News Editor: “It was the joke heard around the world, the one by President Reagan, about bombing the Soviet Union and it resulted in a…”
Norman: 1984, the Cold War raged between two superpowers:
the United States and the Soviet Union.
Major economic and political differences created a constant state of tension between the former allies.
Capitalist United States experienced unprecedented economic growth;
Apple released the highly anticipated Macintosh personal computer;
Los Angeles hosted the 1984 Summer Olympics;
two major blockbusters hit theaters: “Ghostbusters” and “Gremlins”;
Bruce Springsteen released his most successful record: “Born in the USA.”
The nation grew and prospered, socially and economically.
But the Communist Soviet Union was a stark contrast:
the economy was stagnant;
the cost of oil, one of the country’s leading exports, declined;
the country boycotted the 1984 Summer Olympics, citing “anti-soviet hysteria”;
General Secretary Konstantin Chernenko was terminally ill;
Mikhail Gorbachev waited in the wings;
the country was five years into a conflict with Afghanistan;
citizens grew frustrated and had little money;
the government enacted sweeping reforms to eradicate dissent and restore order.
The two nations couldn’t have been more divided,
but that summer, a computer programmer in the Soviet Union created something special:
It was a puzzle game that took the video game industry by storm and helped break the boundaries between the two superpowers.
Alexey Leonidovich Pajitnov was born on March 14th, 1956 in Moscow.
His mother was a journalist who reported on cinema, a somewhat controversial art form in the Soviet Union.
His father was a philosopher, a writer and a dissident of the communist regime.
When Pajitnov was 11, his parents divorced.
From then on, he and his mother lived alone in a one-bedroom apartment.
But their time together introduced him to pop culture.
As a writer, his mother regularly attended the Moscow International Film Festival.
Sometimes she brought young Alexey along and introduced him to films from around the world.
He loved James Bond.
He also loved math puzzles and board games, one of the few forms of entertainment available to children of the Soviet Union.
One of his favorites was Pentominoes.
The goal of the game is to arrange 12 unique puzzle pieces, consisting of five blocks, each into a rectangle.
As a child in the 60’s, Pajitnov witnessed the competition of space exploration between the United States and the Soviet Union.
The USSR recruited scientists and engineers to give them an advantage.
They hoped to draw children into the field by showing off the latest technology.
As a result, 17 year-old Pajitnov was introduced to the computer.
It left a lasting impression on him.
He enrolled at the Moscow Institute of Aviation, where he earned his Master’s Degree in Applied Mathematics.
After graduating, Pajitnov joined the famous Russian Academy of Sciences in Moscow, where he landed a research position in the Dorodnicyn Computing Center.
But the Computing Center wasn’t exactly at the forefront of technology.
All employees used the same, room-sized mainframe computer.
Work conditions weren’t ideal either. Pajitnov shared his desk with three other researchers.
He followed the same routine almost every day: wake up between 7:30 and 8:00 am, eat a breakfast of sausage, eggs and cottage cheese, run some errands, then arrive at the computing center by 10:00 am.
He worked until midnight, which gave him some alone time in the evenings.
Eventually, Pajitnov and a few other employees got an upgrade: their own personal Electronica 60 Computer Workstation.
It was a huge upgrade over the giant mainframe computers.
But to the rest of the modern world, it was ancient.
The Electronica 60 was a clone of the LSI 11 Computer, a system that came out nine years prior.
The display didn’t show any graphics, only alphanumeric characters.
Pajitnov worked on artificial intelligence programs and speech recognition software;
the latter caught the attention of the KGB, Russia’s head Security Agency.
They hoped it could record phone conversations.
But in the evenings, Pajitnov and a few other researchers had the computers to themselves, to work on their own side projects.
One programmer was obsessed with Pac-Man, one of the few arcade games to make its way past the Iron Curtain.
He spent hours trying to reverse-engineer it.
There was also Dmitry Pavlovsky, a fellow researcher and friend who programmed several games on the giant mainframe computer stored away in the computing center.
There was also a 16 year old programming prodigy, named Vadim Gerasimov.
After impressing his computer science teacher, he was brought to the Computing Center to learn more about programming and assist with projects.
Pavlovsky introduced Gerasimov to Alexey Pajitnov.
