Trouble In the Ranks
After the launch of the Atari VCS game console in 1977, Atari director of consumer engineering Kerry Crosson has a discussion with President Joe Keenan and newly installed CEO Ray Kassar. The idea is to provide an incentive bonus plan for his department, responsible for creating console hardware and designing games for it. Some popular games from the department are pulling in big money for Atari and innovating in the marketplace, including Alan Miller’s breakthrough 1978 game Basketball, where the designer creates a trapezoid playfield that gives a previously thought impossible appearance of 3D play on the VCS and allows the two on-screen players free-range around the court. Miller would port the game to Atari’s 400/800 home computers the following year, and Chris Downend translating a B&W version to the arcades.
During the meeting between Crosson and upper management, It is agreed that a pool of profits will be set aside for bonuses for his department; 50 cents for every system that sells, and 10 cents for every cartridge. When spring rolls around the next year, with VCS units having moved off the shelf during launch and games to go with them, Crosson inquires as to the state of the bonus pool. He gets a point-blank “What bonus pool?” from upper management, and is told that any agreement for one must have been a case of misunderstanding by Crosson and his department. Thus, Crosson must go back to consumer engineering and inform the workers that no bonuses are forthcoming. This announcement causes a massive revolt in the department, forcing VP John Ellis to offer incentive deals under the table to those whom management deems key personnel. Atari game designer David Crane sees his salary rise from $18,000 to $25,000 during this period, but the broken promise from management over the evaporating bonus pool leaves a bad taste in his mouth.
Then, one day early in 1979, Crane finds himself intently analyzing a list of numbers on a piece of paper. It is a memo from the marketing department, a part of Atari that has flourished with the ouster of engineer Bushnell and the installment of salesman Kassar. The list, circulated throughout consumer engineering, ranks game sales figures for the previous year, with each game as a percentage of overall sales for the company. It is Marketing’s not so subtle advice to the programmers: make more games like those at the top of the list, and less of those at the bottom. It also has an unintended effect on Crane and fellow game creators Larry Kaplan, Alan Miller and Bob Whitehead… they learn that the four of them are responsible for all of the top-selling games, 60 percent of cartridge sales for the year. With the knowledge that Atari made 100 million in sales that year, you don’t need a degree in computer mathematics to know that the four of them, each pulling in a yearly salary of $25,000 – $30,000, have accounted for $60 million in sales for Atari. Armed with this evidence, the four meet with Kassar to request more financial compensation for their efforts. The CEO is unmoved, suggesting that making games is a team effort and their contribution on par with the assembly workers on the line who fit together the cartridges. Soon after this exchange, the group gets in touch with an attorney about incorporating their own business, making software for game consoles. Kaplan leaves Atari soon after the meeting with Kassar, with Crane, Miller, and Whitehead not far behind. The Gang of Four has left the building.
Via their attorney, the group is put in contact with former music industry executive James H. Levy. A business plan is developed over the summer of 1979, which predicts explosive growth in the video game and home computer markets over the next several years. Approved by the venture capital On October 1, 1979, the four game designers and Levy form the first third-party manufacturer of videogame software, with Levy running the company. Computervision is floated as a possible company name but found to be already taken. The organization is eventually incorporated with the name VSYNC, short for Vertical Sync, a technical term when working with the VCS. As president, it is Levy who comes up with the final company name Activision, invoking the idea of ‘Active Television’, as well as creating a unified design for game packaging. What’s known inside Activision as the “Flying ‘V'” logo design is also created by Levy, and it is included in a 32-pixel, eight-line space at the bottom of the screen in every Activision game. In order to fit this icon, the ‘T’ and the ‘V’ must be connected to save memory.
Also on board for the formation of Activision are venture capitalists such as Richard Muchmore and Sutter Hill Ventures providing funds. With around $700,000 in venture capital, the Mountain View, CA upstart starts its first project, in David Crane’s spare bedroom: reverse engineering the VCS and making a game development system for it. The first game independently released for the VCS is Dragster, in mid-1980.
