The Ultimate (So-Far) History of Gremlin Industries Part 1

After a few digressions, I thought it was high time I got back to my main topic - the history of the coin-op video game industry. Since I covered the early history of Sega in some recent posts, this time I will talk about Sega's US "partner" Gremlin Industries. In this post, I'll look at the company's pre-video-game years and will follow-up next time with their early video games up to the Sega buyout.

Gremlin Industries

Not all of the California video game companies were located in Silicon Valley. Gremlin Games was located far to the south in sunny San Diego. And unlike the many other companies that sprang up like weeds in the California sun of the 1970s only to quickly wither and die, Gremlin would outlast the Pong era to become a major force in the video game world and, after being absorbed by Sega, would last into the golden age of the 1980s. One reason for the company’s success may have been that, unlike the majority of the California coin-op companies, Gremlin was not initially founded to produce video games and did not start producing them until after the ball-and-paddle craze had run its course. Gremlin’s origins, in fact, can be traced to an earlier company called Aeromarine Industries.

Frank Fogleman and Aeromarine Industries

H. Frank Fogleman got into the video game business in a roundabout fashion. In the late 1940s, he studied engineering at East Tennessee State in Johnson City, a rural town nestled in the heart of the Appalachian Mountains (today the school offers degrees in bluegrass music and storytelling). In 1950, two-thirds of the way to his degree, Fogelman dropped out of college to serve with the navy in Korea. After the war, he finished his studies and moved to California where he worked for various electronics companies in San Diego and L.A. In October 1959, he started his own company in San Diego called Aeromarine Electronics[1]. For a year and a half, he toiled alone in a one-car garage in Pacific Beach, where he designed temperature control devices for spacecraft, rockets, and missiles. By May 1961, he was doing well enough to hire two assemblers and move into a 1,000 square-foot building (Macomber 1964). Throughout the 1960s Aeromarine continued to expand and began making other products like electronic switching devices and marine navigation aids. In the late ‘60s, the company began losing money but the incident that eventually pushed Fogleman into the video game business came when he landed a contract to develop a portable phone that could be carried in a suitcase. The project caused Fogleman nothing but grief. It started when a pair of armed bandits broke into the plant one night and stole two prototypes. Luckily for Fogleman, their intelligence did not match their daring. Authorities nabbed them in Las Vegas after they tried to use the phones. Fogleman's troubles were just beginning. The Los Angeles company that manufactured the phones decided to make them on its own and terminated its agreement with Fogleman and his engineers. Fogleman's firm sought an injunction but could not afford the fees and had to find another firm in Palo Alto to make the phones. Just when production got underway, Fogleman hit upon a brilliant idea. He approached Hertz and suggested that they include portable phones in their rental cars. Hertz was interested but wanted to know the company’s production capacity before sealing the deal. When Hertz executives paid a visit to the Palo Alto factory, the production lines were nowhere in sight and the company claimed they had never heard of Fogleman or his phone. They then made a phone of their own and sold it, leaving Fogleman (whose contract with the firm was not solid enough to enforce) in the lurch. (Rhoades 1980)

The Founding of Gremlin Industries

Gremlin founders Gerald Hansen, Gene Candelore, and Frank Fogleman (3rd, 4th, and 5th from the left)

Fogleman had had enough. Determined to establish a business where he owned and controlled the entire production process, he rented a building in Kearny Mesa and started a new electronics contracting company in March 1970. Joining him in the venture was Carl Grindle[2], another astronautics veteran who had previously worked at Cohu Electronics, a large San Diego electronics company founded by Lamotte T. Cohu, former president of TWA and former chairman of Northrup Aircraft. Fogleman and Grindle’s new firm was incorporated as “Gremlin Industries” a name that came as the result of a humorous accident.

[Gene Candelore] We were in the lab working on a game and two of the majority owners at that time were Frank Fogleman and Carl Grindle. I don’t remember if it was Carl or Frank that made a call to the state to register the name. He had it as Grindleman [Industries], a combination of Grindle and Fogelman. Somebody misinterpreted it on the other end and came out with the name Gremlin and that’s what was registered. At that time we weren’t in the game business, we were actually into screening integrated circuits…When we got into the wall games and video games we thought the name Gremlin fit pretty well[3]. (Candelore 1998-2002)

