Ep. 14: Alex Smith Discusses They Create Worlds

Alex Smith, author of They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. 1: 1971-1982 and fellow podcaster, joins us to discuss the North American console crash of the early 80’s: its causes, its effects, and the lessons we’ve learned since then. 

See more from Alex Smith:

Book: They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. I: 1971-1982

Podcast: http://podcast.theycreateworlds.com/

The Video Game History Hour music is Blippy Trance by Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 4.0 License: http://creativecommons.org/licenses/by/4.0/


Kelsey Lewin  00:00

Welcome to episode number 14 of the Video Game History Hour, presented by the Video Game History Foundation.  Every episode we’ll be bringing in an expert guest, and this guy here is definitely an expert: someone who’s done their research and has an interesting story from video game history to tell.  My name is Kelsey Lewin, I’m the co-director of the Video Game History Foundation.  And I’m here as always with Frank Cifaldi, the founder and co-director of the Video Game History Foundation.

Frank Cifaldi  00:24

Our guest today is Alex Smith, author of “They Create Worlds,” a series of frankly groundbreaking video game history books, at least I assume the other ones will be!  So far Volume I is available, covering 1971 through 1982.  It’s available through CRC Press. Can’t recommend it enough – we’ll talk about that later.  Alex is also the co-host of a sister podcast, also called The Create Worlds, and he’s here today to talk with us about the video game industry crash of the early ’80s.  Alex, welcome to the Video Game History Hour.

Alex Smith  01:01

Thank you so much happy to be here!

Frank Cifaldi  01:04

So the crash is a little more nuanced than I think a lot of people realize.  There’s maybe one or two very large factors, but there’s almost, like, five things happening at once that just contribute to video games essentially going away as an American industry for a while.  Let’s just dive right into it, Alex.  What was the video game industry crash of the early ’80s?

Alex Smith  01:33

Absolutely.  So, first to put a couple of limiting factors on what this was: it was a North American crash of the industry in primarily the United States, but that also includes Canada.  There were industry events going on in places like Japan and the United Kingdom, other parts of Europe that were not strictly affected by that.  Also – and this is a part that a lot of people actually get confused on – it was a console industry crash, specifically.  A lot of people tie what was going on in coin-operated amusements into what was going on in the home at this time, and there was certainly a symbiotic relationship there.  But the arcade industry, the coin-op industry, actually went through its own period of difficulty right before the console industry did.  So they kind of snowballed into each other but were kind of separate events.   So to focus in on this North American console crash, basically it’s not an exaggeration to say that the entire thing got wiped out.  You had an industry that had been growing like gangbusters for two or three years, starting in about 1980.  You had Atari leading the way which, for a brief period of time, was the fastest growing company in history, essentially.  It went from about a $400 million business to a $2 billion (with a “B”) business.  You had the entire industry rising to a crescendo of about $3.2 billion in sales and then plummeting, within the space of about two years, to sales of about $100 to $200 million.  So really a complete wipe out of an industry.

Frank Cifaldi  03:28

So I think we should sort of set the stage for where the industry is at this point.  I don’t know, when is the first sign of trouble?  Maybe mid-’82, something like that?

Alex Smith  03:39

Yeah.  So in 1982, you had Atari kind of leading the way in this marketplace having about 70%, 75% of the industry.  They had a they had a small-but-spirited competitor in Mattel.  Hard to think of calling Mattel small but they only had about 15% of the market. So in video games terms they were small, but coming on strong.

Frank Cifaldi  04:10

And then they also made Barbie or whatever. [laughter]

Alex Smith  04:12

Well, yeah, I mean, they had some toy business, I guess?  I don’t know. [Laughter] But in video games, they were small but definitely distinguished.  And you had a bunch of third-party publishers coming in for the first time: companies that did not have their own video game systems but we’re publishing on other consoles, most notably Activision.  And this had worked out very well in 1981.  The industry was worth over $2 billion and basically companies could not keep up with demand.  There was so much demand for video game product, all of the retailers, all of the distributors, the general public, just wanted more, more, more video games and couldn’t get enough, which caused this kind of snowball effect where the manufacturers started producing more and more product to fulfill all of these rapidly expanding orders from retailers.  And then somewhere around the middle of 1982 everyone suddenly realized, essentially, that there was way too much product on the market and they couldn’t sell it all.  And that’s when the trouble really began. Yeah, and it’s not just that the existing companies are increasing production, we also have an increase in companies producing games all of a sudden.  And that’s when you start seeing, for example, a game literally about dog food on the Atari. Sure!  You know, that one gets brought up a lot, Chase the Chuck Wagon.  Now, in all fairness to the fine people at Purina, that was not something that you went into Toys”R”Us or you went into a Sears and you purchased off the shelf.  It was a promotional thing.  It was more akin to when Burger King did those games a few years back, Sneak King, that you could get.   But it is very true that you had so many companies getting into this industry that didn’t understand what they were doing and only so much talent that could actually work with these systems.  Because as I’m sure many of your listeners know, that VCS, or the 2600 as it was called by this time, was not something that was simple to get to do anything that you wanted it to do.

Kelsey Lewin  06:38

We had a very good episode with Garry Kitchen explaining just how difficult it was to make anything of note on the 2600. 

Alex Smith  06:46


Frank Cifaldi  06:47

Right, and not only that it was difficult, but it wasn’t like you purchased – like you would today – a development kit from Atari with documentation and stuff like that.   Atari didn’t even want people making games for the system other than Atari.

Alex Smith  07:02

Exactly, there were a few individuals that had reverse engineered it, and some of these people would offer their information for sale.  There was one guy that was offering, I think, a dev manual for, like, $20,000 a pop.  And that’s where a lot of these companies learned how to work this thing.  But that dev material just basically told you what the calls were.  “Do this to do this.”  It didn’t tell you how to be good at making something happen.  It didn’t tell you how to do slanted platforms and Donkey Kong, as Garry Kitchen was able to do

Kelsey Lewin  07:36

Make Combat again.  People want more combat, right? [laughter]

Alex Smith  07:39

Right!  It was a system that was made the play Pong and Tank, two early 1970s arcade games that had no more than four or five objects on the screen at a time, and now it’s been asked to do Space Invaders, Pac-Man and beyond.  It’s a miracle that anyone was able to do anything with it.  But truly, you had to have a certain level of talent to make it do anything at all.  You had all of these companies popping up and there just wasn’t enough talent to go around.  But that’s one of the factors that gets talked about a lot, that there were all of these bad games coming out.  And don’t get me wrong, there were definitely bad games.  But the fact is, every single game that was released could have been the most absolute brilliant game ever made and you would have still had literally 200% of market demand.  There was only so much that people could afford to buy or that the people wanted to buy to play on these video game systems.

Frank Cifaldi  08:43

Yeah, so what starts happening?  So we’ve we’ve got, obviously, stores have… Well, we’ve got a lot of product being manufactured, but in addition, we have a lot of stores who are sort of over-ordering trying to meet this demand, right?

Alex Smith  08:58

Absolutely.  Because in 1981, nobody got what they wanted. In 1980, nobody got what they wanted.  There was this trend with retailers and distributors of knowing that they were not going to get what they wanted.  And so what distributors and retailers started doing is deliberately over-ordering.  If they thought they could sell 200,000 units of something they would order 400,000 units because they knew that Atari, or Activision, or Mattel, or whoever they were ordering from, would only give them 200,000 units and then everything would work out. 