The trio shared a love of computer games and programming, so they formed a team and brainstormed game ideas in the evenings.
They hoped to package the games and possibly sell them, an extremely difficult endeavor in the Soviet Union.
Pajitnov sat at his desk late into the night, brainstorming.
He thought back to his childhood, when he spent hours playing Pentominoes.
Surely there was a way to translate this experience to the computer.
Pajitnov made adjustments to the standard Pentomino game to accommodate for his outdated hardware.
He cut the five block shapes down to four, which reduced the number of pieces from 12 to 7.
In six days, Pajitnov completed his first version.
He named it “Genetic Engineering.”
The goal was simple, arrange the pieces until they fit into a box.
It worked, but there was just one problem:
it was boring.
Once a player figured out the solution, they had no reason to play again.
The game needed to challenge and engage the player.
So Pajitnov made the game more hectic.
He narrowed the playing field to the center of the screen and had the pieces fall constantly.
It was definitely more engaging and fast-paced, but that created a new problem:
If you failed to complete a row, it stayed on the screen.
If you completed a row, it stayed on the screen too.
It wasn’t satisfying and the game ended too quickly.
Pajitnov’s next modification made the game addictive.
As soon as the player filled in an entire row, it disappeared.
The game could potentially last forever and fitting the puzzle pieces together was a satisfying reward.
Suddenly, he couldn’t stop playing his new game. He even played during work hours, claiming to be “debugging software.”
The game was naturally addictive and didn’t require any sort of tutorial or explanation.
Pajitnov named the game “Tetris”, combining the Greek word “tetra” meaning four with his favorite sport, tennis.
It had a basic scoring system, no sound and no extra levels.
But it was addictive and easily the best game in the trio’s computer game package.
But no one ever imagined Tetris would make it outside the halls of the Dorodnicyn Computing Center.
It only worked on the outdated Electronica 60 Computer.
Tetris gained a small cult following at the Russian Academy of Sciences.
Pajitnov wanted to expand his audience, but the only way to do that was to program the game for a more commonly available platform, the IBM PC.
He approached the 16 year old whiz kid, Vadim Gerasimov and asked if he could assist.
It would be a somewhat difficult task;
Gerasimov needed to rewrite the entire program on a computer he’d never used before.
But in only a few days, Gerasimov had a working prototype.
He had a fully functional, widely compatible version ready in a few weeks.
He added color to the Tetrominoes, multiple levels, plus the ability to save your high score.
Tetris was more addictive than ever before.
However, the dream of selling their collection of games was falling apart:
Starting a business, let alone a software business, was highly unusual in communist Soviet Union.
Plus, they made Tetris at the Russian Academy of Sciences, which technically made the game government property.
Pajtinov, Pavlovsky and Gerasimov didn’t want to see their hard work go to waste.
They named their collection of games “Computer FunFair” and made copies, which they distributed to whoever was interested.
One such person was Vladimir Pokhilko, Alexey Pajitnov’s friend and a clinical psychologist at the Moscow Medical Center.
When he fired up Tetris at his workstation, he immediately recognized the addictive nature of the game.
As rows of blocks disappeared, it gave the player an emotional high, fueling them to keep playing.
Pokhilko made copies of the game for his fellow employees.
Soon, the entire psychology department was hooked.
Pokhilko feared the game would interfere with their work, so he destroyed every copy in the medical center.
But the game found its way back.
Rather than fight it, Pokhilko thought the game could be useful in studying addiction.
A unique two-player version was developed specifically for the Moscow Medical Center by Pajitnov and Gerasimov.
By 1986, Tetris spread like wildfire throughout the Soviet Union.
Almost anyone with access to an IBM PC had some form of the game.
Pajitnov didn’t make a penny, but he was excited about the popularity of the game. But it was only the beginning.
Eventually, Tetris made its way outside the Soviet Union, which ignited an epic battle to cash in on the puzzle game.
With its simple and addictive gameplay mechanics, Tetris took over the free time of Soviet workers.
One such person was Alexey Pajitnov’s boss.
He shared a copy with some colleagues at the SCKI Institute of Computer Science in Budapest, Hungary.
They loved it.
Some students at the Institute even ported the game to the Commodore 64 and Apple II, two popular home computers in the Western world.
