Consumer Virtual Reality


Facebook’s recent purchase of Oculus VR—Palmer Luckey’s interactive virtual reality (VR) company and its head-mounted display (HMD)—has stimulated speculation about the next generation of consumer electronic entertainment. From the publicity, one might assume that this is a revolutionary advance. Interacting with electronic displays runs back, however, to technicians and operators adjusting equipment in responses to oscilloscope and radar displays up to a century ago, and to government and academic researchers researching and developing specialized interactive applications. During World War II, nearly one million American and British soldiers trained on Waller Gunnery Trainers[1] using five 35mm projectors to create an immersive display.

In terms of innovating real-time, interactive and immersive audio-video environments for a mass market, however, the David Sarnoff Research Center (DSRC) in Princeton, New Jersey, along with many collaborators, pioneered developments in the 1980s and early 1990s. Since the DSRC and its predecessors at RCA Laboratories spearheaded the innovation of electronic television systems and CMOS microprocessors, this is not surprising. The ironic aspect rests in consumer interactivity’s beginnings in two other innovations, one of whose commercial failure helped sink RCA and one whose technical proponents had to overcome the indifference of two major corporations. The success of the engineers laid the foundations for DSRC’s work in virtual reality for consumers, which will be covered in the next issue.

Interactive VideoDiscs

Interactive video originated in two projects at the DSRC. First was the Capacitance Electronic Disc (CED), or VideoDisc, which debuted as a prerecorded playback medium for consumers in 1981; the second was a last attempt at developing a home computer before General Electric bought DSRC’s parent, RCA, in 1986. VideoDisc’s format was driven by RCA’s long experience with disc records for sound reproduction; their low cost of manufacture compared to magnetic or laser-read media; and the conviction that researchers could achieve practical reproduction of video as well as audio signals for the home consumer. The 12-inch, carbon-loaded, vinyl disc spun a spiral groove 450 rpm under a titanium-tipped diamond stylus; the changing distance between the depth of the groove and the stylus tip gave a variable capacitance that represented the recorded NTSC audio/video signals. Each rotation provided four frames of 3 MHz video in two interlaced fields, providing about as much resolution as VHS magnetic tape. The players debuted at $499, declining in cost to $149 by 1984; the videodiscs retailed for about $20 each.

The CED competed not only with the established VHS videocassette, but also with the more expensive MCA/Pioneer LaserDisc. Therefore RCA wanted to show that it was not only cheaper and longer playing, but that it was as durable as the other media and could also provide random access to its data. The vertical blanking interval between fields offered space for recording “digital auxiliary information” or DAXI code, and the potential for what a former DSRC researcher calls a “primitive type of CD-ROM.” After the DSRC’s Charles Wine showed that fields on the disc could be accessed through DAXI code near the end of 1980, staff at the Princeton labs and RCA’s Consumer Electronics Division in Indianapolis worked on storage and interactive techniques before the technology’s commercial introduction. In the early 1980s, Charles Dieterich, Todd Christopher, James Rustman, Michael Mindel, Rebecca Mercuri, and others found that, even after quadrupling redundancy to stabilize an analog, electromechanical format for digital readout, the CED DAXI spaces provided about 90 megabytes of data storage to accompany the video. This was huge and cheap compared to the 4K and 8K ROM available on chips or the megabyte-plus storage of 8-inch and 3.5-inch floppy disks. DAXI code provided information and instructions for the player’s microprocessor, including “freezing” a frame by recycling a spiral rotation and “kicking” the stylus back a groove to repeat. In 1981-82 Mercuri demonstrated the possibilities by operating an SFT-100 player and the standard videodisc Tut: The Boy King/The Louvre (RCA 01202) with a Z80 microprocessor, CP/M operating system, and an interactive program written in Basic.

