In the video game “Space Armada” created by Mattel Corp., the idea was to defend the earth against an alien invasion by destroying swarming bands of agile warriors. The aliens were little more than colored shapes against a dark background, and they moved about the screen in an awkward manner, as if they’d been yanked by an invisible leash. Yet Mattel was so convinced of the appeal of “Armada” and 18 other games that in 1981 it spent $6 million on an introductory national advertising campaign in which writer George Plimpton proclaimed superiority over a rival platform, the Atari 2600. “The difference,” said the celebrity spokesperson, “is clear.”
“Armada” was created for the Intellivision game console developed by Mattel’s electronics group in 1979. Although at $300 it was twice as expensive as the Atari unit, the Intellivision platform employed a 16-bit graphics system that powered a new generation of more richly detailed games, and it quickly became a hit. Mattel sold 850,000 units during that first year, and with 2 million Intellivision units in homes by the end of 1982, the video game industry was in full bloom.
Enthusiasts had two ways to get Intellivision games to appear on their TV sets in 1981. They could beg their parents to drive them to the department store to buy a new game cartridge, or they could be fortunate enough to live in Fayetteville, N.Y., Jackson, Miss., or one of 11 other cities where Intellivision games were being delivered over cable TV lines.
For $4.95 a month, cable customers could subscribe to PlayCable, the joint venture of Mattel Electronics and cable technology supplier General Instrument Corp., the predecessor of Motorola’s Broadband Communications unit. Availing itself of FM-band frequencies, PlayCable distributed game software in a data carousel arrangement. Users tuned to a channel where a menu of game titles appeared, and by typing a number into a hand-held keypad, could select the games they wanted to play. A terminal produced by General Instrument and Mattel grabbed the corresponding object code the next time it was transmitted, and stored it in memory. It took about 10 seconds.
Mattel had high hopes for PlayCable, which combined attributes of two businesses – cable TV and video games – that were skyrocketing in popularity in the early 1980s. Mattel executives projected 1 million subscribers for PlayCable within five years, and company officials were heartened by early research suggesting sales of Intellivision platforms soared in markets where PlayCable had been introduced.
But by the spring of 1983 hopes for a breakthrough were fading. Of the 650,000 households that could get PlayCable, fewer than 3 percent subscribed, and PlayCable’s president Gary Stein admitted to the Wall Street Journal the service was falling short. Cable operators that had launch PlayCable complained of high marketing and technology costs, including a headend computer that cost $12,000, plus in-home adapter units that were $57 each. At the same time, the Intellivision business at large was hurting, too, as a glut of titles flooded the market and renewed competition from Atari and others contributed to a $300 million loss for Mattel Electronics. In 1984 Mattel closed the game console unit and sold what was left of Intellivision to a former executive.
PlayCable probably wouldn’t have survived anyway. For one thing, the memory demands of increasingly sophisticated Intellivision games available in cartridge form were expanding well beyond the 6-kilobyte limits of the PlayCable system. Second, security became an issue after two industrious hackers reverse-engineered their way into the Intellivision programming code and threatened to expose it. But the biggest reason for PlayCable’s demise was about basic economics. Before cable customers could enjoy “Space Armada” or “Snafu,” they had to plop down $300 on an Intellivision system, and then agree to spend another $60 or so a year to rent games. The universe of cable-subscribing, Intellivision-owning, premium tier-willing households was too small to present an adequate canvas of opportunity.
Today, as video-game delivery once again rises up as a market for cable providers, the economic foundation has changed drastically. Personal computers are in close to eight out of 10 U.S. homes, and 30 million homes, or more than 25 percent, have video-game consoles. PlayCable’s downfall didn’t come about because delivering games over the network was a bad idea. It happened for the same reason it was so difficult to prevail against legions of angry aliens in a game of “Space Armada.” In the end, the numbers just worked against you.
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