With that, Tetris officially crossed the Iron Curtain.
In a sense, Hungary was the Western world’s closest connection to Soviet life.
It was under Communist rule, but after the 1956 Revolution, the Hungarian government passed major economic reforms to create a more open free-market.
One of Hungary’s most popular exports was the Rubik’s Cube, created by Erno Rubik in 1974.
Hungary was the place to go for business people looking to license Eastern products to Western audiences.
One such businessman was Robert Stein, owner of the British software company Andromeda Software.
After selling computer hardware in the 80s, Stein switched to a much more profitable business: selling software.
But rather than look for potential new games in the UK, he found his talent in his native country of Hungary.
His business model was simple: find a game, sell it to a publisher in the West, and collect royalties on the sales.
Stein frequently visited the SCKI Institute of Computer Science for new titles, and in 1986, he noticed someone playing a game in the corner of the computer lab.
It was Tetris.
“What the hell is this?” he asked.
“Oh, it’s just a game,” an employee replied.
Intrigued, Stein tried the game for himself.
He wasn’t a gamer, but he couldn’t stop playing Tetris.
It was a surefire hit.
He immediately went to the director of the Institute and inquired about licensing.
But the director sheepishly admitted that the game wasn’t theirs.
If Stein wanted to license Tetris, he would have to make a deal with the Soviet Union, but that was easier said than done.
Russia’s economy was still very closed off.
The chances of Stein simply flying to Moscow and brokering a deal was slim to none.
But the director did have one line of communication: he had the number to the Russian Academy of Sciences’ Telex machine.
Stein sent a Telex message stating that he wanted to acquire the rights to Tetris.
The message was forwarded to the creator, Alexey Pajitnov.
Pajitnov was shocked.
He’d given up the idea of selling software.
Now, he had an offer in writing for the rights to Tetris, but he had to be cautious.
He made Tetris, but he had no authority to negotiate for the rights to the game.
“We can do nothing for personal gain,” he said.
It would, however, be a huge accomplishment to have a game published.
After several weeks of getting translations and the proper authorization, Pajitnov sent the following reply:
“Yes, we are interested. We would like to have this deal.”
For Pajitnov, it was a way of saying, “Let’s talk more about this.”
He didn’t want to commit for fear of discipline from his government, but he didn’t want to shut the door, either.
But to Robert Stein, it was a verbal agreement.
As far as he knew, Andromeda Software could find a buyer for Tetris.
Stein immediately went to one of his go-to publishers in the UK, Mirrorsoft.
Mirrorsoft was the software division of the massive Maxwell Communications Corporation.
Founded by Robert Maxwell, a decorated World War 2 veteran and former member of Parliament, the Maxwell Corporation owned several newspapers magazines and even a soccer club.
Mirrorsoft was a big publisher with strong financial backing.
Stein set up a meeting with Mirrorsoft co-founder Jim Mackonochie.
He took a look at Tetris, thought nothing of it, and passed it off to Mirrorsoft’s technical department.
Several weeks later, Mackonochie wandered down to the technical department during a lunch break and noticed everyone huddled around playing Tetris.
He figured he should play the game himself.
He took it home, and soon Mackonochie, his wife, and their children were hooked.
Along with Mirrorsoft, Maxwell Corporation had another software company in the United States, Spectrum HoloByte.
Mirrorsoft and Spectrum HoloByte worked well together, regularly sharing titles and publishing games in their respective regions.
Spectrum HoloByte president Phil Adam was in the UK looking at new titles when Mackonochie showed him Tetris.
He, too, became addicted.
From there, Robert Stein made a deal with the Maxwell Corporation.
Mirrorsoft got the home computer and console rights to Tetris for the UK and Europe for £3000 plus royalties.
Spectrum HoloByte got the rights for the US and Japan for $11,000 plus royalties.
It wasn’t a huge payday for Stein, but he did have other rights to sell, including the arcade and handheld rights.
The bigger problem, however, was Stein’s supposed deal with Pajitnov in the computing center in Moscow.
He had the vague Telex message about making a deal, but nothing was signed.
Technically, he was negotiating the rights to a game he didn’t even own.
With contracts pending with Mirrorsoft and Spectrum HoloByte, the clock was ticking.
