During the early 1950s computers were just starting out and were only designed and used for basic functions. While the advancements in computer technology are both important and impressive they weren't used for gaming until the late 1950s.
The first ever video game was created in 1958 by William Higinbotham using an oscilloscope and analog computer. It was called Tennis for Two and was used to entertain visitors at the Brookhaven National Laboratory in New York. It was a simplified version of tennis played from the side were players would try to get a ball over the virtual 'net'. This was the starting point for games and would later be replaced by the similar game Pong.
Spacewar was created in 1962 at MIT by Steve Russell and a small team of other people. It is widely considered to be the first real computer game made. It is a two-player game, with each player taking control of a spaceship and attempting to destroy the other made possible by the PDP-1's operating system which was the first to allow multiple users to share the computer at the same time. Spacewar has inspired many other computer games over the years, some of which have the same name. Some games are clones of spacewar but most have introduced additional variations to game play. Spacewar! was also extremely popular in the 1960s and was widely ported to other systems.
Several other games were produced and released during the following years but the next well known and popular game made was Pong. Pong was created by Nolan Bushnell and released as an arcade game in 1972. In 1975, Atari re-released Pong as a home video game. Pong quickly became a success and is the first commercially successful video game, which led to the start of the video game industry. Soon after its release, several companies began producing games that copied Pong's game play, and eventually released new types of games. As a result, Atari started to produce other different games. The company released several sequels that built upon the originals game play by adding new features.
In 1977 the industry suffered a 'video game crash'. This led to the manufacturers of older obsolete consoles to sell their systems at a loss to clear stock. This made the market overloaded and caused several companies to abandon their game consoles. The crash was largely caused by the large number of Pong clones that flooded both the arcade and home markets. The crash eventually came to an end with the success of Taito's Space Invaders, released in 1978, kicking off a new rise for the video game industry.