Chapter 16: Exidy

The following day.

Ethan Jones once again drove the Ford F-150 he had borrowed from Thomas Johnson, speeding toward Sunnyvale, 23 miles away, with a Snake arcade machine wrapped in tarpaulin in the back.

In the future, this city would be part of the famous Silicon Valley, but for now, its only notable establishments were massage parlors.

Of course, Ethan wasn't here for a massage. After wandering the streets of Sunnyvale and receiving directions from a kind old lady, he finally pulled up in front of a factory surrounded by iron fences. A sign hung on the spiked gate, with the word "Exidy" written in bold white letters on a red background.

He honked the horn. A white man in laborer's clothes emerged from the factory. Upon spotting the expensive Ford pickup, he jogged over and asked, "Sir, who are you here to see?"

"I'm here to see Pete Kauffman," Ethan said, removing his sunglasses.

The man, who bore a striking resemblance to Tom Cruise, paused for a moment and replied, "Sir, I'm Pete Kauffman."

Then, he added, "Are you Ethan Jones? The Ethan Jones who called me yesterday?"

"Yes, Pete, it's me."

Ethan gave the steering wheel a friendly pat, then gestured with his thumb to the back of the truck. "I brought the machine I told you about over the phone yesterday."

"Oh, great! Ethan, welcome to Exidy Games."

Pete Kauffman nodded quickly, unlocking the gate and motioning for Ethan to park wherever he liked.

Ethan was here to propose a partnership with Exidy, a company that specialized in arcade machines.

This decision was the result of the intelligence he had gathered over the past two months regarding the current state of the video game industry.

The emergence of video games as an industry was quite fascinating.

Though the first video game had been created in 1947 in a laboratory, it wasn't until 1960, with the advent of the PDP-1, the world's first commercial minicomputer, that video games moved from scientific labs to universities.

Even though the creative minds at MIT developed Spacewar! the following year, and the world's first text-based game, The Oregon Trail, was born at the University of Minnesota in 1971, these games only circulated within academic circles, never making the leap into commercialization.

The reason was simple: computers were too expensive.

Scientists believed that video games, being dependent on costly computers, would never reach the general public as long as the price of the hardware remained high. Even university students thought it unlikely that the masses would have access to such a thing anytime soon.

However, in the same year that The Oregon Trail was released, a man named Nolan Bushnell had a different perspective. He believed video games didn't need computers as a medium. The feedback from these games could be produced using the most basic physical technology. Everyone else, he thought, was stuck in a dead end!

So he took Spacewar!—the game created by MIT students in 1962—and converted it into a simple electronic arcade machine, naming it Computer Space. This was the world's first commercial video game.

But Computer Space failed, for a reason that echoed something Jack Ma once said when criticizing Alipay's engineers:

"Many developers design products based on their own logic, without considering the feelings of the average person. They always think that the more specialized, the better. What they don't realize is that specialization often leads to visual confusion for ordinary people. Users want simplicity."

Computer Space was a convoluted product, a game created by geniuses that the average person simply couldn't understand.

But that didn't matter, because the following year, in 1972, Nolan Bushnell attended the launch of the Magnavox Odyssey and saw a game that epitomized simplicity—Pong.

Magnavox priced the Odyssey at $100, which was far too expensive for American consumers in 1972. But Bushnell's coin-operated arcade machine allowed consumers to experience this new form of entertainment for just 25 cents.

Sensing an opportunity, he swiftly copied Pong, made it into an arcade game, and placed it in a bar. What followed was the birth of a legend that countless people have heard.

Affordable pricing and novelty propelled Atari to fame, and Nolan Bushnell, with his Atari, successfully opened the door to the video game industry.

Though Bushnell's act of copying was undeniable, he is still regarded as the father of video games because, while others were trying to figure out how to bring computer-based games to the public, he shattered the barrier of expensive hardware.

This approach of refusing to lay the foundation before building the house was precisely what left other engineers speechless.

Nolan Bushnell's methods immediately sparked a wave of imitation, and within two short years, this novel invention—electronic arcade machines—had taken over the entrances of bars, pool halls, and bowling alleys across America.

Because the most difficult phase of promoting a new industry had already been completed by these game manufacturers, when Ethan decided to make his move into the video game industry, he quickly abandoned the idea of personally visiting each business to pitch his products.

Firstly, the purchasing power of the public was insufficient.

With arcade machines still prohibitively expensive—costing up to $1,000 or even $1,200 a unit last year, or the year before—business owners, having already invested at such high prices, naturally aimed to maximize their profits with minimal additional cost, rather than swiftly replacing the machines.

In these circumstances, even Atari only dared to offer a motherboard replacement service, where they would take the old arcade machines, swap in a new game board, and return them to the owners—charging only for the new board.

If Atari wasn't bold enough to mention the idea of scrapping machines, Ethan certainly wasn't foolish enough to provoke a backlash.

Secondly, Ethan remembered something his finance professor once said during his past life at school:

"Make money early, or risk will crush you. Hesitate, and your descendants will be impoverished for three generations."

In Ethan's view, if he wanted to make a fortune in this business, he needed to eliminate the time spent on ground-level promotion and instead collaborate directly with arcade manufacturers already entrenched in the market, utilizing their existing distribution channels to sell his product!

If one were to describe it, it would be much like Hollywood's approach to filmmaking.

Independent production companies, possessing the capability to create films but lacking distribution power, would take their reels to one of the major studios to seek distribution help. Though the studios would charge exorbitant fees, the independent companies could still leverage those vast channels to try and reach the stars in one leap.

When you're unknown, you have to give up some profit. But once you've made a name for yourself, there's no fear of wealth slipping through your fingers.

So, before leaving Magnavox, Ethan had copied down the list of all arcade manufacturers his former employer had collected.

Exidy was the closest video game manufacturer to Ethan's home in Los Gatos. Founded in 1973, they supplied machines to numerous bars and pool halls in the San Francisco area.

As Ethan drove in, several more white men came running out of the warehouse, drawn by the noise.

When they learned Ethan was here to pitch a new video game, everyone expressed great enthusiasm.

"Yo, Ethan! Glad you chose us!"

One middle-aged man, dressed in overalls and wearing a bowler hat, high-fived Ethan before clapping his hands and calling to the others, "Alright, boys, let's get that game machine off Ethan's truck!"

Their eager reception surprised Ethan, but Pete Kauffman, standing beside him, chuckled and explained, "That's my partner, Samuel Hoyse. To be honest, Ethan, if your machine is half as good as you claim, I think we have a real opportunity for collaboration. People are getting tired of the same old games on the market."

Ethan understood Pete Kauffman's sentiment well.

Though Atari had unleashed a storm in the video game world as early as 1972, there hadn't been a single truly original, commercially developed game since. Everyone was simply copying one another.

The reason was obvious: when the best games were developed by university students, with no clear copyright holders, copying became the most instinctive and easiest way to make money.

And when everyone started copying, the games that consumers encountered became painfully homogeneous.

At first, they might have been drawn in by novelty, but soon enough, arcade manufacturers would have to face the reality of developing their own original games.

It was precisely this understanding that had drawn Ethan into the video game industry.

He had no choice!

After all, how could he not, when at the age of twenty, he already possessed forty years of development experience?