Kelsey Lewin  09:36

I was just going to say, for a modern perspective on this as someone who owns a game store, I’m having to do this with Pokemon cards right now.  So I’m curious to see the inevitable Pokemon card crash again. Obviously, Pokemon cards haven’t been nearly this popular since the late ’90s, early 2000s, but I’m doing that exact Same thing that happened here in the game crash where it’s like, “Well, they can’t give me the Pokemon cards I want, so I’m going to get a second distributor and I’m going to try to order three times as much as I actually want.”

Alex Smith  10:11

There you go.  And when the Pokemon market collapses, remember, you heard it here first.  [Laughter]  It’s so true!  This was a problem both at the retailer level.  And you also mentioned, you know how you were getting a second distributor?  Well, this was also going on in video games.  When Atari was first setting up its distributor network, they set up a pretty orderly network.  They gave everybody territories.  They had manufacturers reps, those reps each had a set territory, and then they would sell to individuals within their territories.  As supply became constrained as nobody could get what they wanted, these manufacturers reps started encroaching on each other’s territory.  And so you would have multiple people selling into one territory.  Then Atari confused the matter even more by allowing certain of their best customers to serve as their own regional distribution centers.  So rather than strictly being manufacturers reps working on behalf of the company, they were their own independent agents that were still buying their product from Atari and then serving as a regional distributor of their own.  So in some cases, Atari, his manufacturing reps were selling into an area AND these super-distributors were selling into the same area.  So if you’re not getting enough product, what are you going to do?  You’re going to order from both of them and hope that between them it comes through.   So that’s the real mess.  A lot of popular histories like to focus on how bad a lot of these games were.  I think that excites us, from the point of view of being video game fans and being into the games and saying, “These games are great, these games are not so great.”  And I’m sure consumer confidence was shaken a little bit by some of the substandard quality.  But at the end of the day, it was a pipeline issue, as boring as that may sound.  It was logistics.  There was 200% of market demand out there and it was just unsustainable.

Kelsey Lewin  12:24

And so when you have this many games, you have all of these retailers that have games that they can’t sell.  Now, it becomes a problem for the companies who are making good games.  I mean, even if we’re not looking at this from a good game/bad game standpoint, even the really good, the Activations and that sort of thing of the world, how are they supposed to compete when retailers already have five times as many games as they need to sell and they’re having to discount them?

Alex Smith  12:54

Exactly, you just can’t do it.  So what inevitably happened is that all of these games were discounted just to clear the inventory.  So if you could go to the front of the store into these discount bins and buy one game for $5, or even by the end of it, five games for $5, you’re not going to go to the new game rack elsewhere in the store and pay $34-$39 for a new game because the economics are just not there.  Because in this period of time, console games really were primarily for children.  You were primarily looking at a demographic of somewhere between, say, 6 and 14.  Older teenagers would tend to go to the arcade to play games instead and adults in general didn’t play at all.  So the kids were not the ones buying.  It was their parents buying for a birthday or for Christmas, especially since these were very expensive items.  Especially when adjusted for inflation.  So if dad or mom are going to the store and they’re looking at this, they’re like, “Well, Jimmy said he wanted this game, but this game is $40.  These five games here look very similar and I can get these for, like, seven bucks all together.  Then I look great because I got him a bunch of presents and it’s all the same, anyway.  What are these video games I don’t even know?”  So that’s what would happen.  You just couldn’t reach the public to go find those those $35-$40 games that would allow the companies that make the games to continue to make the money they needed to make to keep operating.  It was just a vicious cycle of discounting and losses.

Frank Cifaldi  14:48

So this excess product is in stores essentially because there’s, in a lot of cases, no one to return them to, right?

Alex Smith  14:57

Right.  So in some cases Is the companies that made these games, especially the smaller companies, they wind up in trouble very quickly.  So they really can’t offer any kind of refund and are starting to go out of business.  But I mean, a company like Atari could have theoretically offered some kind of money-back situation and absorbed inventory.  But I’ve talked to people at Atari and one of the things that I think gives me a different insight into what happened in this period is, I’ve talked to a lot of the executives that were there.  Sales people, marketing people, even presidents and CEOs.  And it feels like that’s a demographic that has been generally underrepresented really throughout video game history, but especially in these very early days.  A lot of these people had never been interviewed before.  And at Atari, there was a feeling – because Ray Kassar, the CEO of Atari at the time, he was a marketer.  That was his background, he came out of the textile industry out of Burlington, but the important thing is that he was a marketer.  And when this happened, he felt that Atari could market itself out of the situation.  He didn’t feel like they had to take back a lot of inventory and destroy it because he thought that the Atari name, the Atari quality (such as it still was at that point), would win out in the end.  And so there was kind of a hesitance by the bigger players to even try to take stock back, at least on a on a large scale.  If a big retailer demanded you take some property back, you’d do it maintain the relationship.  But yeah, there was really an attempt to just kind of push through, and that was probably not the right instinct in this particular case.

Frank Cifaldi  17:02

So what was the theoretical push?  Was it that you should only trust Atari, right?  Like, “Don’t buy the knockoffs!”

Alex Smith  17:11

Yeah, you know, Atari always kind of existed in its own little bubble in this period.  They were a big part of why 200% of the market was met because they basically never stopped acting like they were the whole VCS market.  I mean, they acknowledged that Mattel had some certain percentage of the market, or Coleco had some certain percentage of the market in 1982.  But they kind of just ignored that there were other companies making product for their system and continue to act like all of the games that we’re going to be purchased for an Atari VCS were going to be Atari Games, which is just not what the situation on the ground was at all at that point.  But that’s how they were producing, that’s how they were doing product rollouts: as if they were the only game in town.

Frank Cifaldi  18:03

And that kind of leads to its own issues in terms of things like their relationship with their investors, right?

Alex Smith  18:14

Sure.  So there were a lot of internal problems at Atari during this time period in the consumer division.  The consumer division had grown very quickly.  And that’s one thing we have to remember – to not just do not just beat on them this whole time – is that this is an organization that in 1979, right before Space Invaders appearing on the VCS caused the entire market to really take off, was very small, had just a core group of maybe around a dozen programmers.  Just a small number of people in sales, a small number of people in marketing.  And then it had to grow really, really fast.  When a company takes off like a rocket, and like I said, went from about $400 million in 1980 to $2 billion in 1982, you suddenly have to bring in a lot of new middle management.  And you discover to a large degree that the skills needed to run something that massive don’t necessarily correspond to the skills that are useful when you’re starting out and are just really tiny, if you can call $400 million tiny.  It’s only tiny in comparison to what would come later, but it was tiny.  And they were just kind of always trying to catch up.  Mistakes were made during this period of time because a lot of people ended up out of their element.  One thing that I’ve heard in particular that was going on and 1982, that I’ve heard from a couple of sources is – and this is, again, kind of boring accounting stuff you can say, but it’s kind of crucial to what happened.  They were not properly matching the orders and the receivables.  So what I mean by that is, Company A orders a certain amount of product.  Company B orders a certain amount of product and company C orders a certain amount of product. Well, let’s say that company C ends up being the first one to pay their bills.  They’re the first ones to pay for the product.  Well, they didn’t, from an accounting perspective, then tie company C’s payment to the actual inventory company C purchased.  They just said, “OK, well, X amount of units have now been paid for.”  Therefore, they might end up attaching it to say company A’s order, even though the two had nothing to do with each other.  And so basically what happened is they had money coming in and product going out, but they weren’t always matching these two things to know who was paying, who was not paying.  This is part of the reason why they got into an over-ordering situation, because if it turned out that company A ordered way too many units, they don’t know that.  So if company A orders again and orders to ton of units, they have no one to say, “But wait a minute, company A still hasn’t paid us off for all of these units, so maybe we shouldn’t do this next order because it sounds like they’re still sitting on inventory.”  They didn’t have that control in place.  So they, at any given time didn’t, really have a good idea of what inventory had sold and what inventory hadn’t sold because they just weren’t tying the bills to the to the inventory.  Again, I know this may sound like somewhat boring accounting stuff.  But it really goes a long way to explain why suddenly there were millions more units on the market than that they could actually deal with.  They had no idea what was going on.  And I think this was just largely a product of how fast they were growing and not being able to get controls in fast enough.

