Generation Gap: Second Generation




Welcome to part two of our feature covering the history of video game consoles. Before continuing with the intro, let me clarify the dates we've chosen - we've defined each generation as lasting from the release of the first system, to the release of the first system of the following generation (therefore, it's not reflecting lifecycle, just the length of time that each generation was the most advanced).

Stick with us over the next few weeks as we cover off the difference between console generations—we’ll take a look at what’s changed and what hasn’t from a general perspective, as well as what was going down in the market at the time. Hopefully this will provide some insight into where we are at currently. That said, some of what was happening in the larger electronic entertainment market may well apply, but don’t be TOO despondent if we only gloss over something you’re really interested in.

Click here to read about Generation 1

Note: This series was written with the assistance of Noel Wheatley, the Stevivor.com TopGeek (@furysevensix), whose vast knowledge of videogame history and large collection of vintage and retro consoles are, in our opinion, second to none. 

Generation 2: 1976 – 1983 JP (1976 – 1985 US)

Given the success of Pong in the arcades, Atari saw a need to capitalise, releasing their Home Pong console in 1975–and it wasn’t really until this point that videogame consoles really started to gain some traction (the Odyssey did fairly well considering, but only sold 100,000 units in its lifetime). Intrigued by Atari’s success, other manufacturers also saw dollar signs. As per our last article, this kicked off the market crash of ’77 based on the sheer number of ‘copycat’ machines on shelves, all of which essentially played the same few games. Sales slowed considerably – the fad had passed, and people wanted something new.

Enter Fairchild Semiconductor (then Fairchild Camera and Instrument), who saw potential opportunity in the market and created a new machine that utilised the microprocessor—which by this stage was spurring some successes in the PC market—to create a new kind of system. This new system utilised ROM-based cartridges, opening the technology up to a virtually unlimited variety of videogames. That system was the Fairchild Video Entertainment System (VES), which was released in August of 1976.

While it wasn’t a terrible machine, it wasn’t a rollicking success either. However, it did usher in a couple of changes – the switch to ROM-based cartridges, the inclusion of limited native colour (as opposed to screen overlays), and a change in controller design. The VES took the simple dial-based controls generally seen in first gen controllers and added extra dimensions, which allowed for movement in multiple directions. This kind of joystick controller evolved over the second generation, with Atari’s joystick being the poster child. However, even given this innovation, the VES pales in comparison to the competition that it spurred into action – one of the next systems to be released in the second generation was Atari’s Video Computer System in 1977 – a name that caused Fairchild to rename its VES to Channel F. What’s more, the VCS name didn’t really stick for Atari, either – the name was changed to its model number “2600” in 1982, following the release of the Atari 5200.

Given the timing, neither Fairchild’s Channel F nor Atari’s VCS sold well initially. The market had slumped as a result of the glut of Pong clones, and consumer interest had not yet piqued in regards to these newer, more powerful systems. Sales looked depressing through 1978, and Fairchild looked to give up; however, word got around that these systems could play multiple games and were not limited to Pong, and by December 1979 the VCS had gathered huge support – the industry was pulling out of the crash.

Not long after, Mattel launched the Intellivision in the US. Given the success of the VCS, and the impressive power of the Intellivision, Fairchild had all but departed from the console market. In 1979, the rights to the System F were sold to Zircon International, who released a redesigned console—the Channel F System II, but by then Atari was far too popular and there was little support for this system. The Intellivision, on the other hand, proved to be some great competition for the 2600, and was another flagship machine of the second generation, selling 250,000 units over its lifetime (of course, compare this to 30 Million units that Atari sold, there was a clear leader).

In early 1980, though, Atari made a 2600 version of the hit arcade Space Invaders (you might have heard of that one?), and this prompted a second surge in the popularity of videogames, as consumers realised they could play those same games on the TV at home. Understandably, this also prompted the conversion of a number of other arcade games over the following years. In fact, the most popular titles of the second generation were arcade conversions (the most popular 2600 game was Pac-Man, selling a whopping 7 million copies even given that it was an extremely poor conversion—it has even been referred to as the WORST console version of Pac-Man). As a result of these successes, Atari was doing extremely well.

Not wanting to miss out on the money flowing through this now billion-dollar market, several other manufacturers released machines in 1982 – of particular note was Coleco’s ColecoVision console, another dominant second generation machine, selling 4 million over its short lifetime. The ColecoVision had a controller that could be described as a cross between the Intellivision’s multi-button controller and Atari’s joystick (see image above), and it also came with a copy of Donkey Kong, which greatly aided its success – Donkey Kong was a rip-roaring arcade triumph for Nintendo, so it really helped sell the ColecoVision. However, console popularity soon came screeching to a halt…

While games and consoles were selling well in the very early 80s, something else was developing. In 1979, four video game designers met with Ray Kassar, then CEO of Atari, to discuss their recognition and remuneration. Things did not go according to plan, and the four engineers left Atari to form their own business—a business that developed games for the Atari 2600 platform. They named this company Activision, and it marked the start of a new kind of trade—third party videogame development (it’s important to note that while Activision was the first third party developer, it still exists today, although not quite at the same capacity).

