purchased $1.5 million worth of parts.
But in early 1976, General Instrument introduced the product that changed the nature of the video games industry.
General Instrument put most of the circuitry needed for designing a video game on a single chip, the AY38500. The game designer was provided with one chip which provided four paddle games and two different rifle games. In addition, capability for fast ball and slow ball, steep angle and shallow angle, and long paddle and short paddle operation was offered.
For companies thinking about going into the TV game business, the GI chip was the convincer. For First Dimension, sitting with a hugh inventory of discrete parts, it was a crushing blow.
The cost of the GI chip ranged from $5 to $6 depending on the volume involved. It promised total system costs of $25 to $30 and retail prices in the $60 to $75 range.
Development of the chip had been initiated for Salora OY in Finland for use in a television set; subsequently Telefunken GmbH and Loewe-Opta GmbH in West Germany and Vanguard S. A. in Spain had also ordered the device. In order to market the IC in the U. S., General Instrument's Hicksville, New York plant developed a 525-line, 60 half-frames-per-second NTSC system version of the original chip, designed for 625-line, 50-half-frames-per-second PAL systems in GI's Glenrothes, Scotland plant.
The GI chip made it possible for companies to quickly establish simplified production lines and to build games that would sell for well under the $129 asked for First Dimension's game.
Pressured by creditors, who held $2 million of redeemable preferred stock in First Dimension, the company filed for operation under bankruptcy as provided for by Chapter XI. Revival seemed possible in September after lawyer John J. Hooker Jr. borrowed and invested $500,000 in First Dimension and the bankruptcy judge delayed redemption of the preferred stock until the end of 1976.
But Hooker's infusion money was rapidly whittled down by $300,000 worth of new bills requiring immediate payment and staggering lawyer's fees. By late October, First Dimension ran out of operating funds after building only 20,000 of its planned 300,000 production run and reaching only $900,000 in sales.
Hard times loomed ahead for many other video game builders. Publicity about First Dimension's troubles spread among suppliers. Many small games companies found they couldn't get parts unless they paid in advance. Some folded in a
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