us at Atari
for our future growth.

To maintain that growth,
we will continue to expand

our advertising programs.

Nolan: There was increasingly
an us versus them mentality.

Ray thought that I was
an out-of-control lunatic

and I thought
he was a pompous [bleep].

He was single-handedly
dismantling

the corporate culture.

The company as it had become,
was not fun anymore.

- Nolan said, we want to be out,
and we did,

because at that point,
we were beyond the pale,

and we were glad to.

- I said, I quit.

And they said,
no, you're fired.

Loni: You kind of felt like dad got kicked out of the house.

That's kind of how it felt,
and you don't really know why,

because no one really knew why.

Owen: It was sad to see him go,

'cause as far as
we're concerned,

he was the father of it as well.

Elaine: It was like part of
our family was ripped away.

- But pretty soon, the rug
was going to be pulled out

from under all of them.

News Archival: This symphony
of electronic noises

is the music of money.

Nearly 3 billion dollars

were stuffed into video games
last year.

News Archival: This year,
as if to prove

they are not a passing fad,

five and a half million video
game consoles will be sold.

- The early '80s
was the golden age

of the video game business.

- The home video game
market was exploding,

but it was really
the arcade game market

that was driving it.

That's where
the big hit games came from

and Atari had a slew of them
and other companies as well.

Howard Phillips:
All these really great games

that were so different
from one another.

Asteroids.

Elaine: Centipede .

Owen: Tempest .

Galaga.

Ed: Missile Command .

Battlezone
has to be in that group.

Owen: Defender .

Joust.

Ed: Dig Dug .

And obviously Donkey Kong .

Keith:
One of the earliest games

that cemented video games

as a lasting medium
was Space Invaders .

- Space invaders
was a successful arcade game

that Atari didn't write.

Manny: Space Invaders was a phenomenon in the arcades.

And, I moseyed over one day
to the engineering building,

and all the engineers
are playing a coin op version

of Space Invaders.

And I immediately walked back
across the street

to Ray Kassar's office
and I said,

Ray, here's what I want,
take that Space Invaders,

and build a consumer version
of that game

and license the name
from them, pay them.

And if you can't license
the name, steal the game play.

[laughs] I don't care,
but I want that game.

When we introduced
the cartridge,

that blew the 2600
into the next universe.

Reporter: The hypnotic appeal
of electronically destroying

enemy invaders,
led to one of the biggest

and fastest toy industry booms
in history.

Joe:
Space Invaders was successful

because the VCS was capable
of displaying that game

as it was presented
in the arcade world.

Henry: Arcade technology
was more robust

than what you could put
in your living room.

Pac Man was a big hit
in the arcade,

but you played it
on the 2600.

And it just didn't seem
like quite the same game.

It just didn't have
what the game gave you

in an arcade.

[game sounds]

Owen: Pac Man has to have all these ghosts running around

and your player and you
can go anywhere

and these little tiny dots
that the graphics system

wasn't capable of drawing.

Joe: And it got a reputation
for what people call

flicker man.

- The Atari 2600 had a huge
amount of compromises in it.

It was a very primitive system
for the time.

David: The Atari 2600
was still alive

ten years after its launch

so that technology
was pretty old,

and the rest of the world
was catching up.

Coming up with better
and faster hardware.

Atari was still riding
the old dinosaur,

when they could have been
innovating new hardware.

Virtually every game
we made on the 2600,

we had to come up with
some programming technique

that made it do something
it was never intended to do.

- We expected this thing
to sell well for 2 or 3 years,

it sold well for a dozen

because the programmers
turned out to be

a lot smarter
than we expected them to be.

- I'm David Crane, C-R-A-N-E.

- Larry Kaplan, K-A-P-L-A-N.

- Al Miller.

Reporter: M-I-L-L-E-R.

- Yes.
- Bob Whitehead.

David: I was part
of a group of four guys

that said, wait a minute,
of the top 20 selling games,

two thirds of them were designed by the four of us.

Well, we sat across
from Ray Kassar and said,

games that we made,
made you $60,000,000 last year

and we're getting,
$24,000 salaries,

doesn't seem to be equitable.

We'd just like to have a piece,

just something,
a royalty, a bonus.

And Ray looked at us
across his desk and said,

these are Atari products.

The guy down on
the assembly line

is as important to the game
as you are

because if he didn't
put them together,

you wouldn't be able
to sell any.

- At Atari, we don't
really like to talk about

who designed what...
Bryant Gumbel: Why not?