Stein sent off another Telex message to Moscow with his offer:
$10,000 up front, along with 75% on whatever money he made from Tetris.
Pajitnov replied once again with a vague, but positive response.
They were ready to make a deal.
Stein kept pressing. He even offered partial payment in the form of Commodore computers.
But just as Pajitnov predicted, the Soviet regime intervened in the negotiations.
AcademySoft, an internal publishing and licensing group within the Russian Academy of Sciences, handled further negotiations.
AcademySoft insisted that the only rights available to Stein were for the IBM PC version of Tetris.
Stein agreed; future versions of Tetris could be negotiated for later.
It was now 1987, and there were still no signed contracts.
Spectrum HoloByte and Mirrorsoft prepared their versions of Tetris under the assumption that all the rights were secured.
Robert Stein grew frustrated.
Who exactly was in charge of the negotiations on the Russian side?
Stein had a verbal agreement, or so he thought, but he needed pen to paper in order to make his dealings with Mirrorsoft and Spectrum HoloByte legit.
So Stein put pressure on the Russians.
In April of 1987, he sent another Telex message to Moscow, this time announcing that Mirrorsoft and Spectrum HoloByte would release Tetris for the IBM PC in their respective regions.
But his forcefulness got him nowhere.
In June of 1987, Stein finalized the deals with Spectrum HoloByte and Mirrorsoft for Tetris.
But… he still had to get the Russians to sign on the dotted line.
Robert Stein assured Spectrum HoloByte and Mirrorsoft that he would secure a deal with the Russians, so the two companies moved forward with Tetris.
But marketing was a big issue.
Tetris was an addictive game, but it was unlike any other game on the market.
There was no story or hero;
The graphics weren’t cutting-edge.
Phil Adam, president of Spectrum HoloByte, noted that Tetris was the first Russian game to be commercialized in North America.
Why not use this to their advantage?
He proposed Tetris be marketed as an exotic game from the mysterious world behind the Iron Curtain.
It would surely tap into the public’s curiosity about the Soviet Union.
The game was completely reprogrammed to incorporate allusions to Russia.
The developers added imagery of St. Basil’s Cathedral, Lenin Stadium, and May Day celebrations in Red Square;
They incorporated classical Russian music;
They even added a reference to Matthias Rust, a West German pilot who flew a small plane directly into Red Square.
He was arrested and charged with hooliganism.
Ronald Reagan and Mikhail Gorbachev impersonators showed off the game at trade shows.
The Tetris hype grew as release day approached.
But right before Tetris launched, in January of 1988, Robert Stein received a telex message from another organization in Russia.
The group accused Stein of selling Tetris illegally, and demanded that further negotiations go through them.
They were known as ELORG.
ELORG was short for Electronicorgtechnica.
The Soviet Ministry of Foreign Trade formed ELORG for the purpose of importing and exporting technology, specifically to other communist nations.
But in the 1980s, under the leadership of Mikhail Gorbachev, restrictions on foreign trade with the West loosened.
ELORG was now free to seek licensing deals for technology internationally.
This included computer software.
ELORG learned that some of the researchers at the Russian Academy of Sciences were creating computer programs, including Pajitnov’s artificial intelligence software.
ELORG met with Pajitnov to see if the program could be sold internationally.
During the meeting, Pajitnov casually mentioned Tetris, and how he and AcademySoft had trouble getting a licensing deal with Robert Stein.
Representatives from ELORG were shocked.
Pajitnov and AcademySoft had no authority to negotiate International software licensing deals.
They demanded all the paperwork be handed over immediately.
What they learned was incredible.
A researcher at the Russian Academy of Sciences was negotiating an international business deal for a video game!
Not only that, but it was about to be sold in the West, and nothing had been signed!
From that point on, ELORG was in charge of all negotiations for Tetris.
They asked Robert Stein to come to Moscow to explain himself.
When he arrived, Stein said it felt like an interrogation.
Representatives from ELORG didn’t trust him.
“Why are you selling Tetris without our permission?” they asked.
“I didn’t even know your group existed!” Stein replied.
He held his ground, arguing that pulling the deal now could be an embarrassment to the USSR, as it would make them seem unreliable in the world economy.
The two sides went back and forth in what seemed like a never-ending game of tennis.
