In the United States, people spend about as much money on home video games as they spend going to the movies. And the multibillion-dollar industry shows little sign of slowing down: Microsoft's Xbox, released last November, shipped more than a million units in less than a month. But the first home video game system, Magnavox's Odyssey, took over 20 years just to get off the ground.

Around 1951, Loral Electronics engineer Ralph H. Baer had a novel idea: a TV on which a viewer could also play games. His bosses at the time nixed the concept, but in 1966, after a move to military contractor Sanders Associates, Baer wrote a proposal entitled "Conceptual, TV Gaming Display." In it, Baer envisioned a game system, compatible with any television, on which viewers armed with simple controllers could play sports, strategy and target-shooting games. This time his bosses let him assign a few technicians to the development of the idea.

A prototype system was nicknamed "the brown box." Its graphics were amazingly primitive by today's standards-white dots on a black screen-and players had to put plastic overlays on the TV screen to create the virtual tennis courts, shooting galleries and racetracks under which the white dots flickered. However, Magnavox took a chance and licensed the system, releasing it in 1972 as the Odyssey (above). Although the device sold about 100,000 units in its first year, stores didn't really know how to market it effectively; many consumers thought the Odyssey would work only with Magnavox TVs, and sales quickly declined. But fledgling game company Atari, whose hit 1972 arcade game Pong was inspired by the Odyssey's Ping-Pong game, saw the potential of a home gaming system and soon released its own household version of Pong. The company unleashed the 2600 Video Computer System in 1977-and home video games began their takeover of America's living rooms.

Magnavox tried unsuccessfully to keep up by releasing the ill-fated Odyssey² in 1978. In the long run, though, the initial home video game patents proved winners: between licensing deals and various legal actions, other game makers, including Atari, Nintendo and Sega, were forced to cough up nearly $100 million to Sanders and Magnavox. Baer, now an independent inventor, went on to create, among other diversions, Milton Bradley's popular electronic pattern-matching game Simon. What's ahead for home video game technology? Baer sees interactive Web-based video games as the next big thing. "I think the future is already here," says Baer.