Frank Cifaldi  22:27

Yeah. And that’s one of the factors that we’ve heard for years now, that Atari was over manufacturing its product.  But I didn’t really know a rationale for that, really, until about two minutes ago. [laughter]

Alex Smith  22:48

Right?  You know, this is a Mattel story, but I talked to Josh Denham, who was the president of Mattel electronics during this period, and I think he summed it up the best of anybody when he said when Mattel started getting orders for like a billion dollars worth of product – and remember, this is a company that had only 15% of the market – so for them to get a billion dollars worth of orders… That was way too high!  And as Josh didn’t put it, “We knew the number was too high.  But the problem was, we didn’t know what the right number was.”  And with something like cartridges, where the manufacturing lead time is so great, you basically had to hit it right on the head the first time you did it.  There was not time for reorders.  With CD, as came later on the PlayStation, or of course today with digital, where you’re often not even putting out a physical product, you don’t have to worry about that.  You have a sales target; you tie your development budget, your R&D budget into what you think your sales are going to be.  But you don’t have to worry about hitting it with your first shipment.  Back then you had to kind of hit that first shipment to get what you were going to get because by the time a reorder came in and it took another three months to manufacture the new cartridges, you’d already missed your market.  So these companies were kind of caught in a real Catch-22 kind of situation.  They didn’t want to fill necessarily all of the ridiculous orders because if they did, they’d end up losing money because there’d be product left on the shelf.  But if they went too low, they’d miss their market and they wouldn’t sell enough either.  So they they had to kind of try to figure out what the target was and they just didn’t have the sophisticated retail distribution tracking mechanisms to figure that out in real time.  So there was a lot of guessing going on. And then as I said, Atari compounded things within their own shop by letting their receivables and their inventory get so divorced from each other.

Frank Cifaldi  25:07

Now Atari also, you know, we touched on this briefly, is accepting and warehousing returns from retailers, which is kind of causing its own problems right?

Alex Smith  25:22

Sure.  So, I mean, Atari does take some inventory back, because I said Ray Kassar really wanted to try to push through, and their main strategy was to push through.  But they did end up with a lot of inventory piling up in warehouses.  It wasn’t necessarily all returns.  Basically, what happened… I’ve talked to a couple of the financial people there, including the CFO, Dennis Groth, and basically sales were going well, sales were going well, sales were going well… and then Thanksgiving weekend, which is of course the real start of the Christmas shopping season back when Black Friday really still meant something, suddenly sales just stopped.  Just completely ground to a halt.  And you know, we’re talking about Atari sales here, we’re not talking about necessarily what people are buying in the stores.  Atari sales to distributors and retailers just halted full stop.  Barely anything.  And of course they’re still pushing out product and so they do have a lot of inventory backing up in warehouses, which led to some burials.  The most famous burial, the New Mexico one that was the subject of the documentary, that was actually largely due to factory closure, because they were closing their El Paso factory nearby and moving a lot of manufacturing overseas.  A lot of their inventory burying actually happened in California in places that have still not been disclosed.  

Frank Cifaldi  27:02

Sequel! [laughter]

Alex Smith  27:03

There you go!  So yes, they were literally burying inventory out in the desert that was just becoming backed up because nobody was buying it anymore.  And, you know, that that brings up a very interesting point naturally on its own, which of course is the entire E.T. thing. 

Frank Cifaldi  27:22

Oh, oh, there it is!  I was timing it!  So, took about 22 minutes… [laughter]

Alex Smith  27:24

There it is!  You know, I I do a similar thing, actually, with my interview subjects because this is very interesting.  E.T.’s actual impact on the wider video game industry is obviously very overstated.  But every single person I have talked to – every single one – at some point brings up E.T. completely unprompted.  And I’m talking about the people that were in charge of these companies.  When Josh Denham, the president of Mattel Electronics, or Arnold Greenberg, the CEO of Coleco, Michael Moone, the president of Atari Consumer, Dennis Groth, the CFO, on and on and on, over a dozen people, all of them always bring up E.T. all by themselves without me ever even asking about it.  So clearly, there is some collective societal trauma associated with E.T. even if we have exaggerated its actual importance to the crash.

Kelsey Lewin  27:29

It is a really good symbol, in a way, just in that it’s a game that was so highly anticipated and so disappointing.  So it’s a good vignette, I guess, of if you just want to explain it really, really, inaccurately but quickly in a way that like it kind of sort of makes sense.  A decent symbol of it.

Alex Smith  28:55

Oh, yeah.  I mean, it is a poster child because it is a game that was rushed, it is a game that did very poorly.  And the reports of it’s a poor performance are certainly not an exaggeration.  In Howard Scott Warshaw’s “Once Upon Atari” documentary, there’s a brief moment where a portion of a total cartridge net sales chart, that was done in the late ’80s during the Tramiel Atari Corp era, appears in the background And some of us have freeze-framed that and taken what figures from that we can and it shows that E.T sold 2.9 million net units in 1982, the year it came out. And then in 1983, it sold negative 600,000 units, because these are net sales!  So that means that the damage is even worse than that, because you figure they sold at least a few units in 1983 that offset that negative figure.  So, I mean, that’s really bad!  I mean, they literally sold hundreds of hundreds of thousands of NEGATIVE units the next year.

Frank Cifaldi  29:53

[Astonished laughter] Well, how does that compare to other highly manufactured product, like Pac-Man?  Were they returned for quality reasons or was it just excess supply?

