Although the first computer games appeared in the 1950s, they were based around vector displays, not analog video. It was not until 1972 that Magnavox released the first home video game console which could be connected to a TV set—the Magnavox Odyssey, invented by Ralph H. Baer. The Odyssey was initially only moderately successful, and it was not until Atari's arcade game Pong popularized video games, that the public began to take more notice of the emerging industry. By the autumn of 1975 Magnavox, bowing to the popularity of Pong, cancelled the Odyssey and released a scaled down version that played only Pong and hockey, the Odyssey 100. A second, "higher end" console, the Odyssey 200, was released with the 100 and added onscreen scoring, up to four players, and a third game—Smash. Almost simultaneously released with Atari's own home Pong console through Sears, these consoles jump-started the consumer market. As with the arcade market, the home market was soon flooded by dedicated consoles that played simple pong and pong-derived games.
Fairchild released the Fairchild Video Entertainment System (VES) in 1976. While there had been previous game consoles that used cartridges, either the cartridges had no information and served the same function as flipping switches (the Odyssey) or the console itself was empty and the cartridge contained all of the game components. The VES, however, contained a programmable microprocessor so its cartridges only needed a single ROM chip to store microprocessor instructions.
RCA and Atari soon released their own cartridge-based consoles.
In 1977, manufacturers of older, obsolete consoles and Pong clones sold their systems at a loss to clear stock, creating a glut in the market, and causing Fairchild and RCA to abandon their game consoles. Only Atari and Magnavox remained in the home console market, despite suffering losses in 1977 and 1978.
The VES continued to be sold at a profit after the 1977 crash, and both Bally (with