- Well, because we like to

make the game the superstar
as opposed to the programmer.

- Why shouldn't you get credit
if you designed the game?

- Well, because it is
a corporate product, okay.

These are games by Atari,

so it keeps
more of a corporate image,

you're buying Atari products.

- At that point,
we knew it was over at Atari.

Reporter:
Were the four of you at Atari

when you decided to strike out?

- Yes, we worked together
designing games,

and decided
that we wanted to go off

and try something on our own.

David: We decided
we're going to go out

and produce, manufacture,
and publish our own games

and that is how we ended up
founding Activision.

But Atari had a monopoly.

The only cartridges that would work on the Atari console

were Atari cartridges.

- Atari kept their first machine
as a black box,

they didn't tell anybody
how it worked,

and they didn't really welcome
third party developers

to make something that would
work on the platform.

David: So before
we could make a game,

we had to reverse engineer
the 2600

and that's something
that I did,

in the spare bedroom
of my apartment.

[♪♪♪]

For years,
I had been trying to put

a little running man
into a video game.

But the Atari 2600
was not designed to do that.

And I said, I am going
to do this if it kills me.

- I was lost in the jungle
with Pitfall Harry.

Surrounded by giant scorpions
and man-eating crocodiles.

Commercial: If you haven't met
Pitfall Harry,

you're missing the year's
most incredible

video game adventure,

Pitfall for the Atari 2600
and Intellevision.

Designed by David Crane,
for Activision.

David: I believe that
Activision sold about

four and a half million copies
of Pitfall ,

generating around $50,000,000
in wholesale revenues.

- Just like that...

David: Not everyone knows
that was one of Jack Black's

first commercial appearances.

He was only 12
at the time, I think.

Nolan: I knew
that the long arm of Atari

would soon come and try to put
them out of business legally,

just because
that's who they were.

David: We had good lawyers
and we were told

they're going to sue you.

They don't have
any grounds to sue you,

but yes, Atari sued us.

- They were sued
for theft of trade secrets.

David: They just assumed
that we had stolen

intellectual property.

And we hadn't done
anything like that.

- I don't remember the issues,
but yes, we didn't win.

David: Once the lawsuit
was settled with Atari,

it was clear
that making video games

for someone else's console was
something that could be done.

Thus what we did was create
the third party video game

software publishing business
we know today.

- Anybody could make
a cartridge for the 2600

and it was what
killed the company.

deo Computer System...

Starmaster by Activision.

Joe:
After that Activision lawsuit,

dozens of companies
got into the business.

David: Overnight,
there were 30 companies

making video games
for the Atari 2600 system.

They were all
just young startups

picking programmers
off the street.

- People who could
knock these things out

could make a huge profit
selling junk.

David:
Games like Lost Luggage...

even Quaker Oats

started making
Atari 2600 games.

Manny: There was the fabled
Custer's Revenge,

which was essentially
raping Indian women.

That's basically what it was.

Now, we're making a game
for kids with the 2600

and we have no control,
forget the quality,

the content of this stuff
was out of control.

- Now Atari had it stinkers,
like ET.

avid: ET , the Atari 2600 game,
is widely considered

to be the worst game ever made.

News Reporter: Steven Spielberg, who directed the movie,

insisted the game be programmed to follow the movie plot.

Manny: Steve Ross
was the chairman and CEO

of Warner Communications,

and he was wooing
Steven Spielberg.

He liked him,
they liked each other.

I don't remember the numbers,
but it was a guarantee

that was north
of 20 million dollars

for this cartridge.

We were crazed.

David: But it had to be
out by Christmas

and by the time
that deal was signed,

there were six weeks left
to make the game.

Atari ET Game Commercial:
The video game

that lets you help ET get home.

Just in time for Christmas.

Happy Holidays from Atari.

- It was doomed to fail
from the moment you told them

you got 15 minutes
to make a cartridge.

So do the best you can.

David: The first screen,
you moved the joystick,

he falls in a pit.

Game over.

I mean, I'm a game expert,
and I couldn't get the guy

out of the pit either.

Manny: It was terrible.

- It sold like gangbusters
for a week,

and then they started
being returned.

- And there was this
urban legend

that millions of ET cartridges
had been buried in the desert.

It's a great story,
except it wasn't true.

Jeff: At the time, the factory
in El Paso was closing

and they just took everything
wholesale out of there,

it wasn't just ET's,
it was 400's, 800's, parts.