Entering the Coin-Op Gaming Biz

Gremlin initially manufactured a variety of products, including oceanographic instruments, fast food equipment (they made the French fry timers used by Jack-In-the-Box), integrated circuit testers, and measuring devices for the Naval Underseas Center. Then, in 1972, they got a job that would set the company on a new course when a customer brought in a coin-operated dart game that needed to be repaired. The task fell to engineering VP Jerry Hansen. Like Fogleman and Grindle, Hansen was a veteran of the aerospace industry, having worked on the Convair F 102 “Delta Dagger” and F 106 “Delta Dart” fighter jets before serving a stint in the US Army as instructor on the Nike Hercules surface-to-air missile (Hansen 2014). After leaving the army, Hansen served as a radio station engineer then went to work at Cohu Electronics making closed-circuit television equipment before joining coworker and friend Carl Grindle at Gremlin (Grindle would later sell his share of the company to Hansen and Candelore). The crude coin-op dart game Hansen saw at Gremlin was like nothing he had encountered during his days working on aviation electronics. While he was able to get the game working, he was shocked at its poorly designed hardware and uninspired gameplay. The player held down a button to start their onscreen arm moving back, then threw the dart by releasing the button. By holding down the button and counting to four, the player could get a bull's-eye every time. Hansen told the customer that someone should improve the game and its design and was surprised when the customer brushed off his suggestion, bragging that the game's coin box was overflowing every time he checked it. If a game that dull and shoddily made could do so well, thought Hansen, just think what a well-made machine could do.

Employees carrying wall games at Gremlin's factory, ca 1976

The dart game was an example of something called a “wall game.” All but forgotten today, wall games were a short-lived phenomenon whose brief heyday occurred roughly in the period 1970-1978 before video games made them all but obsolete. Found almost exclusively in bars, wall games (as the name implies) were wall-mounted games consisting of a large plastic or styrene panel about 3’ x 5’ and 5-8 inches in depth. Multi-colored graphics were silkscreened on the front of the panel and a series of light bulbs were located behind it. Turning the light bulbs on and off created the illusion of motion. Players controlled the action via a pair of remote control boxes that usually consisted of a single button they had to press at just the right time. Themes included golf, duck hunting, dog racing, and especially darts (the games were sometimes generically referred to as “dart games”).

Sure that they could design something much better than the dart game they had repaired, Gremlin decided to enter the wall game business itself and set to work on a baseball-themed game called Play Ball. While Gremlin had plenty of electronics experience, a wall game presented some unique challenges.

[Jerry Hansen] The first ten or twenty (I forget) units were hand wired and the lamp sockets were riveted to the baseboard that served to hold the lamps and printed circuit boards. The wiring harness was something of a mess, so we decided to see if we could get a large circuit board instead. The problem was that no one in the US had ever made a PC board that big. We approached all of the PC houses in a 300 mile radius and made queries as far away as Chicago, but no one could do it. We finally approached a very small local shop that was just getting started and the owner reckoned that he could make some large flat tubs, put them in his parking lot, fill them with ferric chloride, put in the board (copper side up) and swish the ferric chloride around with a push broom until they were properly etched. We were amazed that his technique actually worked very well. About 18 months later, a company that manufactured PC etching equipment visited the "facility" and shortly thereafter came out with a machine large enough to etch the board. They told us that this machine became popular because other companies could put several PC circuits on the board and cut them apart later, saving considerable money. (Hansen wallgames.com)

Gremlin introduced Play Ball, at the 1973 NAMA convention (a somewhat unusual move, given that the convention’s main focus was vending machines). It was a bit of a risk. At the time, the wall game market was already collapsing and the games had something of a stigma attached to them (the Gremlin engineers apparently were not the only ones who had noticed the poor quality and lackluster gameplay) (RePlay 12/76).

Playball, however, was a cut above the competition, starting with the exciting gameplay. 

One player pushed a button to pitch the ball and released it to swing the bat then the other player did the same. Singles were worth a point and home runs four. Players could select from two skill levels – Major League or Minor League. By varying the speed of the pitch, the engineers created a game that was much more challenging than those offered by the other manufacturers. In addition the game featured better graphics than its rivals and much improved sound (including the resonant crack of the bat and a cheering crowd). Gremlin knew its game was a winner, but convincing reluctant distributors to take a chance on another wall game was not easy (some refused to take the game unless Gremlin guaranteed their income). The hard work paid off when Playball proved to be a hit. Enough of a hit, in fact, that Gremlin abandoned its other product lines to concentrate on wall games. Flushed with success, Gremlin created a follow-up called Trapshoot (a skeet-shooting game) and found themselves with another winner.

But there were issues. In reality, while the wall games did well, their design was overly complicated. One common problem in electronic systems like those used in Play Ball was what was called a "race condition" – a situation in which the output depended on the timing of the inputs or other events. When problems occurred, designers often resorted to adding more circuitry in an attempt to slow down the input signals or control their timing, which could lead to unreliable, overly complex designs, as engineer Lane Hauck explains.