That first game is also one of the reasons that Atari launches the obligatory lawsuit against Activision, to the tune of $20 million. It ostensibly concerns trademark infringement over Dragster, which is a carbon-copy of Drag Race, an Atari/Kee Games coin-op from 1977. Other violations mentioned in the suit are patent rights issues and the breaking of non-disclosure agreements the former Atari employees had signed, but it is really about Atari losing its ability to monopolize its share of a market that would have 3.5 million installed systems in the U.S. overall by Christmas. In December the two companies settle, with Activision paying Atari for a “technology license” to produce games for the VCS. Dragster is followed closely by Checkers, Boxing and Fishing Derby. In 1981 Activision posts sales of $65 million in software, a 1000% increase over the previous year, placing it second only to Atari for games sold.
52 games in total are released by Activision between 1980 and 1988, with the designers’ identities prominently featured in all packaging. To increase its stable of programming stars, Activision adds a new Eastern Design Center in New Jersey, swelling the company’s design ranks with the likes Dan Kitchen, who is joined there later by his brother Garry, coming over from the Quaker Oats-owned U.S. Games. At his former company, Garry had created probably their most popular game, the shooter Space Jockey. John Van Ryzin also joins the Eastern Activision team. Another addition to the Activision crew is Carol Shaw, a former Atari programmer who had made early VCS games Checkers and 3D Tic Tac Toe for the company. At her new digs, she creates the hit River Raid, as well as Happy Trails for the Intellivision. Yet another Kitchen brother, Steve, joins the company in 1983.
With their names and faces featured on game boxes and manuals, these game creators become so famous they’re stopped in the streets for autographs by game aficionados, and collectively receive around 12,000 fan letters a week. On Dec. 18, 1981, Jim Levy cuts the ribbon on a new, 92,500 square-foot factory in Milpitas, CA., and Activision sees its production capacity increased by 1000%. By March of 1982, the facility has shipped more than 1 million cartridges. Some well-known Activision releases: Stephen Cartwright’s Barnstorming, Megamania (1982), Hacker (C-64 1985) and Hacker II: The Doomsday Papers (Atari ST 1987) David Crane’s Freeway (1981), Laser Blast (1981), Grand Prix (1982), Decathlon (1983) and Ghostbusters (1984) Larry Kaplan’s Kaboom! (1981) Garry Kitchen’s Keystone Kapers (1983) Steve Kitchen’s Space Shuttle: A Journey into Space (1983) Alan Miller’s Tennis (1981), Starmaster (1982), Enduro (1983) and Robot Tank (1983), John Van Ryzin’s H.E.R.O. (1983) Carol Shaw’s River Raid (1982) Bob Whitehead’s Stampede (1981) and Chopper Command (1982). Activision promotes its games heavily, including lavish theatrical ads run in movie houses in 1982 for Starmaster and Chopper Command.
Pitfall! is David Crane’s sixth game for Activision, heralded at the company’s June 1982 Summer CES booth in Chicago sporting the theme Rumble in the Jungle . A tour-de-force run-and-jump game released in September of that year, the game features on-screen Indiana Jones wannabe Pitfall Harry running through 255 similar-looking screens of jungle and underground, in search of the Treasure of Enarc (read that last word backward). The game goes on to become the best-selling third-party videogame cartridge of all time, selling well over a million copies and holding the #1 spot on Billboard’s videogame sales chart for an astounding 64 weeks. The game is also ported to all the major console systems, as well as computer platforms. Pitfall! is followed by Pitfall II: Lost Caverns in 1984, which contains an extra chip inside the cartridge, called the Display Processor Chip, surely just co-incidentally having the same initials as its designer, David Patrick Crane. This extra hardware relieves a lot of work from the 2600 hardware and allows more complicated graphics for the game.
The first two games for the 2600 are followed by Pitfall: The Mayan Adventure for PC, NES, Sega Genesis and several other systems of the era in 1994. A Playstation make-over Pitfall 3D: Beyond The Jungle appears in 1998. Pitfall Harry even surfaces in the arcade in Pitfall II: Lost Caverns by Sega in 1985. Of course, there is a translation of the game made for Apple’s lucrative iOS market, simply called Pitfall!, by developers The Blast Furnace. Pitfall Harry also graces the small screen as the star in the Pitfall! segment of the Ruby Spears-produced 1983 animated series Saturday Supercade, which runs for two years on CBS. Harry and Pitfall!, however, are dropped for the second year of the show. David Crane is credited with having sold more than six million copies of his original games by 1984.