A year later the DSRC and the Indianapolis factory combined video sequences with interactive choices in a hybrid analog-digital system that cost $88 in parts and fit on top of a television. Like the larger and more expensive systems experimented with at MIT’s Architecture Machine Group and Media Lab, it switched video sequences based on a player’s input, and overlaid data or graphics over video frames. In the fall of 1983 RCA began selling the $500 SelectaVision SJT 400 interactive player with its 32-button remote, and the first of seven interactive discs. Legendary jockey Willie Shoemaker hosted A Week at the Races (RCA 25001), where players picked horses and the machine randomly generated a winner from its assortment of race clips, while The Life and Work of Michelangelo (RCA 25003) was modeled on Mercuri’s demo and proposal.

The discs included a collaboration with Walt Disney Home Video, the DisneyDisc of Mystery and Magic,[2] “the first fully-interactive Disney VideoDisc for children!” The content is rightly characterized as “bizarre,”[3] by one DSRC engineer, and not just because the marketers and scriptwriters showed little understanding of the esthetic of the British murder mystery: Agatha Christie it’s not. With the crash of the videogame industry, however, RCA and Disney wanted to expand the audience and exploit the greater realism of recorded video on the CED. Middle-aged marketers guessed at how the Middle American audience they knew would understand interactive CEDs, and included instructions for their use within the presentation of the murder mystery.

The Consumer Electronics Division and Disney apparently hoped that families would gather to play interactive discs much as they gathered to play board games.

A more promising approach appeared in the interactive CED demonstration, Hoyle's Last Resort. Based on the film noir Lady in the Lake (1947), notable for being filmed almost entirely from the detective’s viewpoint, the player is the detective, examining the crime scene and deciding which witnesses and suspects to interview. DSRC’s Scott Marshall “developed a . . . language that allowed one to interact with a script on the computer as if playing the game with video” with all choices navigated by joy stick and a friendly GUI. Marshall recalled it being “a major production with a full Hollywood-style film crew, professional writer and actors, and filmed in 35 mm. We completed the disk and software for a 20-minute pilot which was demonstrated in many settings to RCA brass. Even Grant Tinker, then head of NBC, got to see it.”

In December 1983, RCA contracted with the country’s largest arcade company, Bally Midway Manufacturing, to provide “several thousand random access”[4] videodisc players. Following the licensing and editing of game film from the National Football League, RCA issued a disc featuring the Oakland Raiders and San Diego Chargers, followed by the more popular rivals, the Dallas Cowboys and Washington Redskins. Two players chose one of eight defensive or eight offensive options from an on-screen playbook, after which the videodisc and display showed the outcome of the selections, complete with an appropriate soundtrack and animated graphics. Requiring no skills and needing repetitions to play a full game, the cabinet was Bally’s first to accept one- and five-dollar bills.[5]

The interactive VideoDisc was successful enough that RCA incorporated it into its $5,000 computerized home entertainment center branded as “Dimensia,”[6] a term for which Google asks, "Did you mean dementia?” An RCA-type “Control” jack on the back of late-model CED players enabled two-way communication with a microprocessor, as in the Bally system, Dimensia’s central control board, or, potentially, Coleco’s Adam computer.[7] Despite positive reviews and responses from dealers and consumers, however, the interactive CED was not popular enough to save the VideoDisc system. RCA made the last of its 550,000 CED players in April 1984, six months before Dimensia’s introduction, and its 16,400,000th VideoDisc in June 1986, thereby closing out a $500 million investment in the future of home video.

Digital Video Interactive (DVI)

At the same time that RCA was winding down the VideoDisc, it was also closing out its last effort at innovating a home computer (HC). Initiated in 1982 by Art Kaiman of DSRC’s Digital Products Research Laboratory and the marketing director at RCA’s New Products Division, researchers explored ways that RCA’s expertise with color video could offer a competitive advantage for a tardy rival. At the time IBM and Commodore competed for supremacy in an exploding market. As a consultant later recounted, the “little HC was being pushed in many directions at once. . . . While each of those directions had merit, not even RCA had the resources to develop them all within the scope of a single product.” With the withdrawal of New Products’ support the following year, however, Kaiman’s researchers, led by Larry Ryan, began focusing on the processing of real-time, full-screen video from a CD-ROM at a broadcast standard of 30 frames per second along with stereo audio to a personal computer. In a world of simplified color graphics on the most expensive videogames and consumer computers, this would be a revolutionary advance.

