The History of ColecoVision and the now-defunct Coleco Corporation

Coleco (a contraction of COnneticut LEather COmpany) was the first company to introduce a "dedicated chip" home video game system, with the Telstar Arcade (a black-and-white "Pong" game clone) in 1976 (released a year before the landmark film, Star Wars). (The Magnavox Odyssey, based on Analog technology, was the first home video game system overall, debuting in 1973), but it faded quickly in the market place. Trying to build upon the enormous initial success of the unit, Coleco decided to bring out nine different Telstar models.

But within a year, 75 other manufacturers had introduced similar units, and combined with with production snags, a shortage of chips, and a push towards hand held games, Coleco skirted with disaster. While Coleco sold over $20 million of hand held games, it had to dump over a million Telstar units, and the company lost $22.3 million in 1978. With the introduction of units with games stored on interchangeable cartridges, Fairchild and then Atari had eliminated any remaining market for the simple pong games.

On June 1, 1982, Coleco re-entered the fray with the announcement of its "third generation" video game system, ColecoVision. Touting "arcade quality," ColecoVision took aim at the seemingly unassailable Atari 2600 (considered at the time to be the Sony Playstation of game systems). Coleco wanted "Donkey Kong," a very hot arcade hit, to be their pack-in game. In December 1981 (the year Raiders of the Lost Ark was released), they went to Japan to make a deal with Nintendo for the rights to Donkey Kong. The Coleco executive wanted to return to the US to show his lawyers the contract before signing, but was told to sign now, or risk losing Donkey Kong to Atari or Mattel, who were currently going though channels to get the rights themselves. Under the pressure, the Coleco executive signed.

In April '82 Coleco and Nintendo were threatened with lawsuits from Universal Studios who claimed Donkey Kong was an infringement on their King Kong. Coleco had invested a fortune in the ColecoVision version of Donkey Kong that was only 4 months from its premiere release. Thinking that they didn't stand a chance in court, Coleco decided to settle, agreeing to pay Universal 3% of all Donkey Kong sales. Nintendo decided to fight it, and some time later actually won. Coleco then filed suit and got some of their lost royalties back. Coleco was no Lucasfilm when it game to wheeling and dealing.

The bulk of Coleco's library, however, was comprised of overlooked coin-op games such as Venture and Lady Bug. With a library of twelve games, and a catalog showing ten more on the way (many of which were never released), the first one million ColecoVisions sold in record time. In 1983, it topped sales charts, beating out the Atari 2600 and Mattel's Intellivision, with much of its success being contributed to its pack-in super Arcade hit, Donkey Kong. The ColecoVision soon had more cartridges than any system except the Atari 2600, and with the 2600 converter still today has more playable games than any other system.

The ColecoVision introduced two new concepts to the home videogame industry - the ability to expand the hardware system, and the ability to play other video game system games.

The Atari 2600 expansion kit caused a flurry of lawsuits between Atari and Coleco. After the dust cleared, the courts had decided that it was acceptable for Coleco to sell the units. As a result of this Coleco was also able to make and sell the Gemini game system which was an exact clone of an Atari 2600 with combined joystick/paddle controllers.

Coleco was also the first home videogame maker to devote the majority of their product line to arcade conversions, using the superior graphics of the ColecoVision to produce nearly arcade-quality games, albeit often missing a screen or level.

Coleco truly shocked the industry by doing so well. In a year, the stock rose in value from 6 7/8 a share to 36 3/4. The following items were taken from Fortune on March 7, 1983:

"Six months ago, hardly anyone expected Coleco to ride so high. [Company President) Arnold Greenberg was known in the industry as a self-promoter overly sanguine about Coleco's prospects. Says one security analyst: "He was always gilding the lily. Wall Street developed a basic distrust of the company." So did the Securities and Exchange Commission. In 1980 it charged Coleco with misstating financial results to mask troubles."

"But almost overnight Coleco's image has changed. ColecoVision, the video game player introduced last August, is one of the most popular consumer products around. The trade, paying homage to its technological advancement, has dubbed it "the third wave" - wave one being the Atari VCS, wave two being Mattel's Intellivision - and the most discerning critics, kids, love it. The 550,000 game players Coleco made last year flew off the shelves by Christmas-time. Coleco's sales nearly tripled from $178 million in 1981 to $510 million last year, and the net income shot up 420% to $40 million."

"Coleco's charge into the market last summer was well timed. Atari and Mattel were engaged in a multimillion-dollar mud-slinging battle on television. George Plimpton in Mattel commercials lampooned the graphics on Atari's VCS game player, while Atari blasted Intellivision's dearth of hit games. Then Coleco suddenly arrived on the scene with the best of both: good graphics and good games. With a greater amount of memory allocated to screen graphics, ColecoVision provided a much better picture than Atari. Although ColecoVision at $175 ($ 335 in 1998 dollars!!!!!) was $75 more expensive than Atari's VCS, discerning video players were willing to pay a higher price for more lifelike graphics. ColecoVision's pictures were also better than those of Intellivision, and the retail was $35 lower."

"To make ColecoVision even more attractive, the company gave away with each unit a $35 Donkey Kong cartridge. "Donkey Kong was a very serviceable gorilla," says Greenberg. "Once we convinced the consumer of the merits of the hardware, Donkey Kong pushed him into buying.""