Alex Smith  30:27

A lot of it was excess supply.  The story has been told a lot so we don’t need to dwell on it.  But basically, they had to sell a certain number of units in order to recoup their costs, because they had paid a very high upfront licensing fee.  And so in this case, they were manufacturing as much to their hopes and dreams as they were to market reality.  So there was an over-manufacturing.   You bring up Pac Man, which I think is definitely worth bringing up because actually Pac-Man, it appears, was actually not over-manufactured.  Or at least if it was, not in the way that’s been commonly reported.  And this is actually a good illustration of some of why I’ve gotten involved in this and and some of what I’m trying to accomplish.   So kind of the gold standard for a long period of time on video game history was Stephen Kent’s book, The Ultimate History of Video Games, by virtue of the fact that he’s a good writer that had a lot of good stories in there and nobody else had really ever tried to pull all of that together before.  Leonard Herman had certainly done his Phoenix, but that was more of a year-by-year, “this was released here, this was released there,” were his Kent’s was the first real narrative history that was really kind of trying to get behind the people, the personalities, the stories.  And what it seems happened is in one of the interviews in that book, Ray Kassar in the blockquote (so it is definitely something he said, not something that Kant is interpreting), says that they shipped 12 million Pac-Mans.  Contemporaneous reports to the time Pac-Man was released indicated that it sold 7-7.5 million, something like that.  So at that point, you just do the math: “OK, they shipped 12 million, they sold 7 million.  Oh my gosh, look at all of those unsold Pac-Mans.”  So that’s the surface level story, right?  But we have to remember that Ray kasar, who was the CEO of Atari, is giving an interview at this point probably about fifteen years after the fact.  The first edition of Kents book came out in 1999.  The interviews were obviously probably done a couple of years before that.  So ten to fifteen years after the fact.  He’s not got any documentation, he’s not reading off of some old Atari corporate sheet.  He’s just saying a number that felt good to him, quite frankly.  I don’t mean that he’s been intentionally deceptive, I’m just saying that memory is incredibly fallible.  So it seems likely that that 12 million figure was a number that was not pulled out of thin air, but was pulled out of Ray Kassar’s mind well after the fact and was probably not accurate.  So one of the things that I’ve tried to do, of course, is to get a lot of perspectives from individuals, and also from contemporary or contemporaneous, I should say, news reports and trade publication reports.  I’ve talked to several people that would have been involved in any decision to manufacturer that many Pac-Mans and none of them remember ever authorizing the production of more Pac-Man units than there were consoles.  I’ve talked to the VP of sales and marketing, I’ve talked to the CFO, I’ve talked to the the president of the consumer division, and they would have all been involved in that kind of decision.  And when you actually stop and think about the story logically, it really starts to fall apart because there’s… There’s something called tie ratio in any sales of this video game stuff, and it’s basically if you have a particular game, how many people that own your system tend to tend to buy games of this type?  And by far, the most successful game up to that point had been Space Invaders on the VCS.  Space Invaders was probably bought by somewhere between 30% and 50% of all VCS owners, which is an absolutely incredible tie ratio. I mean that’s –

Frank Cifaldi  35:35

Yeah, I don’t even think that’s like a Grand Theft Auto number these days.

Alex Smith  35:38


Kelsey Lewin  35:39

The only game I know with an actual attach rate of one-to-one was Breath of the Wild early on in the Switch.

Alex Smith  35:47

Right, right!

Kelsey Lewin  35:48

I mean, like, that’s not done!  There is no game that sells to every owner of a console. 

Alex Smith  35:54

Exactly. And even at that time, they realized this.  Obviously, Pac-Man was going to be a big game.  And obviously they were hopeful that it would be a system-seller; that it would be a killer-app.  But everyone at the company would have had to have been struck by a sudden bout of temporary insanity to assume that they were going to sell 110%-120% of games.  It just wasn’t done.  And I think there’s kind have been this tendency to rag on Atari management and so people kind of just accepted that.  I mean, you know, historically speaking, kind of accepted that.  Well, “Oh, there’s Atari, again going off and doing silly Atari things!”  But in point of fact, that’s actually a bit too silly, even for Atari!

Frank Cifaldi  36:52

Yeah, let’s be clear: there were many stupid things that happened at Atari!  This is not one of them.

Alex Smith  37:00

Exactly.  And it was actually very successful.  And actually that same net sales information, we now have a physical document.  So it’s one of those things where it’s always hard to prove a negative, right?  So that once that story is out there, you can say, “Well, that doesn’t sound right…” and then be like, “Prove it!”  “Well, nobody remembers that.”  It’s like, “OK, but that doesn’t mean it didn’t happen, right?”  So you get into that situation.  But that same document that shows those E.T. sales shows that Pac Man sold about 7.9 million in 1982, which tracks with what the news reports were saying at the sign.  And then it said that it sold additional copies in 1983.  I forget the number off the top of my head, but these were net sales. So remember how the E.T. number went negative because they were overstocked and they had returns and all of this?  The Pac Man number didn’t go negative.  So if they had really manufactured 4, 5, 6 million additional unsold units, you would have seen the bottom fall out of that number in that official Atari report.   So I think Pac-Man was actually a pretty big hit.  The news press at the time said it was a big hit.  The people that were there say it was a big hit.  And I think Ray kasar inadvertently threw a number out that was then interpreted in a way to make it look bad.  But I don’t want to let Pac-Man off the hook because it’s it’s certainly not a great representation of the coin-op game.  I think – and I I have not talked to him personally, but this was you know, I talked to somebody who talked to somebody kind of thing – I think Skip Paul, who was the legal counsel at the time at Atari, and then later became president of coin-op and then became a huge big wig.  I mean, he’s a huge media mogul now.  But I think he put it best that the real problem with Pac-Man wasn’t that it didn’t sell, because it’s sold great.  But the problem with it was, this was the last time that the public was going to see the name Atari.  See the name of a hit game next to the Atari name and feel like, “Well, I’m definitely going to buy this, I can definitely buy this.  This is going to be worth my time.”  It kind of breached the trust between Atari and the consumer because it was a bad port.  There were reasons for it. Some good reasons, some questionable choices, but it was a bad port.  And I think that did cause a breach of trust.  And so going into that holiday 1982, I think that caused buyers to be more wary and was probably part of the reason why people didn’t just pick up E.T. because it was E.T. and because it was Atari.

Frank Cifaldi  40:02

Well, and then plus, going back to what you were saying earlier about Atari’s perspective being to just weather the storm.  I mean, this is probably a big hindrance in that because, like I was saying earlier, I think the only way that they market their way out of this is to establish the Atari name as the only one to buy.  But if you’re disappointing people with the two previous, giant, sort of “triple-A for their day” releases, that the name doesn’t really hold a lot of weight anymore.

Alex Smith  40:38

Exactly.  And actually, there’s a third one as well.  It doesn’t get talked about a lot.  But actually, Atari had two big Christmas releases for 1982.  E.T. was one of them.  And the other one was Raiders of the Lost Ark. 

Frank Cifaldi  40:53


Alex Smith  40:54

A lot of earlier sources pegged it as a 1981 game, which I think led to some of the confusion and people not realizing, but it was actually a holiday 1982 game.

Frank Cifaldi  41:05

And it’s also a Howard Scott Warshaw game.

Alex Smith  41:07

It’s also Howard Scott Warshaw.  And regardless of what merits it may have, I think there was a general consensus that it was a very difficult game.  And we do have to remember that this is still largely a young audience.

Frank Cifaldi  41:24

Right, it’s not difficult in the sense that the game is challenging.  It’s difficult to comprehend.

Alex Smith  41:33


Frank Cifaldi  41:35

They both were!  That’s a problem with both of these games. 

Alex Smith  41:38

Exactly.  You know, Howard Scott Warshaw was was very ambitious with both of them.  I think just in the context of the limited VCS, perhaps that was a bit too much ambition.  But the real problem is, is you’ve got two Indiana Jones games on the market in 1982: you have Raiders of the Lost Ark and you have Pitfall!  It may not have a license, the guy may not be called Indiana Jones.  But Pitfall! is essentially an Indiana Jones game.  Just put Raiders of the Lost Ark and Pitfall! side by side and, I mean… Which one are you going to buy, honestly?

Frank Cifaldi  42:18

Right? Which one are you going to comprehend what’s even happening on the screen?  I don’t mean to kick Raiders of the Lost Ark but that, that game?  It requires two joysticks!  

Alex Smith  42:31


Frank Cifaldi  42:32

That second joystick is for, like, inventory management on the Atari! 