The challenge was how to achieve it. The CD-ROM could stream 1.5 megabits per second. This rate was about 150 times slower than that required for streaming broadcast video and audio; even if the DSRC team compressed the data effectively, new processors were required to decompress and play it back on an IBM PC/AT. Michael Keith described finding an optimal solution through microcoding on the video display processor to produce quality video as “a team effort between the designers of the decoding chip, the engineers developing the compression methods and software, and the engineer writing the software for decompression (me). The way we all worked together creatively, not as three separate entities but all contributing ideas in all three of those domains, was one of the most satisfying and enjoyable aspects of the project.”

In the first quarter of 1984, as Arch Luther joined Kaiman in managing the project and Apple introduced its Macintosh, forty people in three teams developed the “Galactic Challenge” demo to show DSRC and RCA management a profitable future for their investment in digital home video. Using two Ikonas Graphics Systems[8] to digitize and edit 900 frames of imagery and a DEC VAX computer to compress and uncompress them, the software group also applied a YIQ color pyramid compression algorithm to make almost seamless 360-degree landscapes. Using the VAX to run the demo as well, the group developed content including a princess and spacecraft[9] to impress outsiders with the power and possibilities of digital, interactive video where one could pan and travel about realistic imagery and interact with the onscreen environment.

Having gained upper management approval, the team, whose technology did not gain its DVI name until ten days before its introduction in 1987, proceeded to develop the chip sets for real-time audio and video processing in tandem with an Intel 286 microprocessor. Other members wrote sophisticated functionality demos. These included the fast drawing of solid and textured polygons, manipulating video in a frame buffer, and a warping algorithm that enabled transformations and texture-mapping of images onto three-dimensional objects. The programmers worked with video producers and instructional designers to prototype programs, including auto repair, real estate sales, and interior design.

These were all mass-market industrial applications, however; what would people use interactive video for at home? The answer was not obvious beyond videogames, where Scott Marshall and others had switched from interactive CEDs to CD-ROMs. They collaborated with Activision and Gary Kitchen to digitize the sounds and cockpit of a Spitfire fighter plane and give players a tour over a computer-generated, 1930s English landscape. “The flight simulator was really just a copy of Microsoft’s . . . with war game challenges. . . . The first-person flying screen consisted of three layers: the world view outside the window, the cockpit window frame and instrument panel, and computer animated dials and indicators on the panel.”

This market was largely comprised of males aged twelve to 25, however, and cycled in a boom and bust pattern that concerned a corporation already cycling in the broadcasting and semiconductor industries. People who had grown up with television understood it and its cathode-ray tube display as a passive device before which people consumed programs. Would adult consumers embrace a cultural shift in relation to the electronic boxes in their homes, and interact with their monitors?

This was the unanswered question behind interactivity. To help answer it, the DSRC contracted with Lucasfilm’s subsidiary Lucasfilm Games to come up with a game that exploited the technology’s advantages. Perhaps Douglas Crockford was not the best choice for the job. He thought the videogame industry, which was in its third year of recession, “pathetic” and spent ten months wrestling with existential issues of home entertainment. What is interactivity? Crockford spoke of the paradox he saw in videogames: a joystick and a screen seem to provide unlimited possibilities, but practical limits keep players on one thinly disguised track or another. He argued that interactivity should create an emotional experience within the player, plausibly by repeating an earlier enjoyable routine, and called for an interactive experience that “Mom”—who was an archetype, not a stereotype, in opposition to young male gamers—could enjoy.

Crockford did not succeed in his quest to redefine interactive video at RCA. It did not help to initially nickname the engineers’ work “Compressovision,” criticize Luther’s audio compression, and propose, as one Sarnoff engineer described it, “a pleasant, flying dream-like application with no goal or challenge for the player. We were befuddled but wanted to put faith in anything associated with Lucas.” Nor did his final report’s[10] mix of myth, philosophy, his five-year-old daughter’s interactive preferences, and whimsy prove persuasive.