Activision released Pitfall! in 1982, and went on to great success. In fact, many Activision titles released at the time were quite popular, prompting a number of other businesses to try their hand at videogame development. However, there was no licencing in place at the time and things swiftly got out of hand. Companies were trying to cash in and released low-quality titles into the market in droves. Several titles were simply advertainment—a simplified game mechanic designed around a popular product mascot. These titles were reportedly terrible, and sold poorly. Consumer trust was in decline.

On top of this, Atari—riding high on it’s successes (some would say arrogant)—began to rush titles to market. Certain licences were expected to sell MILLIONS, and pressure was put on game designers to get them out in as little time as possible. Forecasts were blown out of proportion. Pac-Man was an example here; while it did sell 7 million copies, 12 million were manufactured, causing Atari to suffer a loss from their best seller. A second high-profile example was ET—a movie tie-in so rushed that it was virtually unplayable. Gamers of the time lost faith in Atari—if they couldn’t do a good job with Pac-Man or a huge licence like ET, then perhaps videogames weren’t as impressive as they seemed? A second market crash was imminent.

While the ’77 crash was detrimental to business, the market crash that occurred in 1983 was almost apocalyptic in terms of the console market. Store shelves were so overstocked that the bargain bins were overflowing with marked-down titles. Not only did this put a bad taste in the mouths of consumers, it reflected very poorly on the console manufacturers, who scrambled to keep afloat. In 1984, virtually no new console games were released. Things were looking bleak—in fact, this market crash all but destroyed the industry in the US, and the balance of power shifted elsewhere.

However, this wasn’t the case in all of the world markets. In Europe, for example, the videogame business had taken a slight detour. Two very important companies had arisen in the early 80s—Commodore and Sinclair—and these focused more on the home PC market than consoles. In fact, they marketed their wares as having an education bent, which was more appealing to parents at the time. The PC market did pick up in the US following the market crash, but never to the extent that things did in Europe (in fact, Sinclair never really gathered momentum in the American market). Why this happened is a story for another time, but as a result, the console market skipped a beat and took a different path in Europe.

In Japan, something else occurred. Nintendo, buoyant from their success in the arcade industry (they had multiple successes in Japan, but Donkey Kong was their major achievement in the US), created a new system of their own, which they released to the Japanese market in 1983. As Japanese consumers lapped up their “homemade” console in droves, the saturation of poor quality Atari games had little effect on the Japanese market. The Nintendo Famicom (“Family Computer”) had arrived, and Japan became the mecca for console gaming for years to come.

Primary Changes from Generation 1 to Generation 2

GEN1 - Code was hardcoded onto chips -no other games could be added

  • GEN2 - Programmable cartridges

GEN1 - Most machines had controllers built in to the console

  • GEN2 - Controllers primarily wired

GEN1 - Controllers generally employed knobs/spinners

  • GEN2 - Shift to joystick + buttons

INTRODUCED - Boot screens first seen in this generation

Coming up next: The story of Japan – the 8-bit Generation

About the Author
Greg Newbegin

Proud father of two, and a lover of games. Retro collector, writer, and fan of all things Japanese. I love all gaming machines equally.



  • EspionageMonkey

    1982 – Vetrex!, was the first console to diplay games in a Vector graphics engine and also was a complete system only needing a power point to play, also the first console i owned and still have :)

    • Greg Newbegin

      Yeah… I had some turmoil internally regarding whether I should include the AWESOME Vectrex… Chose to leave it out in the end because – yes, it was the first of both of those things, but it was also the LAST of both of those things (unless I am mistaken –
      I don’t remember any other vector graphics/standalone home console?)

      Overall – it was already a long article, and the Vectrex was unfortunately just an awesome blip in time.

      But! Your comment added the info, so the world is once again at peace.

    • Greg Newbegin

      Also – VERY jealous you have one, by the way. Was tempted recently, but resisted.

  • https://twitter.com/#!/Hokess Hokes

    Space Invaders…my first arcade machine experience…!! It was in cafe, so it was arcade machine cafe table…! Played Pack-Man and Donkey Kong with friend too…! The good old days…!

    • Greg Newbegin

      I don’t think I ever had the chance to play the Donkey Kong arcade… But I’ve played it on a million other machines, so that’s OK. :)

  • https://twitter.com/#!/Hokess Hokes

    I think I never play Donkey Kong with arcade machine cafe table, I think first time I played Donkey Kong was with Donkey Kong game & watch…orange multi-screen one.
    So, yes, Game & Watch was Nintendo’s big success at that time too…! It’s not video game console, but still we can’t forget about them when we talk about video game history… :)