Not afraid to land some attention with publicity stunts, to promote Stephen Cartwright’s Barnstorming at the 1982 Winter CES Activision gathers members of the press outside of the Las Vegas Convention Center early one morning to witness an actual biplane containing designer Cartwright taxi down Las Vegas Boulevard. Anything to stand out in a rapidly crowding market, where 15 million consoles have been sold, accompanied by 65 million cartridges. Activision has its best year financially ending in March of the year, with income peaking at $157 million. The company has five video game titles with sales over a million units each. On June 9, 1983, Activision goes public, selling four million shares at $12 per share. Unfortunately, the ensuing three months are kind neither to Activision nor the video game industry in general, resulting in an announced loss of $6-10 million, before tax, by the company. Following this announcement, company stock price is halved to $6 a share and subsequently drops to under $2 a share. The obligatory class action lawsuits are then filed by disgruntled investors who feel that the company downplayed the extent of the financial difficulties of the company and of the video game industry as a whole.
Activision survives the great video game crash of 1983-84 by pivoting from the 2600 to the booming home computer market, the groundwork having been laid with the conversion and expansion of Carol Shaw’s River Raid and Larry Kaplan’s Kaboom! for the 400/800 Atari home computers in October of 1983. Co-founders Alan Miller and Bob Whitehead leave in 1984, eventually forming their own development/publishing house Accolade in December of that year. Their first product is a home-run: popular computer baseball game Hardball!, released in time for the boys of summer in July 1985.
Activision themselves are further buoyed by the success of such computer games as their first foray into IP licensing. In 1984 David Crane has taken a night off to see a movie at the local theatre: Columbia Picture’s smash-hit comedy Ghostbusters. The next day, the acquisitions group inside Activision asks Crane if can make a computer game based on the movie. The project is given a breakneck 10-week production schedule in order to be finished before the designer’s impending nuptials; Crane usually needs at least 500 hours to complete a game. It’s fortunate, then, that the designer has already spent some months developing a short game sequence where a vehicle is equipped and driven around the grid-like streets of a city, perhaps for a game in the James Bond realm. Adapting it for his Ghostbusters game is the only way Crane and his team of artists and programmers can finish it on time. Columbia works closely with Crane, supplying him with a videotape of the film under strict security, along with a copy of the shooting script and hundreds of pictures from the movie. Despite the shortened production schedule of Ghostbusters, Crane states at the time that “It’s as good a game as I could do if I took 10 years to do it.”
Other Activision games of the era include Steve Cartwright’s Hacker, Alter Ego by Peter J. Favaro, and Crane’s life simulator Little Computer People. The Kitchen brothers leave Activision in 1986 to create game development house Imagineering, Inc. They further found Absolute Entertainment as a publisher for their developed games, joined in this venture by several other former Active-ites, including the illustrious David Crane. Steve Cartwright eventually joins other former Activision office-mates over at Accolade in 1988.
Activision stumbles in the fiscal year 1987, posting a $14.6 million loss that is attributed to various acquisitions and R&D write-offs. The company changes its name to Mediagenic in 1988, hoping to ride the multimedia wave opened up by the emergence of disc-based storage media, while still retaining the Activision, Gamestar and Infocom label for its video game products. It also signifies a branching out to business productivity software, including the release of Focal Point in 1988, organizational software used in conjunction with Apple’s influential Hypercard relational database and application programming software . Installed at the helm of the “new” company in January 1987 is former senior vice-president Bruce Davis, now president and CEO. With a pruning of money-losing products and labels, Davis manages to get Mediagenic into the black after several losing quarters. The company pushes towards the multimedia future by releasing the first ever PC entertainment CD-ROM, The Manhole, in 1989 for the Apple Macintosh. Originally a floppy-based B&W point and click adventure game for the classic Mac, the program is reworked for the new storage medium, with over 50MB of code and 30 original songs, by the game authors Robyn and Rand Miller of game company Cyan. They would later create waves by making the phenomenally successful game Myst for computers.