Instead the DSRC found funding for production through a traditional venue: children’s education. With Children’s Television Workshop, the creators of Sesame Street, it developed “Words in the Neighborhood,” where video sequences coordinated with graphical overlays and synchronized audio allowed young children using a joystick to learn the similarities in words beginning with the same letter. More ambitious was “Palenque,” a Bank Street College of Education production based on the PBS series, The Voyage of the Mimi, and featuring the same young Ben Affleck. In this case he journeyed to the Mayan city and surrounding jungle to learn about archaeology and ecology. This required location filming and recording, taking one photo per step in what researcher Jeremy Pollack called a proto-Google Street View, and sometimes using a fisheye lens to generate seamless 360-degree views of some scenes. Graphical, textual, audio, and additional video overlays provided more information as the user, climbing the towers and walking through jungle, desired. It was a tour de force of what one could do in the educational market with interactive video on a PC, and academics investigating approaches to computerized education cited it frequently.

In the middle of these successes, General Electric Company (GE) bought RCA for the value of its assets. Neither the DSRC nor the interactive project was considered economically useful, and Kaiman, Luther, and their superiors argued vigorously for an opportunity to show off their technology to the computer industry before closing it out. In a decision as narrow as the one to preserve the labs, GE approved a presentation at Microsoft’s CD-ROM conference in March 1987. The auditorium was packed with over a thousand onlookers by Bill Gates’s introduction, word of mouth, suggestive marketing, and RCA’s reputation. Kaiman, Digital Systems Group leader Larry Ryan, and Luther projected and explained the DVI clips from the array of applications of full-motion, compressed video while a stereo classical soundtrack filled the air. Having concluded the demo of what Kaiman called a “new technology,” he called on the crowd to join them in creating a “new industry.” David Sarnoff, speaking to a smaller crowd in 1939 on RCA’s introduction of scheduled electronic television, would have been pleased. As all three men stood, they were greeted with thunderous applause that grew into a standing ovation.

Requests for more information poured in, the DVI team began releasing data file formats and compression techniques, and GE found a buyer for the technology in Intel. The technology was still some distance from commercialization with its three custom boards and VDP chips sticking out of the PC/AT; the semiconductor company saw DVI as a means of establishing a technical standard in a new field as it led the microprocessor industry in fulfilling Moore’s Law. By the turn of the millennium, Intel’s chips would have 80 times more transistors and DVI would be an integral component to fulfilling a dream of getting “a Pixar machine down into a board.”[11] In October 1988, Intel bought GE’s intellectual property and 35 of its developers for $40 million, and moved them to its Intel Princeton Operation a mile up Route 1 in Plainsboro.

Nine months later, the group shipped its first DVI product, the $25,000, seven-board Pro 750 Application Development Program for PCs. Over the next five years, working closely with IBM and Microsoft, the group expanded and rolled out more sophisticated algorithms and software and won two Comdex awards for IBM’s ActionMedia II board set and i750 PB/DB chips. The Wintel dominance of personal computing did not, however, clear the field of digital multimedia competitors. DSRC's success with DVI and Philips' competitive work with CD-i (demonstrated in June 1987)[12] led Leonardo Chiariglione of CSELT to start the ISO/IEC MPEG standards committee[13] in 1988. Other related standards followed from Apple, IEEE, and consumer electronics manufacturers. Intel closed the Princeton DVI office in the summer of 1993, relocating willing staff to Intel groups in Arizona and Oregon. While those teams formed Indeo[14] and its iterations of real-time AV codecs, the last of which were offered through Ligos[15] for Windows XP and NT/2000, some veterans returned to the David Sarnoff Research Center in the fall of 1993. There they soon joined in the effort to develop the first virtual reality system for consumers: Hasbro’s Sliced Bread Project, or Toaster.

In 2004 the Tuck School of Business at Dartmouth College published a case study[16] detailing Hasbro’s innovation of electronic games. Through internal documents and executive interviews, Tuck’s team explained how the world’s largest toy company successfully created a division of virtual entertainment to complement its offerings of toys and dolls. Before Hasbro Interactive, however, there was the Sliced Bread Project, an ambitious gamble on consumer virtual reality games in the early 1990s. The SBP is a more significant initiative because Hasbro’s subcontracts with leading game developers and its abandonment of relevant patents and applications seeded the VR environment that made possible Oculus VR’s latest iteration of consumer VR technology some twenty years later.