They couldn't let it
on the market

and so they just put it
in a landfill.

David: Regardless, ET was
a very poor business decision

and cost millions and millions
and millions of dollars.

- There may be trouble
in Toyland,

at least
in the video games division.

News Archival:
Warner Communications,

the parent company
that owns Atari,

has been having major problems
since Christmas.

Manny: On December 7th,
I remember I got a call,

the CFO said, we're gonna fall
below the estimates by 30%.

And that was the beginning

of this sort of
unraveling, if you will.

News Archival: The problem is an overabundance of competition.

Atari was once
one of three companies

in this business.

- This year we have about

25 companies
selling cartridges.

Manny: The ability
for third parties

to make software
was where Atari died.

If we could ever have solved
the third party software,

we'd have been fine.

- A lot of people think
that it was bad software,

this, and that,
wasn't that at all.

They tried to put
15 million units

into the market
that was saturated.

And that's what
caused the collapse...

News Archival:
Warner Communications

down one and a quarter
points today,

sixteen and three quarter
points yesterday.

Newsreader:
Atari, Inc. is laying off

1,700 employees in California.

- Atari had to lay off
massive numbers of people

and eventually had to sell
the consumer division.

- It got sold,
it got split in two.

- Atari was gone.

- I felt Atari was my baby.

It was my heritage.

It was really sad
to see it die.

Jeff: It was the best place
you could ever hope to work.

I found myself
walking the halls

of this empty building,
and pouf!

Everybody was gone.

Manny: I've read some things
now, when Nolan says,

the worst thing we ever did

was sell it
to Warner Communications.

That's just stupid.

- I can remember
in 1983, Manny saying,

well, the video game business
is over.

I think it's the only time
in the history of business,

where the market leader
abandoned their business.

And I've often kicked myself for not going out, raising money

and taking it back over.

Nancy: Nolan really predicted
exactly what happened.

So it was sad.

Nolan:
I just sort of shook my head

and clucked my tongue and said:

Too bad.

Keith: People thought
that the end of Atari

meant the end of
the video game industry.

But it turned out
that they were wrong.

News Archival: Suddenly,
surprising as it may seem,s,

the video game industry
is in trouble.

Trip: In 1983, there was a big
decline in the market,

triggered by
the implosion of Atari.

News Archival:
Warner Communications,

which lost half a billion
dollars last year,

on its Atari division,
has had enough.

It's selling Atari

and getting out of
video games and computers.

- After Atari crashed, the video
game industry was dead.

- As Warner's goes,
so does the industry?

- I think that's true.

Howard:
It was dead as a doornail.

News Archival: Are video game addicts losing their addiction?

Is the home video game concept
just a fad?

Howard: The media concluded
home video games

were a passing fashion.

Analyst:
The video game industry

is now becoming very much
like hula hoops.

Owen: People stopped buying
and down it went.

- EA Sports first products
are coming out in 1983,

and our sales people
were saying,

who do we sell these to?

- At the same time
that there was this collapse

in the United States,

the home video game market
in Japan was red hot

with the introduction
of Nintendo's

Family Computer System
or Famicom.

Howard Phillips:
The Famicom came out in 1983,

and in Japan,
it was a huge success.

But in the US market,
we weren't ready for it yet

because the retailers
were too burned.

That left us
kind of in a quandary.

What do we do?

And the answer was, we wait.

Howard Lincoln:
So we made sure

that when we introduced
our product,

we could convince
retailers to take it.

Howard Phillips:
Eventually, In 1985,

Nintendo came out
with the Entertainment System.

NES Commercial: Will you be
the one to witness

the birth of the incredible
Nintendo Entertainment System?

The one to play with Rob,
the extraordinary video robot.

Batteries not included.

Greg:
They launched it as a robot.

Bill White: Rob the Robot.

Rob the Robot
was an accessory that worked

with the Nintendo
Entertainment System.

In reality, it was,
you know, the Trojan horse.

Gail: We all now know the robot wasn't that fantastic.

Howard Phillips:
But it allowed Nintendo

to go to the retailers and say,

come on and talk to us,

we got this new cool thing,
it's not a video game system

but an entertainment system
that uses technology

and all these things.

NES Commercial: The Nintendo
Entertainment System

comes with Rob, zapper,
control deck,

two controllers,
gyromite and Duck Hunt.

Howard Lincoln:
We knew all along

that once it was successful,

Rob the Robot
would hit the dust.

Before we introduced the NES,

Nintendo was strictly a coin
operated video game company.