Mediagenic reaches a settlement with Magnavox over a patent infringement lawsuit filed in 1982, over 11 cartridges released by Activision for the Atari 2600. Mediagenic agrees to pay the pioneering video game company $6.6 million awarded by a U.S. District judge earlier in 1990. This takes the form of monthly $150,000 payments to be made from July 1990 to December 1993, ending with a balloon payment also made in the final month.
Tallying up losses upwards of $60 million, Mediagenic eventually files for bankruptcy protection in 1991, and the company is restructured later that year with the name returning to Activision, and Bobby Kotick running the company. There is, of course, more to the story of the company, such as its acquisitions of text adventure company Infocom and Scott Orr’s sports game development house Gamestar in 1986, and its merger with the owners of Blizzard and Sierra to become Activision Blizzard in 2008. It remains, along with Electronic Arts, as one of the pioneering video game companies still thriving today. I’ll consider it a Duty to recall the rest in a future article.
Sources (Click to view; inert links kept for historical purposes)
Saunders, Glenn. “Stella at 20, Pts. 1 and 2.” Glenn Saunders, 1997. Accessed 1998. Image of David Crane from 1997. Details of the Display Processor Chip inside Pitfall II for the 2600.
Jermaine, John. “Activision Celebrates a Memorable Decade.” Commodore, July 1980, pp. 50–73. Over the summer of 1979, a business plan was written and submitted to a venture capital firm, Sutter Hill Ventures.
Prior to choosing the name Activision, several others were actually considered. Computervision sounded pretty good, but that title was already taken. The company was finally incorporated under the name VSYNC, Inc….
…it [Activision logo] had to fit in a 32-pixel eight-line space on the bottom of all game screens. To accomplish this feat, the “T” and “V” in Activision were connected.
Among the most memorable galas were the 1982 “Rumble in the Jungle,” to promote Pitfall!
At 6:30 a.m. three busloads of press, trade, Activision employees and friends were taken to the street in front of the Las Vegas Convention Center… they were then greeted by a real bi-plane that taxied down Las Vegas Boulevard carrying none other than Steve Cartwright…
Accolade was founded in December 1984, and their first product (Hardball!) was released in July of 1985.
At the time, I was in the process of creating an animated city-wide adventure. The player would be able to drive a vehicle, use a map to plot his way and add equipment to the car to give it special capabilities. This program might have evolved into a Jame Bond-type game if Ghostbusters hadn’t come along.
…I took a night off to see Ghostbusters at a local movie theater. I really enjoyed the film. A day later, I went to work and ran into one of the people from our acquisition group. He asked me if I’d be interested in doing a Ghostbusters computer game.
Columbia (under strictest security) provided me with a videotape of the film. They also sent a copy of the shooting script and hundreds of slides and stills from the movie.
The product was called Manhole. It contains over 50 Mbytes of code and features 30 original songs.
(1985, February). Compute. “To do justice to any game takes no less than 500 hours of my time, and I was going to get married in six weeks.” For a couple of months, Crane had been trying to develop a game that had something to do with equipping a car and driving it around city streets…
Lewis, Jim. “Brothers By Design.” Enter, June 1984, pp. 42–45. Image of Garry and Dan Kitchen at work on MANIAC (photo Jim Pozarik) and Steve Kitchen lounging with Space Shuttle models (photo Rick Browne)
“There’s More to Life Than Pac-Man.” Playboy’s Electronic Entertainment Fall 1982: 46 . Print. But in the first quarter of 1982, Coleco stock appreciated in value more than any other on the New York Stock Exchange. Activision…reported that its 1981 sales had reached $66,000,000, an increase of 1000 percent over sales in the previous year.
“News & Views: Activision News.” .Info Mar. 1992: 16. Print. Just when we thought Activision was dead and gone (the parent company, Mediagenic, filed for bankruptcy protection in 1991)…
In re ACTIVISION SECURITIES LITIGATION, and All Related Actions (United States District Court, N.D. California November 4, 1985). Activision went public on June 9, 1983.