The story begins not with Hasbro, however, but a tiny company in New York City, Abrams/Gentile Entertainment. AGE began as a marketing and design company known for its Rambo movie posters when it began expanding into Rambo toys in 1986. Nuclear engineer Chris Gentile joined his twin brothers to handle the engineering issues in manufacturing figurines; he soon turned their focus to reviving the videogame industry. With game sales at three percent of their peak, Gentile argued that AGE could take gaming into three dimensions with its own system. After licensing the entertainment rights to Jaron Lanier’s $8,800 VPL DataGlove II,[17] based on Thomas Zimmerman’s flex-sensor patent,[18] Gentile worked with VPL’s engineers to simplify its operation through conductive ink and ultrasonic sensors. The new glove was connected to a computer console mixing live and digital graphics, and LCD goggles and stereo surround sound to create the 3-E, “the next thing after 3-D entertainment.”

With the success of the Nintendo Entertainment System in 1986-87, however, AGE could not persuade American toy makers to risk innovating an incompatible system. Instead Mattel offered to license the glove and worked with Gentile and AGE’s contract engineers to turn the glove into an NES-compatible product that could be sold for $88. Mattel sold 654,000 of the PowerGloves in the six weeks before Christmas 1989 and another 350,000 before its Japanese partner went bankrupt, the lack of programs exhausted its value, and users discovered its inconsistencies.

Nonetheless, AGE now had an entrée to developing Gentile’s vision of “Total Virtual Reality” for consumers. In 1990 he began explaining how architects could immerse clients in their designs using a head-mounted display connected to an improved PowerGlove: “We went directly from research to the toy industry and now we're working our way back to practical applications.”

When the costs of production did not fit with what architects were willing to pay, Gentile returned to the consumer market. It was an audacious shift when VPL’s “Eyephone” cost over $10,000 and Provision’s Vision 100 VR work station[19] cost $70,000. Yet the PowerGlove’s success led to a partnership with Steve E. Tice, who had worked in military and NASA 3D. Together they built a fixed, desktop VR console system with a dot-matrix display that attracted interest by Texas Instruments in developing a processor, if a proper LCD and game manufacturer could be found.

In 1992 Gentile approached the renowned president of Hasbro’s Toy Division, Larry Bernstein, backed by the reputation of his PowerGlove, Texas Instruments’ standing in electronics, Tice’s experience in VR, and the prospect of working with the David Sarnoff Research Center (DSRC), the birthplace of LCDs and color TV. Hasbro’s reputation rested on G.I. Joe and board games, but Bernstein and CFO Al Verrecchia were acutely aware of the rise of videogames as competitors for children’s attention and parents’ budgets. The company had spent $20 million developing an electronic interactive game, Control-Vision, that never went to market in the mid-1980s. That experience and unfamiliarity with the appeal of digital entertainment left some in Hasbro reluctant to try again. Commercial pressure from within the industry by rising rival Mattel, and from outside the company by the allure of videogame profits and a survey showing a market against Nintendo and Sega, overcame the resistance.

Gentile’s confidence in the future of consumer VR matched Bernstein’s spirit, and so began Hasbro’s Sliced Bread Project. With Bernstein’s approval, Gentile visited the David Sarnoff Research Center in Princeton early in 1993 in search of a cheap LCD and, in project manager Norm Goldsmith’s words, “discovered that all of the technology he ever dreamed of was gathered in one place.” The DSRC was extremely receptive to the prospect of working for Hasbro. Its five years of guaranteed contracts from General Electric Company with other former RCA divisions had expired; the more it could offer Gentile and Hasbro in developing the VR system, the more technical staff time would be underwritten. By the time DSRC began Phase II that December of what it called Project Toaster, it had become lead contractor and systems integrator for hardware, processor, and software development. Toaster would deliver to Hasbro a complete consumer VR system ready for manufacture, to retail at $199, in less than two years.