And one of its great hits
was Donkey Kong .

- Nintendo really
focused on making games

that were deep
and interesting and compelling

and because they had
this wunderkind there.

Howard Lincoln:
Donkey Kong was created

by a very young employee,
Shigeru Miyamoto.

An artist by trade,
it turned out

that he was a creative genius.

In the game,
there's a little guy

with a mustache and a red hat
who is dodging balls

that are being thrown
by a gorilla.

We had to come up with a name
for this character

and somebody remembered the name
of our landlord, Mario Segale.

So we decided that we would call this character Mario.

And Mr. Miyamoto loved it
and so he started

creating Mario games.

Mario Commercial: Mario! Mario!

Mario! Mario! Mario!

Howard Lincoln: There is
no substitute for great games,

that's the key
to this business.

And without question,
the game that made Nintendo,

both in the United States
and around the world,

was Super Mario Bros .

[game sound]

Gail Tilden: Many people
think of Mr. Miyamoto

as kind of like

the Steven Spielberg
of video games.

[game sound]

Howard Phillips: It's
a little bit hallucinogenic.

I think if you think about
Mario Brothers;

the fact that he put that
on the screen,

it's testimony to his kind of
creative comfort level,

that he was willing
to express himself

with such random weird stuff.

And, he distilled it down
into just a little scenario

within the game that just made it so cat nippy.

[game sound]

News Archival: This year,
kids and their parents

will spend more than
three billion dollars

on video games
and game cartridges.

Almost 9 out of 10
of those dollars on Nintendo.

Gail: Pretty quickly we realized video games weren't dead,

and kids were still loving
playing them.

Bill: Sales took off.

Howard Lincoln: People were
clamoring for the product

and we couldn't keep it
on retail shelves.

- Volleyball?

Salesman: Sold out.

Mike Tyson's sold out.

- Everything is sold out?

Salesman:
Everything is sold out, yes.

- By 1986,
we knew that we had

a mega hit on our hands.

Gail: But, about the time
that we were

in full launch of the NES,
there was another

Japanese company
that was making video games.

TV Commercial: Sega!

News Archival: The game
businesses' giant Nintendo

is no longer
the only game in town.

Howard Lincoln:
We certainly knew of Sega.

Sega introduced
a home video game system

in competition with Nintendo.

- The Sega Master System
was an 8 bit system

and it was not very successful
against Nintendo in any market.

- The Sega Master system
was rolling back the clock,

because here's these games
in the arcade that look cool.

But then when you see them
on the home system,

they just looked crappy.

So, nobody thought that
Nintendo could ever be unseated

by somebody like Sega.

We were riding
that rocket ship of growth,

nobodyhought
it was going to end.

Tom: I was in Hawaii.

I had most recently been CEO
of Universal Matchbox

and we had sold
the company to Tyco.

So I was unemployed, on a beach
in Hawaii with my family.

And all of a sudden,
Hayao Nakayama,

the CEO of Sega of Japan,
appears in his suit and tie

and starts talking to me
about Sega.

I wanted to know
how the hell he found me

and second of all,
what are you doing here?

Well, he wanted me
to come back to Japan with him

and look at what
16-bit technology could do

for the video game industry.

Mike: Every system up until then had been 8-bit technology.

- The last thing
I thought I was going to do

was enter the video game
market.

But when I saw 16-bit,
I actually was blown away.

16-bit was so different,
so dramatically better.

I joined the company.

Mike: Tom Kalinske was this superstar hotshot executive

from the toy industry,
and we couldn't believe

that he would join
a little company like ours.

Tom:
I thought there was a chance

of at least grabbing some
market share from Nintendo.

Shinobu: When Sega decided to launch 16-bit
Sega Genesis ,

Nintendo was very formidable

and Tom Kalinske often called
this, David and Goliath.

Sega Commercial:
What's the hottest

16-bit video game system?

With true arcade games, great graphics, real challenge,

stereo sound,
and the hottest library too?

Genesis from Sega.

Genesis , the new generation
in video games.

Howard Lincoln:
By the end of 1986,

Nintendo had
essentially 100 percent

of the home video game market
in the United States.

Howard Phillips: But Nintendo didn't want to just

make a platform
that like early Atari's

could just be crushed by bad product and shovel ware.

- So we had to
figure out some way

to keep bad games, or games
that we did not control,

off our system.

Trip: They wanted
to control everything.

And they wanted to be able
to approve games in advance

and approve the final version

after they would
personally test it.

