By 1981, the arcade had captured the imagination of an entire generation of kids. New games were being released almost weekly, and most successful new games brought interesting challenges and new gameplay patterns into the fray.
All of this led to the 1981 arcade business growing into the world's number one entertainment medium.
"It was a wacky, extremely competitive business. I was there when coin-operated games were earning $8 billion in quarters a year. These games were out-grossing the record industry and the movie industry combined, in quarters!" clix
- Dan Plishkin (Atari coin-op engineer)
Coin-ops were quickly spreading outside of the arcade. By the summer of 1981, one in five of the approximately 40,000 convenience stores in the USA had added coin-operated video game machines to their locations, and many of these sported Atari products.
"Gamers pour 10 million quarters into Asteroids coin-operated machines every single day." clx
-Frank Laney Jr. (Arnie Katz), Electronic Games Magazine
After the success of Asteroids, Missile Command and Battlezone in 1980, the Atari name and the company's Fuji logo were synonymous with quality gaming experiences. The Atari coin-op division entered 1981 armed with further developments in vector hardware and a continuing dedication to game design.
However, the year started off in the wrong direction with a string of failed ideas and missed opportunities. The first, in March, was Asteroids Deluxe -- a sequel, but not necessarily an improvement, over Atari's most successful game to date.
"Asteroids Deluxe was done by Dave Shepperd. I did not have any input into this game other than the original code he worked from." clxi
- Ed Logg
With shields auto-fire and killer satellites, Asteroids Deluxe proved too difficult to play and not enough of an advance over the original game to match Asteroids' popularity. However, it still sold fairly well with about 22,000 units sold. clxii
"But wait -- what's that over there coming out from behind that large asteroid over there? It's the Zylor saucer you were sent in after. Dodging and weaving, you suddenly realize they've gotten a lot smarter. And what's that strange looking asteroid that seems to be following you? Wait a minute, that's no asteroid! It's a giant ship! This is an ambush!" clxiii
- Asteroids Deluxe Advertisement
About the same time, Atari's first 3D vector flight simulator appeared in arcades: Red Baron. The game was a bit like a flying version of Battlezone (in fact, the Battlezone cabinet was used to house the game clxiv), but with both air and ground targets. The game sold only 2,000 units and was not any kind of sizable hit. clxv
Soon after, Atari's next game to hit the arcades landed with a similar thud. Warlords was a cult favorite, an innovative one to four-player Breakout-style game. It was great fun to play, but simply could not muster the mass audience necessary to break through the influx of games from a multitude of manufacturers that were flooding into the limited arcade space. It sold just over 2,000 units. clxvi
It was not a good time for Atari to release three decent, underwhelming games in a row. By mid-1981, the competition in the arcades was getting fierce. Atari was facing-off against golden age hits in every corner of the arcade floor. Namco's Pac-Man, and Williams' Defender, both released in 1980, were just capturing the imagination of the mass market, as would Namco's Ms. Pac-Man.
Nintendo's Donkey Kong, Namco's Galaga and Sega's (licensed from Konami) Frogger would capture that attention in the second half of 1981. These hit games were both opening up the arcade to women (Pac-Man, Ms. Pac Man, Frogger), while keeping the hardcore players satisfied (Defender, Galaga). To stay in the game, Atari needed to find a new hit game to compete with them.
Instead, it found two.
The first game came in June, and it was a monster success. Centipede was a garden-based "bug shooter" designed and programmed by Ed Logg and Dona Bailey (one of the first female coin-op designers). As to who actually came up with the original idea, this has been the subject of some controversy.
"Centipede was an idea that came from a brainstorming session Atari would have every year." clxvii
- Ed Logg
The game placed the player in a patch of mushrooms. Centipedes, spiders and other garden insects that had to be eradicated to save the patch. Most of the mushrooms could be destroyed, which gave the game the feel of infinite possibilities, and also led to multiple strategies for obtaining a high score.