Alex Smith  42:38

And there’s some really finicky things where you have to switch between inventory objects very quickly for certain puzzles.  Like, there’s the mid-air, right?  You’re using the parachute, and then while you’re using the parachute, you have to pull something else out…  I’ve never played it so I forget the exact sequence.  But there are some complicated puzzle chains for the VCS, for a system that’s really best suited to action games.  So that goes to exactly what you’re saying. It’s not just that those games were disappointments, but look at Raiders and then look at the Activision equivalent essentially, which was Pitfall!  And it’s like, “OK, maybe Atari isn’t the one that’s really doing the best work anymore.”

Frank Cifaldi  43:23

So this puts us at Christmas ’82 which… I mean, am I remembering right?  Is this sort of the quarter that they report that just is the fire that burns everything down?

Alex Smith  43:37

Yes.  Right, December 8, is when Warner Communications does its fourth quarter report. So we we have to remember, of course, that Atari is a wholly-owned subsidiary of Warner.  So Atari doesn’t report results but Warner reports results.  And they have, of course, their conglomerate.  They have the movies, they have the music, they have book publishing, even more esoteric things.  Atari is part of their toys and games division; it’s essentially the entire toys and games division.  They technically own a couple of other things but but all of the revenue is coming from Atari.  So atari had been forecasting the entire year – and Warner, I should say on their behalf has been forecasting the entire year – 50% growth over the previous fourth quarter the year before.  And they hold to that for a very long time.  Of course, the analyst community got on them for that, but judging from what I’ve heard from the internal people, they really realized they had their problem at Thanksgiving.  Some people in the company knew as early as August that the warehouses were getting kind of full and they were getting nervous.  But the orders were still tracking at the moment, and of course a lot of that inventory doesn’t ship out until right before the Christmas season because things were much more seasonal then.  So it wasn’t until Thanksgiving that they really realized they had a problem.  And they’re announcing the quarterly results December 8.  There’s not a lot of time there.  So they finally, on December 7 – literally the evening of December 7 – is when they first clue in investors, “So we’re making an announcement tomorrow and it’s not going to be great.”   So, on December 8, they announced that the company still made money, and that growth is going to be 15%.  And so you may ask yourself, “OK, well, 15% isn’t 50%, but it’s growth, so… Why is there a problem?”  The reason there’s a problem is that Warner Communications had prided itself on the fact that it did better every single year than the year before.  Not just that the company grew compared to the year before, but the growth was greater than the year before.  For thirty-six consecutive quarters, Warner Communications was able to report that the company grew more this year in this quarter than it did last year in the same quarter.  Thirty-six consecutive quarters, which is an eternity in in Wall Street terms!  So that 15% growth, even though it was growth, it was the first time that they didn’t grow more than the previous year’s comparative quarter in thirty-six quarters.  So that was the equivalent of some other companies saying, “We’ve just lost $50 million,” or something.  I mean, this was an earthquake in Wall Street terms.  And it led to a lot of panicked selling-off of Warner stock because that was an indication within that specific context that something was seriously wrong.  Plus, all of the analysts were majorly, majorly pissed off at them because they were told right up until the eve of the announcement that growth was going to be huge.  And so that’s what they’d been telling their institutional investors and other people that depended on them, so they all looked stupid.  So of course, they have no interest in bucking up Warner or defending Warner once this happens, and so they all start savaging the company immediately, as well.

Frank Cifaldi  47:44

And when you’re savaging Atari in 1982, you’re savaging video games.

Alex Smith  47:50

You really are.  In the minds of the public, it’s very synonymous.  A lot of people just referred to playing video games as “playing the Atari,” much as they did with Nintendo and the Nintendo Entertainment System in the 1980s, because they were 70%-75% of the market.  That fell a little bit by the end, but a lot of that fall was because there were other third parties making games on the VCS.  The Intellivision and the ColecoVision and the Odyssey 2, which was technically still a thing, they never had nearly the market share, nearly the mindshare of Atari.  So that’s the business from a public perspective, is Atari.  So if Atari is falling apart, as you said, everything is falling apart.

Frank Cifaldi  48:43

So that obviously must have a chain reaction and, in fact, what comes to mind for me – I’m sure you must have watched this, Alex.  I think you did as well, Kelsey, because we actually kind of screened it and one of our exhibits.  There was this great contemporary documentary being shot at the time with the developers at Imagic.

Alex Smith  49:05

Yes!  [laughter]

Frank Cifaldi  49:07

Where, you know, they have embedded film crews talking to and filming these guys making games and they’re getting ready to go public.  They’re getting ready to start selling shares in Imagic.

Alex Smith  49:23

December 10, 1982, to be exact. 

Frank Cifaldi  49:25

Was the sale date?  God… [laughter]

Alex Smith  49:26


Kelsey Lewin  49:27

What a horrible one to pick…

Frank Cifaldi  49:31

So we have this embedded crew showing all of this happening and then showing the downfall that was immediate, as well.

Alex Smith  49:40

Absolutely, yeah!  They had to cancel that IPO.  For some reason, nobody was interested in buying video game stocks two days after Atari made that announcement.   So right, so in the first part in 1983, you have two things going on.  One of them is this is the quarter that really all of the overstock and returns really start making themselves known.  Because the toy stores and the department stores and the discount stores, they’re putting their full faith and effort to selling as much as they can, at as good a price as they can, through December 25.  Through Christmas.  So it’s really right after Christmas that you start getting the retailers demanding returns, or demanding discounts, or putting out discount bins in the front of the store… All of that stuff is really starting to play out in the first part of 1983 when it becomes apparent that not nearly all of the inventory moved at Christmas.  And we have to remember: video games really are seasonal at this time.  Atari had made great strides in getting people to purchase cartridges kind of year-round, but the systems only sell at Christmas.  And the majority of the cartridge sales, even though they released throughout the year, are still at Christmas.  So there’s no way that all of this stuff is going to move at full price in the first few months after Christmas.  It has to be discounted.  So that’s what’s going on in the retail end.   Then on the institutional investment end, you have this disastrous report from Atari, which is followed up early in 1983 by disastrous reports from Activision, and Mattel, and all of these other companies.  With all of these disasters reports coming out, no one is going to extend additional credit.  No one is going to put additional money in, make additional investments in any of these companies that are suddenly in a an absolutely disastrous situation.  And so it’s not like you’re going to be able to get money to weather the storm and be like, “Oh, well, we’ll just we’ll just let the pipeline clear itself out at a buck apiece and then once that stuff’s all finally out of there, we’ll go back to making real games again.”  It’s, like, they didn’t have the access to capital that they needed to be able to do that.   The one exception was Activision.  Activision, miraculously, somehow managed to go public in March of 1983.  And I’ve talked to the CEO of Activision.  I mean, I asked, “How the heck are we able to do that?”  And he said, “Well, we we were able to position ourselves as an entertainment company instead of a video game company.” And good for them!  I don’t know how they managed to pull it off, but they did.  And then they lost money for four straight years.

Frank Cifaldi  52:38

But all I can think of is just, you know, licensing Pitfall Harry for cartoons and merchandise and stuff like that.