It was really a financially
challenging model.

- Nintendo's response
was to come down

with an iron fist.

They controlled the market
from top to bottom.

News Archival: The FTC
is still investigating

charges Nintendo
has unfairly monopolized

the highly lucrative
software end

of the video game market.

- They did care what
the titles were and they--

and they were very strict
about it.

They were a bully.

- I don't perceive myself
as a bully.

I don't think that Nintendo
was ever a bully.

And it worked
in the sense that

the home video game business
didn't collapse,

in fact it arose.

- We haven't
done anything wrong here.

What we've done in the last
three and a half years

is to single-handedly
recreate a dead industry.

We have resurrected
the home video game business.

Tom: A lot of the third parties really resented

how Nintendo
had ordered them around.

And it was clear
we needed the support

of important third parties,
and one of the most important

that I could see
was Electronic Arts.

Trip: The part of the industry
that I helped pioneer

was video game publishing
as we know it today.

It was pretty much
an amateur operation

until I launched
Electronic Arts.

I began to take Sega seriously

when I heard rumors that they had a 16-bit machine.

We thought, wow,
we could really

make some great games for this.

And I thought, you know,
why don't we just

figure out for ourselves,

how to make games
for this machine,

and then, we don't
have to be bound

by an onerous
license agreement.

Tom: I'd heard from my staff
that EA had reverse-engineered

the Genesis system
and they were planning

to release games
on the Sega Genesis system

without paying royalty to us.

And I thought that was wrong.

So, I went to EA and had
a rather unfriendly meeting

with Trip Hawkins.

Trip:
Tom was actually very useful

because he's a good, reasonable,
articulate American businessman.

- He may not remember this,
but I asked him,

I said, Trip, did your mother
ever teach you

the difference between
right and wrong?

And he got quite upset
over that.

- Sega said to him,
you work with us, together

to beat Nintendo,
and Trip liked that idea.

- And we worked out
a license agreement

that turned out to be a win-win.

Tom: The EA breakthrough
helped us convince

other third party developers

to take the battle with Nintendo
and just tell them,

they were going to publish
on Sega Genesis.

And Nintendo
wasn't happy about it.

They were so stuck
in their ways,

it made it somewhat easy
for us to take them on.

But we needed a character

who could compete effectively
with Mario.

Shinobu: As Nintendo often said, the name of the game

is the game.

One game can change
the fate of the company.

If I have to mention
only one reason

why Sega succeeded,
it is Sonic the Hedgehog.

[game sound]

Tom: When I finally got a chance to see the actual game,

I was blown away.

It showed off the graphics
of the Genesis system,

it showed off the speed.

I wasn't sure
it could ever be

as successful as Mario was,

but by god, we were going
to try to make it such.

I knew that instead of going
directly against Nintendo,

we had to do
something different.

So, my basic philosophy
was, alright,

we're going to leave them
the 9- to 12-year-old boy,

and we're going to go after
an older age group.

File Footage Sot: 16-bit marketplace, we believe,

is a much more sophisticated
marketplace

and we're directing this
towards the teenager

and the young adult.

Mike:
Nintendo was the game system

your parents wanted you to play.

This was the one that your
kind of devious uncle

would let you play.

Tom: And then,
in terms of our marketing,

we took Nintendo on.

We made fun of them.

Sega Commercial:
Genesis does, Genesis does.

Genesis does, Genesis does.

What Nintendon't.

- Sega does what
Nintendo don't, or something.

I thought it was kind of funny,
quite frankly.

- We also moved
to the famous scream.

Sega Commercials:
Sega! Sega! Sega!

- Sega!

I started taking my kids
to school in the morning

and when our car would pull up,
the girls would yell, Sega!

Back at me.

And I thought, wow,
I've even got the girls

yelling Sega,
this is great.

[♪♪♪]

Diane: We had a goal
to beat Nintendo.

Every time something came up
and it was a hurdle,

it was like, what would
we need to do to beat Nintendo?

Gail: They came in
with an attack,

that Mario
was a dumpy old plumber

and they had something
that was faster,

cooler and, you know, you can't
just turn around and say,

oh, no, Mario's cooler.

- They were an easy target.

We knew they wouldn't respond,
so you could be nimble

and sort of run around them.

Sega Commercial:
[screaming]

- They were in your face
in terms of their commercials

and marketing.

Sega Commercials: Sonic 2 fits easily into any tacklebox.

Act now.

