The earliest electronic ping-pong game was played on an oscilloscope, and was developed by William A. Higinbotham at the Brookhaven National Laboratory in 1958. His game was called Tennis for Two.
The idea for a home console version of PONG was conceived in 1973 and a prototype was designed by Al Alcorn, Bob Brown and Harold Lee during 1975. The project was named Darlene after a female co-worker at Atari. PONG had some important differences from the original Magnavox Odyssey, which had been discontinued in 1974. The Odyssey used discrete electronic components as a legacy of its 1960s roots, while PONG was based on an integrated circuit containing many components on a single chip. The chip in the home version of PONG was the most complex developed for a consumer product at the time. PONG boasted on-screen digital scoring, something the Odyssey lacked, but while the Odyssey offered a range of different games through plug-in circuit boards, the first PONG console played the table tennis game only. The Odyssey lacked sounds and PONG made a distinctive bleeping noise through an internal loudspeaker each time the ball was hit. The Odyssey could add spin to the tennis ball through a button on its controllers, while PONG could add eight levels of spin automatically depending on which part of the bat the ball hit. This was a feature found in the arcade version of PONG, and helped to produce varied play. In both the Odyssey and PONG, when the ball hit the top or bottom of the screen it bounced back in, a feature more like squash than tennis. The player gained a point in PONG when the opposing player failed to return the ball. Since domestic televisions in the 1970s lacked audiovisual inputs, the PONG console was connected to the television by converting its output to a radio frequency signal that was fed in through the antenna socket. Some consumers had been confused by the name of the Magnavox Odyssey, believing that it would work only with Magnavox televisions. However, both the Odyssey and PONG were compatible with any make of television that had an antenna socket.
The PONG console was demonstrated at the Consumer Electronics Show in the summer of 1975. The buyers from the major retail outlets showed little interest, believing that the public was not sufficiently interested in video games for the home. However, soon after the show Atari contacted Tom Quinn, the sporting goods buyer for Sears, Roebuck and Company. Quinn was familiar with the PONG game found in arcades and bars, and decided to take a chance on the new console. He met with Nolan Bushnell and asked how many units Atari could produce in time for the Christmas holiday season. Bushnell reckoned that they could produce 75,000, but Quinn wanted double that number of units and offered to pay to boost production to that level. In return, Sears would become the exclusive retailer of PONG under the Sears Tele-Games label.
Christmas 1975 turned out to be the most successful period for sales of PONG home consoles, with customers lined up outside Sears stores waiting for new shipments of the game to arrive. The first consoles retailed at $100, the equivalent of around $400 at today's prices. The burgeoning popularity of PONG caught the attention of Al Franken and Tom Davis during the first year of the television show Saturday Night Live. The comedy duo wrote and voiced several segments in which no actors were visible, and all that viewers saw was a PONG game in progress looking just as it would if they were playing the game themselves. Franken and Davis would talk to one other as friends, rarely mentioning the game itself, and with the conversation occasionally having a detrimental impact on their game skills.
A consequence of the popularity of PONG was that enthusiasts would play the game for hours at a time on their home consoles, leading to damage to the television screen being used as the display. Since the white lines forming the tennis court were shown constantly, they could become burned into the phosphor coating on the cathode ray tube of the television, causing irreparable damage to the screen. After a number of incidents where this occurred, the instruction books of tennis video games mentioned the risk and advised against extended play, or suggested that the brightness and contrast controls of the television be turned down in order to reduce the risk of damage. Another feature of constant play was the tendency of the paddle controllers to wear out and require replacement.
Cloned versions of the PONG home console soon appeared, with the AY-3-8500 chip launched by General Instrument in 1976 offering a range of Pong-style games to any manufacturer. By 1977 the market was saturated with cloned Pong consoles and demand was in decline. Seeking a quick exit from the industry, many companies sold off their games at discount prices. The result was the first crash in the video game market, an event later echoed by the Video game crash of 1983. The public's interest in Pong consoles had waned by the late 1970s, and the units had ceased production by the early 1980s. By this time more sophisticated games such as Space Invaders and Pac-Man had become available, and the sound and graphics capabilities of Pong consoles were seen as old-fashioned. The technology of the home video game market had also evolved in 1976 when the manufacturer Fairchild released its new programmable console, the Video Entertainment System or VES. Unlike the dedicated Pong consoles which had a fixed number of built-in games, the VES could offer a range of games via plug-in ROM cartridges. Atari launched its own programmable system in October 1977, the Atari Video Computer System or VCS. This later became known as the Atari 2600, and the use of plug-in cartridges was the defining feature of the second generation video consoles that dominated the market during the late 1970s and early 1980s.
Nolan Bushnell says that Atari sold a total of 38,000 coin-operated PONG games, although taking into account the large number of clones, it is estimated that over 100,000 units were sold, making it the most popular arcade game of all time.