Creating a virtual reality system for consumers on such a schedule created challenges similar to those in creating Digital Video Interactive, or interactive VideoDiscs. Engineers would have to generate stereo, wide-angle images of the highest resolution possible for the head-mounted display in real-time. What applied to vision applied to sound. The images had to synchronize with the accurately tracked movements, in any direction, of the head and equipped hand in real-time as well. The closeness of the eyes to the displays required special optics to reduce the perception of proximity and replicate the perception of depth. The lenses, displays, and related electronics should not weigh much to keep the HMD comfortable to wear.

Finally, the presumed lack of limits on a player’s movements demanded an exceedingly powerful graphics processor that could react almost instantly to sudden changes in the player’s movement or view, and handle the highest resolution possible from the displays. Too much delay in the system’s response to head or hand movement would spoil the effect and generate dizziness or even nausea in the user. To deliver this in games offering some sense of virtual immersion for under $200 was hardly realistic, but the DSRC and its partners came closer than anyone else for the next twenty years.

Having gained permission after the fact from Thomson, DSRC’s consumer electronics client, to contract with Hasbro, CEO James Carnes put Arthur Firester in charge of Toaster. He was given the secluded basement of Building 3 to work in, not knowing that RCA’s first computer, Typhoon,[20] was built there after World War II. Firester also had with the power to recruit staff from anywhere in the company. Firester recruited Goldsmith, a semiconductor engineer with a talent for complex project management, to organize the project and budgets. Three weeks before Christmas 1993 Goldsmith delivered a detailed PERT chart outlining how the DSRC would run the project as prime contractor. He and Gentile got along well in part because Gentile “was one of two or three people I’ve ever worked with who understood that the PERT chart (actually the activity diagram) was the only way to manage a complex project.”

Goldsmith broke the project into hardware, electronics, and software groups. Douglas Dixon ran the latter, newly returned with Michael Tinker and others from Intel’s shuttered Princeton DVI operation. After ten years’ experience in computer video R&D, Dixon managed the smoothest part of the project. His group established flow charts for the artists’ work on images, 3D models, audio, and bitmap fonts; their conversion into Toaster formats; and their linkage through GNU to the programmers’ libraries, codes, and programs. It also organized and standardized the application program, authoring templates, authoring system libraries, and platform system libraries. Charles Wine designed “an elegant and efficient operating system.”

Meanwhile Tice, Gentile, and Turner Whitted recruited game programmers—notably Electronic Arts—to develop twelve prototypes, which involved training them to think beyond Nintendo’s side-scrolling to exploit 3D interactivity. The appeal of getting a million dollar, Silicon Graphics RealityEngine platform helped; the SG salesman retired on his commission. By the summer of 1995, five games were demonstrated on the complete system of hardware and software, and tested by the 16-year-old son of one of the group leaders.

The hardware challenge lay in the displays. In the early 1990s, color LCDs that fit inside a helmet were expensive. To provide a 320 x 200 image in stereo would take up a third to half the cost of the entire system. In addition, the drivers for the head-mounted display (HMD) required a counterweight on the back of the helmet. Only in June 1995 did Dietrich Meyerhofer and Herschel Burstyn file for a patent on a “brilliant optics design”[21] to split the video displayed by one LCD into two images through several injection-molded lenses. With distortion cancelled out by pre-distorting the lenses, this innovation promised to save on weight, the price of an LCD, and the cost of manufacturing the HMD. In addition, a subcontractor integrated spatialized audio with the video, which allowed different points of view; the handsets were designed to be touch-friendly when out of view; and serialized video through DSRC-designed and -built integrated circuits meant that only two wires were needed to bring signals to the headset. Taking the low-cost dictum too far when selecting the requisite piece of ferrite, however, made the calibration of the head tracker difficult.