The Sega Genesis
has Blast Processing,

Super Nintendo doesn't.

Tom: I used to get nasty letters from Howard Lincoln,

to cease and desist
our advertising.

- I don't think we took
anything like that seriously

until they started gaining
market share...

Then, we did take it seriously.

Tom:
The work environment at Sega

was really a lot of fun.

We were one of those companies
that had the ping pong table

and we were shooting
Nerf things at each other.

In that sense, we were
a throwback to the Atari days.

- We were a wild bunch of
different types of characters.

Bill: Nintendo,
on the other hand,

was lean and mean.

We were conservative.

Trip:
Nintendo was run like an army.

- Listen up!

You have to take
your oral examination,

you have to take
your oral test.

- And Sega was run
more like a dude ranch.

- I don't think
there's any clearer way

of showing the difference
between the Nintendo attitude

and the Sega attitude
than Mortal Kombat .

Mortal Kombat Ad:
Mortal Kombat!

Howard Phillips:
Mortal Kombat was a game

designed to appeal
to the older interests

of a teenage boy.

Man 1: If you knock her out
two times,

then you get to kill her.

Man 2:
Kids love blood and guts

and it makes it
something exciting.

Howard Phillips: It had
pretty gratuitous violence.

- Taking out hearts
and ripping heads off.

Howard Lincoln:
Blood was flowing freely.

Reporter: Heads are yanked off
with their spines attached.

Consumer:
You take a guy's head off,

that's what the kids
want out there.

Greg: You laugh today

and say, well, what,
why is everybody get

so upset about this?

The problem was,
it was the first game

that has blood in it.

- The publisher Acclaim,
decided to publish

for both Sega Genesis
and the Nintendo Super NES.

Greg: And, when we told
Howard Lincoln,

they actually went into
a deep review and said,

hmm, I don't know if it's
going to fit for their system.

- We were very concerned

with the type of content
of the games.

We had our own
internal guidelines

for what was acceptable,
and we concluded

that we could not allow blood
on the Nintendo version.

Greg: Howard said, you have to
make the blood green.

So we said, sure,
we'll make the blood green.

Is that what you want, Howard?

We'll make the blood green.

Tom: Everybody knew
it was silly

and I thought what Nintendo
was doing was censorship.

Mike: At Sega,
it was the statement that,

hey, we're going to let you see
the red blood and they're not.

- Super Nintendo has a more tame version of Mortal Kombat.

But some believe the company's
effort to sanitize the game

will kill off most of its sales.

- We clearly got branded
as the cool machine.

And that was something
that Sega had never been before.

- We've had three times
as many orders

for the Sega version as we have the Super Nintendo version.

Greg: It was much more
successful on the Sega system

and made Sega
a much more successful company

during that period of time
than Nintendo.

- They cleaned our clock.

Bill White: Mortal Kombat
created quite a fever

in the marketplace
from a sales standpoint,

but it also created
quite a bit of publicity;

from parents.

- Absolutely, I'm concerned.

- I am concerned because
it directly affects

the behavior of my children.

- I am very concerned,

and there is one tape
in particular

that I understand
is very violent.

It's called Mortal Kombat .

Bill: Ultimately, that reached
a point of discussion

where Congress decided
to take a look at game violence.

Lieberman: I think it's time
to draw the line.

I know that one place parents
want us to draw the line

is with violence
in video games.

Howard Lincoln: Sen. Lieberman
and his committee

decided to look into
home video game violence.

- What you're about to see

are scenes from the most violent
new video games.

First we have Mortal Kombat ...

- It is a sick, disgusting
video game in my judgement.

Shame on the people
that produce that trash.

Tom: They thought this was
warping the minds of children

and there should be
government controls

put over what kind of games
should be brought out

into the marketplace.

- If you don't do something
about it, we will.

- The decision was made
to send me,

although I'd only been at Sega
for a few months.

But I did have the benefit
of having multiple years

at Nintendo.

- We decided to send
Bill White to represent Sega

because Bill
had worked for Howard.

And we thought this was gonna
really get under Howard's skin.

- I can't sit here
and allow you to be told

that somehow
the video game business

has been transformed today
from children to adults.

It hasn't been.

And Mr. White, who is a former
Nintendo employee,

knows the demographics
as well as I do.

Gail: Howard was actually
an attorney by practice.

So, I don't know that it was
a very fair setup for Bill.

I think he got kind of
thrown to the wolves.

- Small children bought this
at Toys R Us,

and he knows that
as well as I do.