Alex Smith  52:43

I guess, yeah.  They did start to make Pitfall! kind of transmedia before that concept existed so that could be absolutely a part of it.  But you see, that’s the reason Activision lived.  They went public and they still took a bath for four straight years, sixteen quarters of losses.  But because they were able to go public right before, they had money.  So they just burned through cash.  And they had to layoff people and they had to scale back, but they burned through cash.  Other companies couldn’t burn through cash.  Warner Communications could have probably afforded to burn through cash because they were a major diversified conglomerate.  But Warner is not just Atari, Warner is this whole media empire.  And there were other people out there that coveted that media empire, one of them being Rupert Mturdoch – yes, that Rupert Murdoch.  So as Atari is dragging down the Warner stock price, suddenly Warner becomes a viable takeover target for Rupert Murdoch.  So, basically, the company… Steve Ross, who was the owner of the company and the chairman, was fighting for his life throughout this entire time period because of the depressed stock price, so they could not wait for Atari to turn around, either.  They couldn’t just say, “Oh, well, we’ll just weather this and then come back in two years.”  If they did that, it would be Rupert Murdoch’s Warner Communications and the history of the world would have been very interesting.

Frank Cifaldi  54:02

I don’t want that guy to own Bugs Bunny.

Alex Smith  54:21

Right!  So, Warner had to bail out of Atari and, you know, that was the best positioned company.  Mattel very nearly went bankrupt.  I mean, they were on their way out.

Frank Cifaldi  54:36

Let’s, like, record halt here, right? 

Kelsey Lewin  54:37

Yeah, that’s a big deal!

Frank Cifaldi  54:41

Like, Mattel had a lot more going on than video games.  Again, this is the Barbie company!

Alex Smith  54:47

Exactly.  But video games became the tail that was wagging the dog.  They had so much capital tied up and so much inventory tied up in video games, that it nearly dragged down the entire company.  And it really came down to Michael Milken, the the so-called “Junk Bond King,” and say what you will about him – and there’s plenty to say – but basically they went to Milken and he said, “Barbie cannot go bankrupt.” And I mean, you know, he puts it in this kind of altruistic term.  Obviously, he also saw that long-term, Barbie was not going to go bankrupt as long as it could get these video game losses out of the way.  I mean, he was in it for a profit.  But he said, “Barbie cannot go bankrupt.”  And he invested enough money for them to bridge the gap period.   Essentially, in a sense, became an angel investor.  (I mean, that’s not the literal definition of an angel investor.)  But that’s essentially what happened and saved them at the last moment.   Coleco, of course, had the great fortune to have only just gotten into it, which made it a little easier for them to get out of it when they had another big hit come along, which was Cabbage Patch.

Frank Cifaldi  56:07

Right.  OK, so we’re now in ’83.  Basically all – not all, but for the most part – video game companies are just kind of dying off left and right.  The ones that exists are maybe reducing their output because they just can’t sell in this market.  We’ve got stores full of inventory that they can’t do anything with but just try to get rid of at whatever price consumers are going to pay.  I’m simplifying things a little bit here, but that’s essentially video games for the next two or three years, right?  Are just this excess inventory that’s sitting in stores that’s being sold for as low as a buck a pop.

Alex Smith  56:57

Absolutely.  And that’s really… I mean, you talk about how there were a million different things going on, and there certainly were.  But that that macro-level view really does sum it up pretty well.  And there just was no way to continue the industry during that time period.  Retailers were fed up just trying to get rid of what they already had.  They would take new product; there were a small number of new games released even in 1984.  They would take new product, but they would only take it in very limited quantities and only on their terms.  I mean, I talked to people that worked at Activision during the Mediagenic days in the late 1980s.  And according to some of the people working there then, they were still paying a price with retailers at that time for what happened in 1982-1983.  Retailers were still playing hardball with them, were still refusing to give them good terms on new product, because they were still furious about what happened in 1982-1983.  And not just furious from an emotional perspective, but furious from a bottom line perspective of so much damage was done.  “We cannot let you damage us in that way again.”  And so you could get a small amount of new product in but you often didn’t have very good margins on it. And then of course, often, as we already said, it didn’t sell because mom and dad come into the store and figure they can be a hero by by getting ten games instead of two games. And so they go to the discount bin.  And by this time, there are even some good games in the discount bin!  So, you know, little Jimmy and little Susie might not even be unhappy with that haul.  It just meant that nobody was going to buy a brand new, full priced game in 1983 or 1984.  It was just impossible.

Frank Cifaldi  59:05

And it’s like if you were a video game fan at this time, you just have unlimited supply.  It might not be new but you probably don’t even know that because there’s not even video game magazines anymore telling you what’s new, so… You can go to the store once a week and get a new video game!

Alex Smith  59:26

Right!  And you know, because coin-op had a downturn at the same time, which really it was… I mean, they were slightly symbiotic with each other, but they were unrelated in the sense that the market forces causing problems were different.  But because coin-op had collapsed at the same time, it’s not like people were going out and playing the latest Space Invaders or Pac-Man in the arcade and then demanding it in the home.  That’s a lot of what drove the early sales, is being able to play Space Invaders, Pac-Man, Defender, Berzerk, etc., in the home after playing them in the arcade, but there are no coin-op hits coming out during this period.  So yeah, there isn’t an impetus to even go towards the new.  So you could just catch up on on the games you never bought the first time around for $40 for $2 apiece and be fine.  If you were super, duper into gaming, like a true hardcore game aficionado, then you went out and bought a Commodore 64.  And there were still a lot of great Atari-style action games coming out on that system with much better graphics and killer music, so…

Frank Cifaldi  59:27

And you’re still not paying anything because all those games were pirated, so either way! [laughter]

Alex Smith  1:00:47

Exactly. [Laughter] If you if you were one of the poor suckers who bought it new, it was cheaper than a cartridge.  And then of course, yeah, then you just traded it around.  And so that worked out great.  So that’s another one of those things, that there’s been a trend amongst a certain group of people – and I’ve brought this up sometimes on my show – that there wasn’t really a video game crash.  I mean, people still understand that yeah, Atari went bankrupt, and an E.T. was discounted for a buck and all of that.  But they’re like… video games never went away because, “I kept playing video games this whole time, I just moved on to the Commodore 64.” Or, “I just was happy with what was in the discount bin and I just played those games.  I could always go into a Toys “R” Us whenever I wanted and buy a video game.” And so for –

Frank Cifaldi  1:01:38

Like, Thunder Castle came out in 1985 for the Intellivision, so don’t tell me there weren’t, c’mon!  That game’s great!  [laughter]

Alex Smith  1:01:43

Exactly.  And and so it’s true that for a lot of people that grew up loving video games and never stopped loving video games, that for them personally, there wasn’t a crash in that sense.  But the market was just completely sucked dry.  It went from about $3.2 billion to about probably $200 million…?  You’ll see the number $100 million thrown around a lot: this is a number that Nintendo used in the late ’80s. This is again, about going back into all of these original primary sources that were never really mined very thoroughly before, because it’s only within the last decade and a half or so that you’ve had a lot of really good databases – internet databases – compiling this stuff, whether it’s stuff you get through your library through ProQuest, or newsbank, or just the amazing amount of magazines that have appeared on archive.org and that kind of thing.  We haven’t had access to these primary sources.  So when you go back and look at that $100 million number, it turns out that it’s the number Nintendo liked to use in the years after the crash.  So that number is probably a little low.  Myself and a fellow researcher, Ethan Johnson, we spent a lot of time going through newspapers and trade publications from the 1984-1985 period.  And what we found is, first of all, everybody stopped tracking video games in 1985.  Literally.  Nobody was tracking sales of video games in 1985.  Before that, the Electronic Industry Association, which is the organization that puts on CES, the Consumer Electronics Show (or at least it was at the time, there’s probably been mergers and buyouts since then).  In the late ’70s, early ’80s, the Electronic Industry Association was the organization that did CES, and they tracked video games pretty well in the early ’80s.  But ’83 was the last year that they tracked, which is where that $3.2 billion number comes from.  Actually, they did track in ’84, my mistake.  But they they are the ones that tracked in ’83 and said it was about $3.2 billion.  That’s where that comes from.  The $100 million comes from Nintendo after the fact.  Everybody stopped looking in ’85, which is part of the problem.  By going through some of these news articles, we kind of get the sense that it was probably more like $200 million?  Which may not seem like a lot of difference, but… And there were probably about a million consoles and about 20 million cartridges sold.  Which sounds like a lot until you realize that in 1982 there were, like, 8 million consoles sold and 60 million cartridges sold.  And in 1983 when the console market peaked, there were 75 million cartridges sold.  More cartridges were sold In ’83, even though the market was falling apart because of all the discounting and whatnot.