"Another popular feature has been ColecoVision's expandability. Accessories like the $55 Turbo module, a steering wheel, gas pedal, and gear shift used to play a road racing game, can be plugged into the console. The company's $60 Atari adapter enables ColecoVision to play Atari VCS-compatible cartridges. Atari doesn't approve - it's suing Coleco for $850 million, charging patent infringement - but game addicts do. Coleco sold 150,000 Atari adapters in just two months. Coleco's latest add-on, the Super Game module, was shown at last week's American Toy Fair. It adds more memory to ColecoVision and provides additional play variations."

"Coleco's software approach was to go after licensed arcade games and to make cartridges for Atari's VCS and Intellivision in addition to it's own game player. Although Coleco hadn't built a single ColecoVision when it was negotiating licensees in 1981, the licensers liked Coleco's plan to make products for all three leading game systems. Coleco reached agreements with five firms, landing nine hit arcade licensees. Last year the company sold eight million cartridges."

"Flush with last year's successful foray in video games, Arnold Greenberg predicts even more good news is on the way. "We are a terror in the marketplace," he boasts. Greenberg proclaims that Coleco will increase it's market share in video game players this year from 8% to 25%, supplanting Mattel as No. 2."

"Achieving such lofty goals may be difficult. Coleco last year paid only $250,000 for the rights to Donkey Kong, but Atari later had to pay an estimated $21 million to license E.T. for it's coin-operated and home video games. Late last year Coleco reached an agreement with the game maker Centuri for licenses to three arcade games: Phoenix, Vanguard, and Challenger. Then just before the contract was to be signed, Atari won the license by making a higher offer. Parker Brothers also outbid Coleco for the Popeye license. "Coleco's position is still not assured," says Barbara S. Isgur, a security analyst at Paine Webber. "They were helped last year by the phenomenal success of Donkey Kong. What will they do for an encore?"

"Arnold Greenberg remains optimistic. He notes that Coleco has already signed license agreements to bring out 30 new games by year-end. In January, Coleco made CBS the principal foreign distributor for it's products. In return Coleco will begin developing and marketing for ColecoVision home video cartridges licensed by CBS from Bally, a major arcade game maker."

Unfortunately, the ColecoVision suffered the same fate as the rest in the great video game shake-out of 1984. The dark times for home video games if you will. Coleco's unsuccessful bug-ridden ADAM computer only complicated the problem. Some believe if it wasn't for Coleco's Cabbage Patch dolls, they would have completely disappeared. Even the Cabbage Patch dolls couldn't keep Coleco going forever and, eventually, the company went under for good a few years later. Ironically, Mattel (the producers of Intellivision) now own the rights to the Cabbage Patch dolls and Nintendo re-lauched the home video game industry unprecedented heights with the little Mario guy from the Donkey Kong game.

Coleco stopped production of the ColecoVision in 1984. Their last few titles (Illusions, Spy Hunter, Telly Turtle and Root Beer Tapper) were barely seen in stores. Soon after that, Telegames bought much of Coleco's stock and even produced a few titles of their own that didn't reach the shelves before the shake-out. As recently as 1991 a mail order electronics store was known to sell ColecoVision motherboards and joysticks.

When Coleco left the industry they had sold more than 6 million ColecoVisions in just two years, even with the its last year of 1984 being troubled by the shake-out. Many in the industry believe if it wasn't for the videogame crash of '84, that Coleco could have gone through the 80's as the system of choice, especially with its proposed Super Game Module. It was clearly beating Atari and Mattel, but just didn't have the installed base to last out the crash. Enter Nintendo in 1986 dominating the home video game market like never before with the NES (Nintendo Entertainment System) . . .

Timeline --------

Aug 1982 - ColecoVision released 1982 - Expansion Module #1: Atari 2600 Converter released 1982 - Module #2, Driving Controller released Feb 1983 - Super Game Module announced 1983 - Super Game Module demoed (non-playable) at New York Toy Show May 1983 - Advertising of the Super Game Module starts; runs through July Jun 1983 - ADAM computer introduced Aug 1983 - Super Game Module schedule to go on sale Oct 1983 - Super Game Module dropped Fall 1983 - ColecoVision Roller Controller released 1983 - ColecoVision Super Action Controllers released Winter 1983 - The video game market begins to crash Spring 1984 - The video game industry collapses. All ColecoVision production stops after selling 6 million console units. Jan 1985 - Coleco drops the ADAM computer 1985 - Telegames picks up where Coleco left off, putting out new titles Dec 1985 - Nintendo NES is test-marketed in New York City 1988 - Telegames releases the "Personal Arcade" ColecoVision clone.

ColecoVision 1982-1984 R.I.P.

There you have it in a nutshell! While the version of ColecoVision pictured above died out, the ColecoVision has been breathed back to life like never before with the various PC emulators that can be found on the Internet. You can actually play classic ColecoVision games on your PC with these emulators! The rise, fall and ultimate redemption of ColecoVision (through PC emulators). It was a great time to be a teenager in the early 1980's: ColecoVision, British New Wave Bands (watch VH-1 to catch some of these oldie tunes) and the Star Wars Trilogy. Guess which of the three is the only one to truly age well with the passage of time? Obviously, that's a rhetorical question.

(Source: Anonymous LucasArts Informant, who is very addicted to ColecoVision emulators for the PC!)