Bruce Anderson led the electronics group in an endless search for an affordable graphics processor (“Curly”), other ASICs (“Moe” and “Larry”), and DRAM. The processor was to handle 500,000 textured polygons per second, when SGI’s RealityEngine processed only 300,000. After Texas Instruments stood its ground on providing the necessary chips in return for production guarantees, Hasbro contracted with Jez San’s Argonaut Games to optimize an ARM core processor for VR. Perhaps encumbered with Nintendo work, Argonaut in turn subcontracted it to Ben Cheese Design’s Rob MacAulay, who had led the creation of Nintendo’s Super FX processor for 3D games. The challenges were such that Anderson brought in Phoenix VLSI Consulting and visited both groups twice a month, often accompanied by Whitted. For memory, Rambus’s new RDRAM proved significantly superior to more expensive SDRAM in transfer rates, a crucial factor in processing polygons. To exploit this speed, DSRC pioneered in pipelining a bidirectional, multiplexed, high-speed bus. Creating a pipeline with a flow matched to the Rambus memory was the key to reducing latency between physical motion and electronic response. With the end of the project in July 1995, however the patent applications related to this problem were abandoned.

What happened? After all, the DSRC team had developed a complete prototype system, including the complete design and manufacturing prototypes of the system console, head-mount display, and controller hardware; design and implementation of the hardware electronics; design of the system software libraries, and implementation on SGI simulation systems. Hasbro had hired Frog Design, known for its work with Apple, to design the production-model headset, and placed an order for the molds to be fabricated in Portugal. It negotiated RDRAM production prices with Hitachi and was in negotiations with Panasonic and Matsushita for additional production as OEMs. As importantly it had already released an ad[22] for what was now the xScape VR system and its five games; a shorter, edgier video[23] with an electrically demonic icon alerted young males to the next generation of gaming now called “Rush.”

The people outside Hasbro portray different parts of an elephant. Yes, the price had crept up—$299, $399, topping out at $499—despite the monocular LCD breakthrough, with the introduction delayed to the holiday season of 1996 at the earliest. Focus groups indicated that Hasbro’s VR system was worth the higher price. One LCD or two, Toaster carried the cost of a TV set in its 3D VR system against Nintendo, Sony, and Sega’s increasingly powerful consoles, and in Firester’s words, “Sony unambiguously scared them.” If only the Hasbro executives had understood that the profits in the videogame industry came from the games, not the hardware, or the difference between the annual drop in electronics costs compared to the inflation rate for plastic . . .

The decision was not an easy one for CEO Alan Hassenfeld. He succeeded his late brother Stephen in running the family-owned company and was well aware of Stephen’s interest in successfully expanding into electronic games. His number two, CFO Al Verrecchia, despite his remorseless reliance on numbers and Sliced Bread Project’s slim projected profit margins, continued to support it. So too did Sandra Schneider, whom few at the DSRC respected despite her long experience in gaming software and marketing pop culture. She had succeeded Bernstein in running the SBP and contributed to its delayed introduction by changing the software format from cartridges to CD-ROMs.

At the executive council, however, they were the only supporters. The business plan anticipated selling two million units in five years, with twelve percent profit only by Year 4. Hasbro had spent $45 million in three years and was due to spend another $22 million on advertising Rush. Tens of millions more would go toward further innovation and inventory. Keeping it or killing it would cost money that would displease the board of directors. Hassenfeld had played the latest games and could see Hasbro gain in prestige and talent with this cutting-edge system. After polling his inner circle, however, he said, “I’m killing it.” He had already made up his mind to move into digital electronics with a safer bet: creating Hasbro Interactive division to centralize efforts and focus on adapting Hasbro’s popular games for the small screen.

From Hasbro’s perspective, and perhaps the wider world’s, the CEO was correct. The company profited handsomely from its shift, and neither rival Mattel nor the videogame industry followed on with a successful VR system for consumers. . . . Until next year, when many expect Oculus VR to start selling its Rift system to the public. If it succeeds the way its backers hope, they can thank Hasbro, the David Sarnoff Research Center, and the many individual participants who spread what they learned from Toaster about Virtual Reality hardware, software, and the uncertain interface between them in that black, head-mounted display.


I am most grateful to Bruce Anderson, Jim Carnes, Doug Dixon, Art Firester, Chris Gentile, Norm Goldsmith, Jeremy Pollack, Steve E. Tice, Michael Keith, Arch Luther, Scott Marshall, Rebecca Mercuri, and Jeremy Pollack and one who wishes to remain anonymous for their extensive recollections of the events described here. Any errors in this account are the author’s and corrections and documentation are welcomed.

