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In the history of computer and video games, the second generation (sometimes referred to as the early 8 bit era or to a lesser extent, the 4 bit era) began in 1976 with the release of the Fairchild Channel F and Radofin 1292 Advanced Programmable Video System.

The early portion of this generation saw the release of several consoles as various companies decided to enter the market, and an occurrence of a later portion whose releases were in direct reaction to the earlier consoles. The Atari 2600 was the dominant console for much of the second generation, with other consoles such as the Intellivision, Odyssey 2, and ColecoVision also enjoying market share.

The second generation came to an abrupt end in 1984 amid the video game crash of 1983.

8-bit home consoles (1976-1983)Edit

The earliest console, the Magnavox Odyssey had used removable cartridges that were nothing but glorified jumpers to activate the games already wired in to the console. This method was soon replaced during the move to Pong consoles, where the logic for one or more games was hardcoded into microchips using discrete logic, and no additional games could ever be added. By the mid-1970s cartridges had returned with the move to CPU based consoles. With games now consisting of microprocessor based code, these games were burned onto ROM chips that were mounted inside plastic cartridge casings that could be plugged into slots on the console. When the cartridges were plugged in, the general-purpose microprocessors in the consoles read the cartridge memory and ran whatever program was stored there. Rather than being confined to a small selection of games included in the box, consumers could now amass libraries of game cartridges.

The Fairchild VES was the world's first CPU based video game console, introducing the cartridge-based game code storage format. It was released by Fairchild Semiconductor in August 1976. When Atari released their VCS the next year, Fairchild quickly re-named it to the Fairchild Channel F.

In 1977, Atari released its CPU based console called the Video Computer System (VCS), later called Atari 2600. Nine games were designed and released for the holiday season. It would quickly become by far the most popular of all the early consoles.

The Bally Astrocade was originally referred to as the Bally Home Library Computer, and was released in 1977, but available only through mail order. Delays in the production meant none of the units actually shipped until 1978, and by this time the machine had been renamed the Bally Professional Arcade. In this form it sold mostly at computer stores and had little retail exposure (unlike the Atari VCS). In 1979 Bally grew less interested in the arcade market and decided to sell off their Consumer Products Division, including development and production of the game console. In 1981 they re-released the unit with the BASIC cartridge included for free, this time known as the Bally Computer System, and then changed the name again in 1982 to Astrocade. It sold under this name until the video game crash of 1983, and then disappeared around 1985.

In 1978, Magnavox released its CPU based console, the Odyssey 2, in the United States and Canada. Philips Electronics released this same game console as the Philips G7000 in many European countries. Although it never became as popular as Atari, it managed to sell several million units through 1983. Philips had also designed the more powerful Interton VC 4000 console family (e.g. 1292 Advanced Programmable Video System) before this.

In 1979, Activision was created by disgruntled former Atari programmers. It was the first third-party developer of video games. Many new developers would follow their lead in succeeding years.

The next major entry was Intellivision, introduced by Mattel in 1980. Though chronologically coming long before the "16-bit era", the Intellivision had a unique processor with instructions that were 10 bits wide (allowing more instruction variety and potential speed), and registers 16 bits wide. The system rocketed to popularity alongside the 2600.

Though not the first system to challenge Atari, it was the first to pose a serious threat to Atari's dominance. A series of Intellivision TV ads featuring George Plimpton mercilessly attacked the Atari VCS's lesser capabilities with side-by-side game comparisons. Nevertheless, Atari held exclusive rights to most of the popular arcade game conversions of the day, and used this key segment to support their older hardware in the market. This game advantage and the difference in price between the machines meant that each year Atari sold more units than Intellivision, lengthening its lead despite inferior graphics. This need for price parity has influenced every console war since.

1982 saw the introduction of four new consoles, the Emerson Arcadia 2001, the Vectrex, the ColecoVision, and the Atari 5200. The Vectrex was unique among home systems of the time in featuring vector graphics and its own self-contained display. The Arcadia and ColecoVision were even more powerful machines.

The popularity of early consoles was strongly influenced by their ports of arcade games. The Atari 2600 was the first with Space Invaders, and the Colecovision bundled in Nintendo's Donkey Kong.

Early cartridges were 2 KB ROMs for Atari 2600 and 4 KB for Intellivision. This upper limit grew steadily from 1978 to 1983, up to 16 KB for Atari 2600 and Intellivision, 32 KB for ColecoVision. Bank switching, a technique that allowed two different parts of the program to use the same memory addresses was required for the larger cartridges to work. In contrast, some Arcadia family members (e.g. Palladium VCG) supported up to 31 KB without any need for bank switching. In the game consoles, high RAM prices at the time limited the RAM (memory) capacity of the systems to a tiny amount, often less than 1 KB. Although the cartridge size limit grew steadily, the RAM limit was part of the console itself and all games had to work within its constraints.

By 1982 a glut of consoles, over-hyped game releases, and games from new third-party developers less well-prepared than Activision began to appear - overflowing the shelf capacity of toy stores. In part because of these oversupplies, the video game industry crashed, starting from Christmas 1983 and stretching through all of 1984.

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