Bill: Nintendo basically
took the side of the senators.

Tom: Howard Lincoln
presented Nintendo

as being the perfect company.

He pretended to be
literally saint-like.

But then Bill White
pulls out a rifle.

- A rapid fire machine gun.

- And said,
what are you talking about?

Look at this rifle
you guys have.

- That uses
the same technology

to our understanding
with several games available.

And they have no rating
on that product

to suggest
that product's for adults.

Lieberman: Nintendo produces that, you say?

- Yes...
LIEBERMAN: Yeah.

I must say, to me,
that looks like a--

looks like a weapon

Tom: We tried to dissuade the senators from this viewpoint

that everybody who played
video games was a child.

And that just wasn't the case.

- The average
Sega Genesis user

is almost 19 years old,
and fewer than 30 percent

are under age 13.

- They all thought
it was little kids

playing at home
with their moms.

And it wasn't.

Lieberman:
Thank you, Mr. Lincoln.

You're not perfect,
but you're--

you've been a damn sight
better than the competition.

I find the course of behavior
by Sega

the most objectionable
here in these games

that we're talking about.

- It was not a good day
for Sega.

Tom: I was quite angry with
Howard over his performance.

So we had a few nasty comments
back and forth.

- I sent him a poem.

Roses are red,
violets are blue.

You had a bad day, Tom,
bo-hoo-hoo.

Howard Lincoln: But there was a growing concern

that the senate hearings
would have a negative impact

on sales of home video games.

Tom: Because of
the negative publicity,

we were very concerned
about a crash occurring again.

Bill: Ultimately though,
it was in Nintendo's

best interest
and Sega's best interest

to develop a rating system

that allowed the consumer
parents to choose

which games were right
for their children.

Howard Phillips:
It helped establish

that there's different
types of games

that are appropriate
for different ages

or for people
of different tastes,

and ratings really codified
that for the whole industry.

So, it was a great thing.

Tom: The video game market
actually grew substantially.

It actually helped us
broaden the market

to go after
the older age audience

who now said, "Oh, yeah,

there's stuff here in
this video game business

that appeals to us as well".

Anchor: It won't be long
before budding young actors,

who used to dream
of going to Hollywood,

will dream of going
to Silicon Valley.

Howard Phillips: The future
with CD-ROM technology

means the kind of
production qualities

that you're used
to seeing in films.

Mike: In the early '90s,
it was very clear

that CD ROM was going
to be the direction

of games in the future.

- You could make a video game
look like a television program

with photorealistic images
and full motion video.

- Cartridges
were costing like $45.

But with a CD-ROM,
you could have all that data

for a $1.80 at the time.

Tom: We'd heard that Nintendo
was going to work with Sony

on developing
the next video game system

using Sony Optical Disc
technology.

Mike: When we heard that Sony
was partnering with Nintendo,

it sounded like calamity.

How could Sega compete
with those two giants together?

I was actually at
the Consumer Electronics Show

in Las Vegas
when we were all expecting

to hear the joint announcement
from Sony and Nintendo.

- I think there was
the expectation

that we were going to do
something with Sony.

But Nintendo
made a business decision.

I recall announcing
that decision

and I knew it was a shocker.

- Howard Lincoln
surprised the world

by saying
that they were going to use

Philips Optical Disc technology and not Sony,

and they apparently
had not told Sony this

before the presentation.

So the Sony executives
were furious.

- And it was a total,
"What the [bleep]", moment.

Sony was really left
with its pants down.

You gotta think
that made it personal

for Sony at that point.

In Japanese culture,
it was incredible humiliation

for this iconic national brand
like Sony

to be left at the altar
by Nintendo.

- And so, rather than
work with someone else

as a third party
content provider,

they were intent on

developing their own platform

that they could control
from the very beginning.

- We may have poked
a sleeping dragon.

We poked a lot of dragons.

- It may seem like
a footnote in history

for everyone
except the game geeks,

but it really
was a turning point

in the entire industry's
development.

That was like Waterloo
for our industry.

History would
never be the same.

Howard Phillips:
Sony did a very smart job

of entering the market.

Diane: We knew for a fact
that Sony was bringing out

a system that could
really hurt us badly.

Male Announcer:
The games are ready!

Are you?

- When we heard rumors
from the development community

about how powerful
PlayStation was going to be...

particularly about how rich
and fast the 3D graphics were,

we just assumed that it would be a super high-end system.

I mean, if you think about it,

a lot of Sony's
consumer electronics products

were very expensive systems.

