How was Nintendo able to capture value from the home video game business?

In 1968, Nolan Bushell, the 24-year-old son of a Utah cement contractor, graduated from the University of Utah with a degree in engineering. Bushnell then moved to California, where he worked briefly in the computer graphics division of Ampex. At home, Bushnell turned his daughter’s bedroom into a laboratory. There, he created a simpler version of Space War, a computer game that had been invented in 1962 by an MIT graduate student, Steve Russell. Bushnell’s version of Russell’s game, which he called Computer Space, was made of integrated circuits connected to a 19-inch black-and-white television screen. Unlike a computer, Bushnell’s invention could do nothing but play the game, which meant that, unlike a computer, it could be produced cheaply.