Chariots of Cartridge Power

Pac-Man and pals occupy the living room

It is practically unreal. A regular Pac-a-dream. Pac-Man, the obsessional game of pursuit and devour, is not just roaming the amusement arcade; increasingly, it is a house guest in the living room. May its fortunes increase; Warner Communications' certainly have.

Atari, which marketed a home version of Pac-Man only last month, just helped Warner Com, its parent company, post a record 57% increase in first-quarter profits. In 1982, according to San Francisco Securities Analyst Ted James, Atari, the world's largest supplier of home-video consoles and cartridges, should sell around $400 million worth of coin-operated video games and some $1.3 billion worth of the home-video consoles and cartridges. This represents a revenue for Warner almost six times that of their record business, five times that of the film division and about 47 times that of their Oscar-winning movie Chariots of Fire. No wonder Hollywood looks a bit like Wall Street back when the brokers started to hit the pavement.

Pac purists display the same enthusiasm for the Atari home version that your old English professor showed for the Classics Illustrated comic of Paradise Lost. No one denies, however, that the home market is where the major loot lies. Emerson, Coleco and Parker Brothers--who started a small living-room revolution with Monopoly in 1935--are jumping in. Mattel, which makes Atari's archcompetitor, Intellivision, says it has sold more than a million units at $249 and expects to be marketing 40 cartridges by December. One design will be based on an upcoming Disney movie called Tron, about a whiz who finds himself, Alice-like, trapped inside a video game. Hollywood fights back!

And so does Atari, which in September will introduce a new game machine, tentatively named Atari 5200 ($349), with more sophisticated graphics and more complex controls.

The most intriguing--some might say mind-boggling--success stories in the home-video game are smaller companies such as Activision and Imagic, which manufacture cartridges (at an average cost of $27) for machines produced by the biggies. "The magnitude of the growth has caught everybody by surprise," says Activision President Jim Levy, not without satisfaction. In 1979 Activision was launched with $700,000; it closed its books on fiscal 1982 sales of over $60 million. Game designers now often rate royalty agreements giving them 1% of gross sales, and over at Activision, each game comes with a prominent credit ("conceived and designed by Bob Whitehead"), along with the designer's picture and some personal pointers on gamesmanship. Says Atari President Raymond Kassar, who is chauffeured to his office in a cream-colored Mercedes: "We've always treated our programmers as stars."

But Levy worries: "Capacity has at last met, and exceeded, demand. We cannot push the market faster than it's going to grow." Maybe not faster; but surely further. The number of households owning video games is expected to double to almost 20% by year's end. Industry observers believe 100 million cartridges will be sold this year. And there is always Europe, where roughly 1% of the TV households have video games. Those numbers are sure to change. In Britain, for one, "pack it in" may take on a whole new meaning.

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