"Centipede would be considered, at best, a 'casual game' now -- which was so funny to me, because it wasn't that at all -- it was an action game with a story, and now it really doesn't have a narrative at all by today's standards! It probably wouldn't even be released today." clxviii
- Dona Bailey
The game went on to sell just over 54,000 units, and became Atari's second best selling coin-op of all time. The game was also very popular with women, which gave Atari an edge with that growing demographic of arcade patrons.
"Many theories have been suggested. One is that it was created by a woman. Another is that destroying insects fits well with a woman's psyche. I believe this game appeals to women because it is not gender-biased like fighting games or RPGs or sports games." clxix
- Ed Logg, on why Centipede appealed to women
The second big game for Atari in 1981 was Tempest. Originally designed by Missile Command designer Dave Theurer as a 3D version of Space Invaders, it ended up being a third-person, 3D battle around the edges of increasingly more intricate geometrically-shaped proving grounds.
"I came in one day and all of a sudden he had this round tube with these things coming up it. I said, 'What the heck is that Dave?' He said, 'I don't know. Aliens from the center of the Earth? I don't know.' I think he said something about having had a dream about it.
I said, 'How does it work?' He said, 'I don't know. They're coming up around the edge of this thing and you're trying to blow them away.' He just sort of started out with this concept and took it from there. I can see why he would say that Tempest was certainly his proudest achievement. He worked extremely hard on that. It's pure creation from his own brain." clxx
- Rich Adam
Tempest included a knob-style paddle controller to move the player's avatar around the rim of each geometrically designed level. It also used Atari's newest color vector generator ("Color-Quadrascan") and the vector math box to create 3D visuals that had previously never been seen in the arcades.
The combination of great graphics, fast action, and innovative game design created a superb hit for Atari. The game was so hypnotic that some players would go into a trance-like "zone" state while playing, shutting-out everything else around them.
"Tempest controls were good enough to where once you learned how to manipulate them you could almost become one with the machine. That is, a good Tempest player gets to spin that knob and do the firing in the right time and get into sync with the machine or get into a rhythm. I don't know exactly what to call it, but you were so close to the action that part of you entered the experience. You forgot about what was going on around you and you were just there."
- Lyle Rains
Tempest sold about 30,000 units, only 8,000 more than Asteroids Deluxe, however the greatest gain was not in numbers but in mind-share. With Tempest, Atari looked like a company moving forward, not one that was reaching back to old hits for inspiration.
The teenagers and older game players who had grown-up on Pong and Space Invaders now craved more challenging and thrilling gaming experiences, and with Tempest, Atari was in the position to deliver.
Along with the released games, Atari coin-op had several false-starts and abandoned games in 1981, including Force Field, Hyperspace, Space Shoot (by Howard Delman), Time Traveler, and Thogs. clxxi
Even with the hits, all was not necessarily good for Atari's coin-op division at the end of 1981. The engineer that had started it all, Al Alcorn, left the company after Atari failed to ship the Cosmos holographic electronic game he had been working on. Even though Alcorn had taken thousands of orders at CES, Atari still opted to not produce it, effectively shutting down Atari Electronics.
"Ray Kassar was too scared to take a chance on the handheld/tabletop market, the Atari 2600 VCS was the only thing he had faith in." clxxii
- Al Alcorn
The frustration got to be too much for Alcorn. In 1981 Atari was simply not the place he had helped start in 1972. It was time to go.
"I left Atari because it ceased to be fun for me under the Presidency of Mr. Kassar." clxxiii
- Al Alcorn
More engineers followed. The most high profile defection was the trio of Ed Rotberg, Howard Delman, and Roger Hector, who all left to form their own video game design firm.
"In 1981, Roger Hector, Ed Rotberg, and I left Atari and founded Videa, Inc. Our goal was to become a well regarded design firm in the video game business, as well as in whatever other markets we could leverage our skills. We ended up designing the arcade game Gridlee for Gottlieb, a point-of-purchase merchandiser for ByVideo, and a couple of games for the Atari VCS."
- Howard Delman