[Lane Hauck] Jerry Hansen (VP Engineering and the greatest guy I’ve ever worked with) slapped about 50 TTL chips and 100 capacitors (his universal solution to race conditions) together to make their first wall games, Play Ball and Trapshoot. (Hauck 2012)

Part of the problem was that the technology they were using was becoming increasingly outdated. What they needed was something that would simplify their design. Something like a microprocessor.

[Lane Hauck] Their third game was to be a soccer game, but Jerry realized he was over his head and some intelligence (a micro controller unit) was needed. We met one evening at a Signetics presentation for their 2650 microprocessor. After meeting Jerry, I went home and typed up a 20-page spec for FoosWall and joined them soon after. (Hauck 2012)

Hauck had studied physics and engineering at UCLA and Cal State, Los Angeles before going to work for Lockheed and Spectral Dynamics. While working at Lockheed in the early 1970s, Hauck became convinced that minicomputers were the wave of the future. When he tried to talk the company into purchasing one, however, they were uninterested. Undaunted, Hauck spent $5,500 of his own money on a DEC PDP-8 and taught himself assembly language programming. In the process, he played the various games that came with the system. (DeWyze 1982) He also created a code-breaking game called MOO, which eventually evolved into the handheld game Comp IV, which he licensed to Milton Bradley (Hauck 2012). 

When he moved to San Diego to work for Spectral Dynamics, the PDP-8 went into his back bedroom where he continued to work with it in his spare time. After joining Gremlin, Hauck designed FoosWall (a soccer/foosball-themed wall game) around the 8008 microprocessor. Programming was by Agoston “Ago” Kiss, who had worked with Hauck at Spectral Dynamics. Kiss had come to the US after fleeing Hungary in 1956, crossing the border with a suitcase in one hand and his son George in the other (Craig 1978). Fooswall provided Gremlin with its third hit in three tries, establishing them as a leading wall game manufacturer. While some two dozen companies, including Midway, PMC, Meadows, Amutronics, Sunbird, and even Atari, made wall games in the 1970s, Gremlin was the genre’s undisputed king. In 1975, the company had $2 million in sales, a 105% increase over 1974 (Annual Reports). By the end of the year, with 50 employees, Gremlin had outgrown its three-building complex at 7030 Convoy Court and in January, 1976  the company broke ground on a new $1.5 million, 56,000-square-foot plant in Research Park on Aero Drive in Kearny Mesa (Play Meter 3/76). By the end of the year, Gremlin’s wall games had generated $5 million in sales and they controlled 95% of the market.

Wall games, however, had a limited future, especially as video games became more and more popular. To truly succeed in the coin-op world, Gremlin would have to expand. Despite the early success of Pong and its clones, Fogleman chose to stay out of what he called the “yo-yo market of early video” (RePlay 12/76), but by late 1976, that market had become too big to ignore and Gremlin finally decided to test the waters. According to engineering VP Jerry Hansen, the real issue was not so much reluctance as the fact that the company simply did not have the expertise needed to design video games. But that would soon change. 

Notes

[1] This may not have been the company’s original name. In August 1960, Fogleman filed for a patent on a “Temperature reference apparatus” for a company called Genistron, Inc. In April of 1962 he filed for another patent for Aeromarine, indicating that perhaps Genistron was the company’s original name.

[2] The timing and details of Grindle’s involvement with Gremlin and the company’s naming are not entirely clear. Rhoades 1980 indicated that Grindle became partners with Fogleman in 1974. Others, including Hansen, recall that Grindle was involved from the beginning and the company became known as Gremlin early on.

[3] Rhoades 1980 tells a slightly different version of the story. In his version, the company incorporated in Delaware without specifying a name. An employee from the Delaware office called and asked for the name and Candelore blurted out “Just call it Grindleman Industries,” which was misheard as “Gremlin.” Jerry Hansen reports that the company filed for incorporation several times in California, only to find that the names they tried were all taken. They finally tried Grindleman, and when the papers came back, they said Gremlin.

Sources

Interviews with Gene Candelore, Gerald Hansen, and Lane Hauck.

An interview with Gerald Hansen that appeared on wallgames.com.

Various articles by Frank Rhoades that appeared in the San Diego Union.

Various issues of RePlay, Play Meter, and Vending Times.

"Game Designer: The Thoughts on His Mind" by Jeanette DeWyze, Games People, 10/2/82