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 VII

ELECTRONIC GAMES: TECHNOLOGY DRIVES MARKET EXPLOSION

JEFF D. MONTGOMERY

Vice President

Gnostic Concepts, Inc.

Menlo Park, CA

The rapid evolution of microprocessors and other LSI circuits, plus new display devices and other components, will drive a large and rapidly expanding market for electronic games over the next four years. The growing complexity of integrated circuits, combined with their plummeting costs as production volume accelerates, will make available a wide variety of increasingly complex games at declining prices.

The introduction and promotion of new and updated games will proceed across a broad front, from throw away consumer items, priced at a few dollars each, to major revenue producing games at several thousand dollars each. These games will fall into three basic price ranges:


 * Consumer expendable units, $10–100 each retail, typically single game, not reprogrammable
 * Home entertainment centers, $100–500 retail; reprogrammable for a variety of games, and also providing non-game functions
 * Commercial games, $500–3,000 each, generally coin operated and revenue producing.

The total US domestic production of electronic games in 1976 was $242 million, as shown in Figure 1. This will more than double, growing at an average annual rate of over 21 percent per year to reach $524 million in 1980. Some of this production will be exported. Exports, however, will be exceeded by imports, including games assembled offshore by US manufacturers. The US market, therefore, will be slightly larger than US domestic production, as discussed later in this paper.

Home video games dominated production in 1976, with a production value of $148 million, 61 percent of the total. Coin operated games, primarily video type lounge games, represented total production of $83 million. The shift in these ratios will be minor over the next four years. The most rapid growth will be achieved in interactive and educational games, plus kits and accessories, representing a small share of 1976 production but almost doubling their share by 1980.

Jerry Eimbinder of Electronic Engineering Times with Nolan Bushnell, board chairman of Atari.