Patrick looks back at how lawyers have shaped the history of gaming to this point.
By Patrick Vuleta on May 1, 2014 at 10:16 am
James’ article earlier this week about the problems with Steam and quality control brought back memories of the Video Games Crash of 1983. Well, whatever repressed memories I have are probably pooping in a crib, but the internet helps me imagine: An overconfident Atari abandoned quality control, leading to the refusal of gamers to purchase such buggy delights as E.T. the Extra Terrestrial and a really shoddy Pac-Man port. The result: A total crash of the console gaming market, allowing PCs to take their rightful, leading place (for a while).
Okay, so it wasn’t a bad outcome at all. I dunno why everyone talks ill of it. But the crash did highlight one other thing: That much of the gaming industry was built by lawyers. Today we’ll look at how, so you’ll be able to answer the question of “How the games industry grew up”. It might arise on a date.
Moral rights started it all
In the heyday of the late 70s, Atari executives in powder blue suits demanded their coders be anonymous. Endgame credits didn’t exist, and developers even had to change their names for press interviews. This was, apparently, for their own good, in much the same way as A Current Affair pixelates those on witness protection. Many Atari 2600 games were really bad, after all.
Arguably, the real purpose of this was to maintain Atari’s dominant market position, by keeping talented coders anonymous in the hopes that they would not be poached by competitors. It was also cost cutting: Pay a developer $20,000 a year, get $2 million in sales from the game they designed by themselves. Woot.
This understandably rankled with developers, since film and music published by the same parent company (Warner) allowed creative workers their moral rights that exist alongside copyright: The rights to be identified in credits and build a portfolio. And so Activision was formed, by four of those pissed-off developers.
In these days, Activision was not known for milking every franchise to the ground. Rather, Activision was the most important innovator of the early 80s. Activision marketed its developers just as it marketed its games, and pioneered the concept of third party studios operating outside the hardware manufacturers.
Unfortunately, because Atari had no copyright protection or DRM of any kind in its console, this also resulted in everyone and their dog creating poor quality games for the Atari 2600, crashing consumer and retailer confidence in the industry.
The dog food company game typical of the shovelware that caused the crash. Send in coupons from dog food cans and you got… this.
Blame Pong for everything
The crash forced Activision to survive on cash reserves for a time. Although producing high quality games like Pitfall, Activision suffered the one-two hit of lack of consumer trust on the right, and bargain discounting of shovelware games flooding whatever market was left.
Activision limped along, now focusing on the still-thriving PC market, but things took a turn for the worst when the studio was successfully sued by Magnavox, owner of the patent for Pong. The effort was funny given the Pong genre was just about to collapse, but the patent was a big deal for Magnavox at the time, which had a 40 million a year income stream for ball and paddle game licensing fees.
The lawsuit exhausted whatever cash reserves Activision had left, and by 1990 the only hope for survival was a takeover by an investment group owned by none other than Bobby Kotick. Bobby turned the company around, but as a businessman, not a developer, and the new Activision ran very differently to its innovating youth. Fast forward a couple of decades and we have Guitar Hero, a rather Pong-like game in itself (it’s played with a paddle).
The demise of Activision.
Nintendo’s new strategy: limited licensing
At the time of the crash, Nintendo was enjoying success with the NES in Japan. The crash was a strictly American phenomenon: Nintendo had always kept tight quality control.
Nintendo wanted to expand into the American market, but was anxious to avoid the fate that befell Atari. Nintendo’s answer was to drastically limit the licenses it extended to third party developers. Anyone who didn’t abide by Nintendo’s terms was denied the NES developer kit, and any developer who tried to reverse engineer could be sued on breach of copyright.
This worked, for a time. Nintendo’s excellent Mario established the gold “Seal of Quality” you could see on NES packaging. Consumer confidence was restored, and so ushered in the era of the NES, Master System, SNES, and Megadrive. This was the golden age of consoles. Instead of today’s copycat ports, 8-bit and 16-bit consoles were known for their exclusive and innovative flagship titles.
However, the golden age couldn’t last. The new competitors of Sony and Microsoft came into the market, luring the best developers with promises of more creative freedom, and less severe licensing. Although Sony and Microsoft retained some control, developers weren’t restricted to just one platform, could release more than a few titles per year, and didn’t have to answer to strict Japanese businessmen who yelled at them a lot.
We see the result of this licensing tussle today: Many titles are developed for both the Xbox and Playstation, and in some cases PCs too. Instead of the segregated markets of the past, now we just have the games industry.
Will the future be driven by gamers or publishers?
Some comments on James’ article suggest Kickstarter and Steam Greenlight serve as a lifeline to an industry stagnating from publisher control. Admittedly, publisher control has reached ridiculous levels in the past with overreaching DRM, and so for a time this was a welcome backlash.
However, viewed in the historical context, it’s really just history repeating. While I’m doubtful that we’re going to have another video game crash any time soon, I have full confidence that publishers will stay firmly in control, just as they took control after the last glut of shovelware that entered the market.
It might take a couple of years, but publishers will respond to any reduction in profits by tightening their grip, not allow creative freedom to go unchecked. This is why we can’t just let backyard developers have free reign on premier publishing platforms like Steam.
Never underestimate the power of companies and their lawyers to control the industry. We’re plotting against you.