The simple imagery of two bars sliding up and down opposite sides of a screen bouncing a square ball back and forth has become iconic. In the same vein, the image of a plump plumber with a handlebar moustache, tomato-red hat and thick Italian accent has also become familiar to anyone remotely aware of the existence of video games. Since the early 1970’s and the creation of video games like PONG, the video game industry has seen much economic growth, has become culturally significant as a form of entertainment, and has over time made leaps and bounds in technological developments, becoming a force to be reckoned within the entertainment industry. Though video games share a few similar concepts with film and television, there are two distinct elements that make it unique and give the industry an economic and technological edge: interactivity and nostalgia. Video games give the consumer the ability to take an active part in the experience of the entertainment medium, while film and television are passive forms of entertainment. This element of interactivity adds a whole other dimension into the entertainment experience of the consumer. And while film and television are no doubt able to foster a sense of nostalgia in consumers, video games are able to develop it in a discretely psychological way that comes with the element of operant conditioning inherent in video games. By covering the early history and reception of video games economically and culturally, and looking into the factors that set video games apart from film and television as a form of entertainment, such as the video game hardware available, the targeted consumers, and the psychology behind interactivity, as well as the nostalgia factor, this paper will discuss the effect interactivity and nostalgia have had on the economic success of the video game industry. Today, video game consoles, controllers, high-resolution graphics and compact discs come to mind when thinking of the video game industry. However, the industry started much smaller. In 1971, a coin slot was added to the arcade video game, Computer Space, and the video game industry was born (Wolf 29). Before this occurred, such games were available only to those who had access to computer labs at the universities and corporations developing them. Arcades popularized video games, namely beginning with the introduction of PONG in 1972 (29). Soon after, video game consoles were available as home systems alongside the rise of home computers, which were also developing gameplay capabilities (29). The games produced during this era were of relatively low quality, and were all essentially different versions of PONG, thus resulting in a very small variety of games as well.
At the time, Atari had a monopoly on the video game industry, with “20 million consoles sold in the initial run, and 1,500 games available” (Beck, Wade 30). The growth was exponential, topping at $3 billion in 1981. However, the success of these simplistic PONG-themed games produced by Atari and companies like it was short-lived, as interest disappeared and consumer demand dipped (Wolf 29). Atari’s sales fell to $100 million by 1983, and the entire industry experienced a crash (Beck and Wade 30). The stagnancy and lack of innovation was the reason for the crash, and forced the video game industry to reassess itself.
In 1985, the industry made a comeback when Nintendo released the Nintendo Entertainment System (NES). It generated much popularity on Wall Street with a 90 percent market share it had with the same product in Japan (Beck and Wade 31). The system became a hit, was the best-selling toy in North America, and was home to “Super Mario Brothers 3, which became the best-selling video game of all time, grossing a half-billion dollars” (31). It was at this time that the beloved Italian plumber, Mario, became as iconic as Mickey Mouse, according to researchers (31).