Frank Cifaldi  1:02:02

Right, right.  Exactly.

Alex Smith  1:02:48

So that’s… that’s a drop!  [Laughter]

Frank Cifaldi  1:05:08

And so something that, you know… Sort of normal oral history of video games that we all know and tend to agree with is this was a dead industry and Nintendo, by introducing the NES, sort of brought it back and that’s the industry we have today.  And yes, that’s all true. 

Alex Smith  1:05:29


Frank Cifaldi  1:05:29

But something that I hadn’t really considered until it was brought up on your show, They Create Worlds, was that it was also just a “right place at the right time” thing.  Like, I always knew, of course, just from contemporary history from talking to some folks who were at Nintendo, etc, that people didn’t necessarily stop liking video games.  But what hadn’t occurred to me is that, really, by the end of ’85, when Nintendo’s attempting to enter the market, that’s about when inventory finally started drying up in retailers for the existing games, right?

Alex Smith  1:06:12

Exactly.  It was basically that the pipeline needed two years to flush itself out.  And Nintendo definitely still deserves some credit for all that they did, absolutely.  But if they had tried to do the same thing in 1983 or 1984, it wouldn’t have worked.  And if they had tried to do the same thing in 1986, it may have even worked even better.  I mean, part of it really was the timing that 1985 was finally when all of that old inventory was flushed out of the market one way or another and retailers could start looking to stock new product again.  Some retailers were very hesitant to do that; some retailers really didn’t want to do that.  So Nintendo still deserves some credit for kind of nudging those retailers in the right direction.  But yeah, it wasn’t just the miracle of Nintendo.  It was also that people still liked games and the market could now accept games once again.

Frank Cifaldi  1:07:18

So we touch on this a little bit briefly earlier in the show, but a lot of what we’re talking about is really filling in the cracks on what has become the accepted, historical record of video games.  And that kind of seems to be why you’ve jumped in as a historian yourself, was to solidify this more.  Is that accurate?

Alex Smith  1:07:50

Yeah, no – I think that’s definitely fair to say.  The kind of story of video games, if you will, is a story that kind of got canonized from a very small number of sources that were written mostly in the ’90s, but a couple also in the 80s –I’m thinking of Zap!, which was the first attempt to do a history of Atari back in 1984.  But then you had Game Over, which chronicled Nintendo.  And then you had the Ultimate History of Video Games, by Steven Kent.  And those books told very good and very convincing narratives about video game history in this early time period, but told that history using a comparably small number of sources.  I mean, Game Over aside, he had, like, a million people that he talked to at Nintendo.  But the other two, they were working within the constraints.  They were journalists working towards a deadline and working to tell a specific story that they wanted to tell.  And they didn’t have the great resources that we have today in terms of online databases with lots of handy-dandy keyword searching and all of that.  I mean… History is really about going into the archives and poring through hundreds of reels of microfilm and thousands of pages of bound journal volumes and tens of thousands of memos and notes and correspondences and personal papers collections, which is not something that’s going to happen on the journalism level, nor should it.  This is not in any way an indictment of people like Sheff and Kent, without whom many people – including myself – would have never even gotten interested in this crazy history in the first place. 

Frank Cifaldi  1:09:56

Right and it doesn’t usually make, you know, commercial sense, right?  To go to that that level of depth.  I mean, even just speaking for myself, I’ve written some historical articles on the internet.  Typically I had maybe a two week deadline to get something out. [Laughter] And you know, I don’t think anyone would argue against the thought that we hope someone actually takes their time and does this using the foundation that we’ve built here. 

Alex Smith  1:10:34

Right, sure.  And then on the academic side, we’re still in a kind of weird place because, well… First of all historians, and when I use “historians” in this sense, I’m just talking about people – which is not me at all – that have have PhDs in history and are teaching in history faculties at universities.  Historians want their history to be good and dead before they start covering it.  They want that hundred years, hundred and fifty years to give them proper perspective.  And they’re not wrong that you need some time for perspective.  Some of the conclusions that we’re even drawing today may prove to be off-base fifty years from now because more sources come to light.  So those kinds of historians in academia haven’t really started looking at this yet. The history that’s been done on the academic side has been mostly done by media studies people.  And some of them have done some very excellent work.  Again, I’m not saying this to denigrate anybody.  But the media studies people are more interested in how the media itself fits into theoretical frameworks related to how people embrace, consume, and regurgitate media.  Which is all great and fascinating areas of research, there’s some great work being done there.  But they’re content to take their history – their kind of chronicle or their narrative of history – from the popular sources that are already out there.  So in most of these sources, even though they’re doing some great work in interpretation, you’ll see that their sources for just what happened are the same old things.  Their Kent, their Sheff… all of these same sources.  So there are very few people right now that are kind of filling this middle role of… Let’s not get way out in interpretive land, I mean, I’m not an academic.  And that’s, that’s fine. They do what they do and it’s valuable, I do what I do and I like to think it’s also valuable.  So, you know, not approaching it from the same direction as an academic, but someone who is a bit more deliberate and careful and gets deep into the the sources that are available, which are far easier to access today generally than they were even twenty years ago just because the the internet and online databases have changed the way that we can engage with a lot of this material.   So yeah, what I’m trying to do with with my work is gather all of these newspaper articles, magazines, trade publications from throughout time, and then conduct very extensive oral history – which admittedly also has its own limits, because memory is memory.  And then kind of cross-reference all of these things together to try to get a better idea of what actually happened so that as professional academics, as media studies people, as professional historians move forward, they will have sources of information that at least provide a jumping off point, a groundwork for their own explorations.  And then on the other side, something that isn’t too bogged down in academic jargon and academic interpretation that it can still be enjoyed by a general audience as well.  That’s just kind of like, “OK, I like video games. What the heck happened?”  You know, that kind of thing.

Frank Cifaldi  1:14:37

Yeah, it’s interesting, this sort of ecosystem you bring up.  Because I like to think of the Video Game History Foundation as as serving more your type, right?

Alex Smith  1:14:50


Frank Cifaldi  1:14:51

Where we’re trying to sort of capture the material that falls through the cracks and make sure that people can access it while they still care about the subject matter. And, for me, it’s like, it’s sort of a mixture of someone like you but it’s also… Well, I don’t know, maybe it is the same kind of person –

Alex Smith  1:15:14

– I think it is.

Frank Cifaldi  1:15:15

– because to me, it’s like, what I want to service with the Foundation are the people who typically I think of them as wanting to go deep on one specific aspect.  I mean, you are that same person, you’re just doing that three hundred times over.

Kelsey Lewin  1:15:29

A lot of it!

