Game on

In 1978, when Doug Macrae ’81 set up his brother’s pinball machine in the H Entry Lobby of MacGregor House as an MIT sophomore, his goal was to collect a little cash from his dorm mates. That machine earned enough for Macrae to buy another, then another, and eventually partner with fellow MacGregor House resident Kevin Curran ’81. The pair split revenue 50-50 with campus dorms and built a network of 25 pinball machines and arcade video games. They noticed that students happily pumped quarters into brand-new games, but revenues dropped over time. So they created a business-bolstering strategy that changed the landscape of video games forever.

It started with Missile Command, a wildly popular space shooter game released by Atari in 1980. With help from their friend Steve Golson ’80, Macrae and Curran installed Missile Command on campus and collected $650 during the first week—roughly one quarter every four minutes, 24 hours a day. On week two, the take was $400, and by week four, students who could play for only two minutes just weeks earlier were playing 10-minute games on a single coin.

“We jokingly said that we should get involved in the design of the games as opposed to just being the operators,” Macrae says. “We were at the wrong end of the food chain.”

Modifying games is now common and often encouraged by publishers, but it was expensive, technically challenging, and legally questionable back then. Since hackers couldn’t easily pull up a game’s entire source code, they modified games by building enhancement kits—read-only memory (ROM) chips that could modify small pieces of the original code. Arcade owners could use these kits to upgrade games, but they were easily copied and violated copyright by relying almost entirely on the game’s original coding.

By January 1981, Macrae, Curran, and Golson had hatched a plan with housemates John Tylko ’79 and Larry Dennison ’80, SM ’91, PhD ’96, to build a Missile Command enhancement kit that would fundamentally change game play and couldn’t be copied. They borrowed $25,000 from Macrae’s mother and purchased a GenRad 6502 emulator that could display the game’s assembler code. The emulator allowed them to view code one screen at a time, but because it couldn’t connect to a printer, seeing the entire code generally required one person to read each line aloud while another typed it into a TRS-80 computer.

With help from Chris Rode ’82, the group spent spring break working round the clock to decipher what each line of code did, often by temporarily erasing pieces to see what broke. With the code cracked, the group designed features including new enemies, faster game play, and unique sound effects, and then loaded their code onto an encrypted circuit board that connected to Missile Command’s motherboard through ROM sockets. The encrypted hardware prevented copying, and they hoped that the novel features, fresh coding, and new name—Super Missile Attack—would prevent intellectual-property infringement.

That wasn’t how Atari saw it. By mid-May, Macrae and Curran had founded a company called General Computer Corporation (GCC), sold roughly 1,000 Super Missile Attack kits, and grossed almost $300,000, inspiring the pair and Golson to put their educations on hold. That summer, a local arcade distributor told Curran that Atari planned to sue, but by then, the team was focused on a juicier prize: Pac-Man was dominating arcades worldwide. The race to make an enhancement kit was on. The team, bolstered that summer by coder Philip Kaaret ’84, worked feverishly to get it done. But to hit the market first and avoid a potential Pac-Man suit, GCC would need to establish that game modification was legal, starting with Super Missile Attack.

“We thought we were perfectly in the right and we had this wonderful product and everybody loved it,” Golson says. “What’s the worst that can happen? I have to go back to school?”

GCC preemptively sued Atari, seeking a judgment that Super Missile Attack didn’t infringe on Atari’s copyright—and to avoid having to go to court in another state if Atari sued first. Then the company was hit with a $15 million countersuit and a restraining order to halt sales. Atari’s strategy to quietly kill the kit backfired, however. A judge allowed GCC to create a new version to accommodate Atari’s IP complaints, and as the suit continued, game manufacturers worried that a GCC win would hurt their business. In October, Atari offered an alternative: end the lawsuits and join forces.

GCC signed a two-year, $1.2 million “development” contract that didn’t require the group to develop anything. But it did prevent GCC from selling enhancement kits without permission from the original game licenser—which Atari figured no licenser would grant—and it gave Atari right of first refusal for new games created in that time.

“They really had no expectations of getting anything out of us other than giving us enough money that we would go sit on a beach somewhere or maybe go back to school,” Macrae says.

Just before signing the Atari deal, GCC finished the Pac-Man enhancement kit, which included more mazes, unpredictable monsters, and bouncing fruit bonuses. To avoid IP infringement, they also created new sounds, altered the color scheme, added legs to the iconic Pac-Man character, and renamed the game Crazy Otto.

Before Crazy Otto could hit the market, the Atari deal required GCC to get permission from Bally Midway, the company licensing and distributing the US version of Pac-Man. The same week they signed the Atari contract, the GCC team showed Crazy Otto to Midway executives, hoping to form a licensing agreement. Midway, which didn’t have a follow-up to Pac-Man, returned with a counteroffer—transform the kit into an official game sequel. Because the kit had been designed before the Atari deal went into effect, it wouldn’t count as a new game.

With no copyright obstacles, GCC reverted to the original Pac-Man visual schemes but changed Crazy Otto into a female character. The title morphed from Crazy Otto to Super Pac-Man to Pac-Woman to Miss Pac-Man, but was ultimately changed to Ms. Pac-Man after Midway executives noticed that the game’s interstitial cartoons featured a pac-baby and wanted to avoid controversy around an unwed pac-mother.

Released in 1982, Ms. Pac-Man became one of the highest-grossing arcade video games of all time. The GCC team later created Jr. Pac-Man (Midway sold the arcade version, Atari the home console version) and more than 70 titles with game systems and hardware for Atari. And before shifting to Macintosh software development in 1984, they also secured a place for themselves in the annals of arcade history.

Editor’s note: this story was amended to acknowledge the contributions of Philip Kaaret ’84 to coding Crazy Otto.