Further Reading

Bruce Anderson, Rob Macaulay, Andy Stewart, and Turner Whitted, “Accommodating Memory Latency in a Low-cost Rasterizer,” Eurographics slide presentation, 9 September 1997.

Grigore C. Burdea and Philippe Coiffet, Virtual Reality Technology, Volume 1, 2nd ed. (John Wiley & Sons, 2003).

Todd J. Christopher, U. S. Patent No. 4,309,721, “Error Coding for Video Disc System,” filed 12 October 1979, published 5 January 1982.

Todd J. Christopher and Charles B. Dieterich, U. S. Patent No. 4,419,699, “Digital Video on Recording System and Playback,” filed 16 November 1981, published 6 December 1983, priority 12 October 1979.

Douglas Crockford, “Quest into the Unknown,” DVI/LucasFilm 1985-86 notebooks transcribed on

“Design and Decorate: DVI Pilot Application” (Design & Decorate Inc., 1988), YouTube/Alexander Benenson.

Charles B. Dieterich, U. S. Patent No. 4,308,557, “Video Disc System,” filed 12 October 1979, published 29 December 1981.

“Digital Video Interactive Technology” (GE/RCA, 1987), YouTube/Alexander Benenson.

Steve Ditlea, “Grand Illusion: Coming Soon to your Home: Artificial Reality,” New York Magazine, p. 26-34.

Douglas Dixon, Manifest Technologies/”DVI Technology, 1982-1992.”

Nathaniel I. Durlach and Anne S. Mavor, eds., Virtual Reality: Scientific and Technological Challenges (National Academy Press, 1995).

“The DVI Story: Making it Happen in Seattle” (David Sarnoff Research Center, 1987), YouTube/Alexander Benenson.

William J. Hawkins, “Video Teacher,” Popular Science, February 1984, p. 110-4.

Richard Holloway and Anselmo Lastra, “Virtual Environments: A Survey of the Technology,” TR93-033 (University of North Carolina at Chapel Hill: September 1993).

Tom Howe, CED Magic/Capacitance Electronic Disks.

IGIC Consulting, Emerging Markets for Virtual Reality (Boston, MA: 1992).

“Intel DVI File Format Summary” (Encyclopedia of Graphics File Formats, 2nd ed., 1996).

Renée Gearhart Levy, “Hand in Glove: Chris Gentile ‘81,” Syracuse University Magazine 7, Issue 1, (September 1990), p. 10-13.

Arch C. Luther, Digital Video in the PC Environment (Intertext Publications, 1989).

Arch C. Luther, Many Threads: The Saga of an Electronics Engineer (Luther, 2008).

Douglas Martin, “About New York: Frontier of Play: Power Gloves and Stuffed Cars,” New York Times, 10 February 1990.

Rebecca T. Mercuri, Computer-Interactive Modifications for the RCA VideoDisc Player, PRRL-82-TR-099, June 1982, David Sarnoff Library Collection, Hagley Library.

Dietrich Meyerhofer and Herschel Burstyn, U.S. Patent no. 5,619,373, “Optical System for a Head Mounted Display,” filed 7 June 1995, published 8 April 1997.

G. Wayne Miller, Toy Wars: The Epic Struggle between G.I. Joe, Barbie, and the Companies that Make Them (Times Books, 1998).

Michael J. Mindel and James C. Rustman, U.S. Patent 4,313,134, “Track Error Correction System as for Video Disc Player,” filed 12 December 1979, published 22 December 1981.

Chris Trimble, “Hasbro Interactive,” William F. Achtmeyer Center for Global Leadership, Tuck School of Business at Dartmouth Case no. 2-0021 (2004).

Kathleen S. Wilson, “Palenque: An Interactive Audio/Video Research Prototype,” in Colin Harrison, ed. Interactive Learning and the New Technologies (Berwyn, PA: Swets North America, 1988), p. 172-8.