Alex Smith  1:15:31

Right!  No, no that’s very true.  You know, this gets brought up a lot in other circles too but, like… Nobody realized that movies, moving pictures, were going to be this incredible, new cultural thing until thirty, forty years after – or even fifty years – after things got started.  And even then, nobody was really paying attention to making sure they preserved the old movies, or making sure that they talked to the Lumiere brothers, or talked to Edison or talk to D. W. Griffith about all of the things that they did in the very early days to kind of create the foundation of this thing we know as movies.  Now it gets covered pretty well, but so much was lost at the very beginning. And it feels like there’s more awareness, at least on on the level that you and I are operating on.  There’s more awareness that we have a new media art form that is only going to become bigger and more important and more influential.  And unlike in movies, we’re taking steps to save as much of that early history as we can, while those magazines still exist, while those people are still alive.  In some cases, while that source code still hasn’t been lost.  And I just think that’s wonderful because I don’t think a lot of industries have had that same benefit, a lot of entertainment industries from times past.

Frank Cifaldi  1:17:22

I think it’s because of piracy.  I honestly think that the ease of use of pirating the media has propelled video game history study forward in a way that that other media hasn’t, combined with the internet, of course.

Kelsey Lewin  1:17:41

We have people who are still interested in the old stuff than I think you would otherwise have if you didn’t have an easy way to access all of that old stuff.

Alex Smith  1:17:53

Well, I think that’s absolutely right.  I mean, when your when your earliest history is literally a massive fire hazard, as it was for the movie industry, it’s kind of hard to keep that stuff in circulation, right?

Frank Cifaldi  1:18:08

Right.  And there’s one copy of it, right?  And it is – I forget the figure – I believe 40 times more flammable than wood?  It’s nitrate.  And there’s no real reason to keep it because there’s no home video market or whatever, of course that stuff’s going to disappear.  But, you know, the inverse is video games, which were… If we’re counting video games as, you know, the video game industry, not that sort of early experimental stuff that’s some category, I mean… This is something that was home media from the beginning and that was easily copyable almost from the beginning. And, you know, by the time the internet comes around, the games are still actually small enough for the most part to be distributed file size wise, which you can’t say about even music and film at the time.  I mean, it’s all this giant ecosystem of course, but I don’t think I’m nearly alone in that my interest from this came from having the internet and going, “Oh, look haha, I can download old games!”  And just kind of came from there.

Alex Smith  1:19:26

Oh, absolutely.  I think that’s definitely a big part of it as well.  And you know, I just think it’s wonderful.  I like to feel I’m playing my own small role.  I think it’s wonderful that all of us, I mean… Myself, Video Game History Foundation, Gaming Alexandria which I’m very involved with, and many others, HG101 [Hardcore Gaming 101], I could go on and on, are taking the steps now to make sure that this information is being saved and protected and recorded.  Because, you know, a hundred years from now when we’re all dead and gone and (assuming the robot apocalypse hasn’t happened or we haven’t all burned to a crisp in the meantime) I think when historians proper historians look back, and finally start taking a real interest in this video game thing, they’re just going to have so much more to work with to understand what truly happened because of the efforts of people like you and me that are professional enthusiasts, or amateur professionals, or whatever you want, whatever you want to call us. 

Frank Cifaldi  1:20:42

Whatever we are. [laughter]

Alex Smith  1:20:42

But I think it’s an important part of the ecosystem of just making sure that the history of the industry gets preserved.

Frank Cifaldi  1:20:50

Alex, where can listeners find out more about your podcast and your book?

Alex Smith  1:20:57

Absolutely. So I do a podcast with my best friend, Jeffrey Daum, twice a month.  We always release on the 1st and the 15th at midnight, GMT.  So in many places, including the United States, they actually come out the evening before the 1st and the 15th called, “They Create Worlds.”  It is just a podcast of video game history.  Every episode, we spend somewhere between an hour and two hours tackling some topic in history.  A lot of our episodes are focused on the history of a company.  But we also do biographical looks at individuals.  We do history of particular game franchises, just whatever happens to strike our fancy.  Kind of tying in with a lot of the research I’m doing, so trying to show how the business and creative sides of the industry intersect which is a big passion of mine, because I think there’s there’s a lot of people that take a huge interest in the creative and there are a small number of people that take an interest in the business, but the intersection of those two things almost never comes out very well.  So that is “They Create Worlds,” which can be found at a TCWpodcast.podbean.com is the the main hosting site for the podcast, though you can get it through just about all of the major podcast distributors.  It’s on iTunes, it’s it’s on podbean, obviously.  It’s on Spotify, just about all of them.  Then I’ve also got my book series.  I’m in the middle of writing a comprehensive three-volume history of the industry that we’ll go to about 2005-ish, it’s not trying to go up to the present day. I’m doing that under contract with CRC Press.  And so the first book, They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry Volume I, is currently available in hardcover, paperback and ebook directly from the publisher, CRC Press, as well as major online retailers.  I do feel like I need to say that they are expensive books.  It’s an expensive book, I know it’s expensive.

Kelsey Lewin  1:23:24

We’ll back you up on this, we both recommend this a lot if you’re in to video game history. It’s a textbook.

Alex Smith  1:23:24

Yeah, they had to do it that way to make their financials work.  I wanted to be able to write a huge “everything including the kitchen sink” history of the video game industry. I didn’t want to self-publish it because I wanted it to have the additional credibility that comes from being published, instead of just self publishing.  The downside of that is, since they’re big books and it’s the publishing industry, they have to charge a lot for them.  If you’re really into video game history, I guarantee you it’s worth your time and your money.  There’s a lot of stuff in there that I know has never been seen anywhere else.  I do hope once this grand project is done I can do something that is a little smaller, a little more general and a little cheaper.  But I just want to say, I am not out of touch; I do understand that they are expensive books but there there is a lot of value in there for the money, I feel.

Frank Cifaldi  1:24:34

Yeah, and I don’t know.  It’s like, how much is it on Amazon right now?  The paperback the paperback currently, if you need a physical one, is $85 which I don’t think is that ridiculous for what this is.  This is currently the document on the video game world up to 1982.  You call it ’71-’82, I call it more, like, 1920-1982.

Alex Smith  1:25:06

Yeah, it has several chapters that are before ’71, absolutely.

Frank Cifaldi  1:25:10

But I mean, this is to me the the new standard.  I don’t know if that’s the right way to say it because I don’t expect anyone else to make anything like this.  But you know this is… You know, we talked about how video game history, or most of video game history’s history, has been referencing sort of the same two or three books.  I believe that going forward that this is replacing those books in a lot of ways.  So I can’t recommend it enough.

Alex Smith  1:25:46

Well, thank you. That’s very kind.

Frank Cifaldi  1:25:50

Great!  Thank you so much for joining us on the Video Game History Hour.

Alex Smith  1:25:54

Absolutely. Thank you for having me, it’s been a fun conversation.

Kelsey Lewin  1:25:58

Thanks for listening to the Video Game History Hour, brought to you by the Video Game History Foundation.  If you have questions or comments for the show, you can find us on Twitter @gamehistoryhour or email us at podcastat@gamehistory.org.  Did you know the Video Game History Foundation is a 501(c)(3) nonprofit and that all of your contributions are tax deductible?  You can support this podcast and all of our other work on Patreon or at gamehistory.org/donate. This episode of the videogame history hour was produced by Robin Kunimune and edited by Michael Carrell. Thanks so much for listening and we’ll see you next time!