Uston, Ken. “A Report From the First Video Games Conference.” Creative Computing Sept. 1983: 232-46. Creative Computing Magazine (September 1983) Volume 09 Number 09. Internet Archive. Web. 26 Feb. 2016. [From summary of Activision president Jim Levy’s speech] About one and one-half million homes had some sort of game system, and about three to four million game cartridges were sold that year .;1980…There were then about 3 1/2 million systems in U.S. homes.;1981…Activision’s delivery capacity grew by 1000%…;1982…Fifteen million hardware units and 65 million software units were sold.
1980 image of Activision design team from InfoWorld, “Atari Sues to K.O. Competition”, pg. 1, Aug 4 1980. Retrieved from Google Books, Sep 11, 2015.
Atari Gaming Headquarters – www.atarihq.com
Good Deal Games, “Interview: David Crane”, by Michael Thomasson
1981 image of David Crane from Electronic Games, “Inside Gaming: Playing Chicken with David Crane”, pg. 12, Winter 1981. Retrieved from the Internet Archive, Electronic Games collection
Reddit iAmA with David Crane – www.reddit.com/r/IAmA/comments/yli88/iam_david_crane_creator_of_pitfall_and_cofounder/
Image of Jim Levy, and other information from
Video Games, “They’ve Got Their Act-ivision Together”, by Randi Hacker, photo by Victoria Rouse, pgs. 29 – 31, 80, Vol. 1 Num. 1, Aug 1982
Leagle, “In Re Activision Securities Litigation”, Nov. 4, 1985
Activisions Newsletter, “Activision for Atari Home Computers”, pg. 10, Vol. 7, Fall 1983
Gamasutra, “The Replay Interviews: David Crane”, by Tristan Donovan, Jan. 3 2011
“Atari Sues to k.o. Competition.” InfoWorld 4 Aug. 1980: 1. Print. The trademark violation charged by Atari involves the name DRAG STRIP, which was the name given to a prototype Activision game.
The New York Times, “Atari Suit Settled”, Jan. 5 1983
Image of Activision designer panel taken at CGE 2014 in Las Vegas
Joystik, “The World According to Pitfall Harry”, by Phil Wiswell, pg 18, Vol. 1 Num. 4, Jan. 1983
InfoWorld, “Q&A: David Crane”, by Jim Bartimo, pg. 84, Mar. 12, 1984 – books.google.ca/books
Staples, Betsy. “What’s New for ’82, Video Games, Activision.” Creative Computing May 1982: 70. Creative Computing Magazine (May 1982) Volume 08 Number 05.”…at the strip we met a small, open-cockpit bi-plane, turned around and followed as it taxied through the streets of Las Vegas to the convention center.” Internet Archive. Web. 05 Nov. 2015.
Image of Activision 1984 CES booth courtesy of Steven Szymanski
About.com – “Garry Kitchen – Cooking Up Video Game History”, by D.S. Cohen, retrieved Jun 28 2014
Image of Mediagenic logo, and other info from Compute!, “News & Notes: Quick, What’s a Mediagenic?” by Gregg Keizer, pg. 8, Aug 1988. Retrieved from the Internet Archive, Compute! magazine collection
Activisions newsletter,”Our Milpitas Family”, pg. 5, Vol. 3, Spring 1982
Image of Bruce Davis from Info World, “Mediagenic Rises From Ashes…” by Rachel Parker, pg. 34, Oct 3, 1988
2012 Image of Bobby Kotick from de.wikipedia.org – http://de.wikipedia.org/wiki/Robert_Kotick#/media/File:Bobby_Kotick_in_NYC_photographed_by_Jordan_Matter.jpg. Photograph by Jordan Matter
Sodaro, R. J. (1985, January). Ghostbusters. Ahoy!, 59-60. Ghostbusters represents the gaming giant’s first experience with licensing.
“News & Views: Shake Ups and Shake Downs.” Info Sept. 1990: 22. Print. Bruce Davis… announced that Mediagenic has reached an agreement with the successors to the Magnavox Company, providing for long term payments of $6.6 million in patent infringement damages awarded to Magnavox over eleven video game cartridges released by Activision (Mediagenic) for the Atari 2600. Mediagenic will make monthly payments of $150,000 to Magnavox from July 1990 to December 1993, with a balloon payment due in December 1993. Hunter, David.