- We had heard
that the Sony system

was gonna be
a $500 priced system.

And we didn't think
that would be successful,

because we knew
price was so important

in the video game industry.

- Nintendo wasn't
terribly concerned.

They thought, yeah,
if they're at 500 bucks,

that's a problem for them.

Steve:
There was a lot of talk about

what the price point
was going to be.

It started out at 499,
and then we convinced them

that it needed to be
substantially lower,

and they were all set
to do it at 399.

Trip: I think Nintendo probably thought to themselves,

well, shoot, if they want to be
really aggressive,

they'll offer it at 399,
but that's still too high.

- We agitated
for a long period of time

that it needed to be
a lower price point

right up until the day
of the announcement.

Trip: I was there in the room

when the PlayStation
was introduced.

- I'm going to ask

Sony Computer
Entertainment
President
of America,

Steve Race to
join me for
a brief
presentation.

[applause]

- I had a speech prepared

but I threw it away
and just said...

299.

[applause and cheers]

Trip: He said, 299,
and there was a gasp.

- And that was
the shortest speech

in the history
of Western business, I think.

- Oh, [bleep].
[laughs]

Oh, [bleep].

- We wanted them to say,
oh, [bleep].

We wanted them to know
they're in trouble,

that we're here to play.

- We never saw a price point
like that coming.

There was panic in the office.

- No!

- We knew we were
in for a battle.

- They changed the whole
nature of the business.

Sony ends up being
a real disruptor.

- Sony eliminated Sega
from being a hardware competitor

and it marginalized Nintendo.

Man In Sony Commercial: Hey, plumber boy, mustache man,

your worst nightmare
has arrived.

I got a little surprise
for you here!

3D, lush organic environments.

How's that make you feel, buddy?

Feel a little like
your days are numbered?

- Nintendo kind of
bumped along the bottom

for a number of years.

- Nintendo was eventually
able to come back and fight.

But, for Sega, it was the end.

Shinobu: Sega fought
very fiercely, of course,

we can't give up,
but eventually,

our loss was very obvious.

- It was the death knell
of Sega.

- The decisions started to
revert back to Japan

and I was being ordered
to do things

that I didn't agree with,

and I was tired of not being
able to make my own decisions

for Sega America,
and about that time,

I resigned from Sega.

Howard: When I heard
that Tom had retired,

I sent him a letter.

- "Dear Tom,
I was saddened to learn

that you are leaving Sega."

- "You've done a great job
over the last 6 years..."

Both Together: "...dramatically
increasing Sega's market share,

at our expense."

- "Let me wish you
the very best of luck

in your new venture."

- "All my best,
Sincerely, Howard Lincoln,

Chairman,
Nintendo of America."

- I was really touched
by this letter.

- I felt it was
the appropriate message

to send to a worthy competitor.

I never considered it personal.

It was just a great fight
between two companies.

Hats off to Tom Kalinske,
he did a great job,

it was a great fight.

At the end of the day,
we had better games

and deeper pockets.

Mark:
It's incredible to think

that Ralph Baer toiled away
in his basement,

and his intent was not
to be in record books.

He just wanted to build
something cool.

He just wanted to have fun,

and it turned out
to be something.

Ralph was not recognized
for a long time,

but his idea has blossomed

into a hundred billion
dollar industry.

Why would you not be happy
about that?

Ralph Baer: There's
a horizontal knob here

as you can see.

Trip:
When you're doing something

truly out of passion,

purely driven by your desire
and your sincere belief

in a dream,
and you don't really know yet

what's gonna happen,

and then it works, there's just no better feeling.

David: Now there are
millions of people

working in the video game
business,

and I'm proud of the fact
that we created an industry.

Nancy: Everybody was creating
something brand new.

It was the future.

And so,
you just felt it in the air.

It was, you know, Camelot.

Tom: We had real entrepreneurs, real entrepreneurial people

looking for
the next great thing

and really pushing the envelope
in game development.

Nolan's day
was really the wild west.

Nancy: Nolan likes to say
that he doesn't spend his life

looking in
the rear view mirror.

Nolan: Thinking about
how sad I am over Atari

being screwed up by idiots
is not nearly as important

as new innovative product.

Ideas are actually
the cheap part.

Any idiot who's ever had
a shower's had a good idea.

It's the people that get out
and work on it that matter.

I believe the best life is
when you work hard, play hard.

Whatever you do,
do it with the volume turned up.

[laughs]