ELORG wanted final approval over any of the games;
Stein wanted the rights to all home computer systems, not just the IBM PC.
The two sides continued to negotiate.
Nothing had been signed.
But in the West, Tetris moved forward.
On January 29 1988, Spectrum HoloByte released Tetris for $34.95.
It came in a red box with the word Tetris written in Russian in bold yellow characters.
It stood out from the other games.
The Russian marketing angle worked brilliantly;
Spectrum HoloByte sold 100,000 copies in the first year.
In the UK, Mirrorsoft sold fewer, but still a sizable amount.
Then again, they also removed a lot of the Russian imagery from their version.
The reviews were glowing.
“Tetris is so simple to learn that you`ll know all the rules five minutes after opening the box.
But it`s so intriguing to play that once you`ve started you`ll be spending many hours in front of the computer screen —
so many that you`ll begin to wonder if Tetris isn`t really part of a diabolical plot hatched in the Evil Empire to lower worker productivity in the United States.”
Dennis Lynch, Chicago Tribune.
“As computer games go, it is simple and addictive.
Critics say it lacks the guns and explosions and mayhem that appeal to young connoisseurs of American entertainment software, but then, Soviet software is apparently softline.”
Peter Lewis, the New York Times.
Tetris fever enveloped the West and was being played at home and at work.
Spectrum HoloByte even added a boss key to the game:
Pressing the escape button would quickly bring up a blank command prompt.
To Spectrum HoloByte and Mirrorsoft, it was a resounding success.
But Robert Stein was nervous;
His deal with the Russians was still in limbo.
Spectrum HoloByte and Mirrorsoft began porting the game to other computer platforms.
But finally, in May of 1988, four months after Tetris hit the market, ELORG and Robert Stein made a deal.
Andromeda Software got the rights to Tetris for home computer systems.
They also got the rights to port Tetris to quote, “…different types of computers…”
To Stein, this meant home consoles as well.
ELORG received an undisclosed amount up front, as well as royalties on every game sold.
Stein breathed a sigh of relief.
He quickly phoned Jim Mackonochie at Mirrorsoft, confirming the deal was officially done.
When Mackonochie asked about the arcade and handheld rights, Stein assured him that deal was imminent as well.
From there, they wove a tangled web of sublicenses that would ultimately turn into a ferocious battle over who could do what with Tetris.
In January of 1988, Spectrum HoloByte showed off their new product at the winter Consumer Electronics Show in Las Vegas.
Spectrum HoloByte president Phil Adam stood proudly on the showroom floor displaying Tetris to a long line of attendees.
Standing in that line was Henk Rogers, owner of Japanese game publisher Bullet-Proof Software.
Rogers was born in the Netherlands, but grew up in the United States.
While in college at the University of Hawaii, he fell in love with a Japanese woman, and moved back to Japan with her.
From there, he got into game development, and formed Bullet-Proof Software.
Inspired by the game Dungeons & Dragons, Henk Rogers released The Black Onyx, an ambitious turn-based RPG the likes of which Japan had never seen before.
By the end of 1984, it was the best-selling computer game in Japan.
In 1985, he was enamored with the Nintendo Famicom, and determined to make a game for the system.
After reading in a magazine that Nintendo president Hiroshi Yamauchi was a fan of the board game Go, he set up a meeting.
Rogers pitched that he could make Go for the Famicom.
Yamauchi gave him an advance of ¥30 million, or approximately $300,000 to make the game.
Within minutes, Rogers had a deal with Nintendo, cash, and became an official Nintendo licensee.
By 1988, Rogers was getting more into publishing.
He frequented trade shows looking for the next big game to bring back to Japan.
So there he stood, waiting in line to play an odd-looking new game from Russia:
He wasn’t quite sure what to make of it.
“Tetris was probably the quietest game at the show.
Even then, products were graphically exciting, but this game was a totally different thing.
I wanted to play it because it struck some basic chord.
I couldn’t stop playing.”
After going through the line more than five times to play, Rogers was convinced: Tetris was the game he was looking for.
It was simple, seemed easy to program, and would require little translation.
Rogers learned that Gilman Louie, CEO of Spectrum HoloByte, was going to Japan to shop the game.
Gilman Louie’s first stop was the ASCII Corporation, one of the largest publishers in Japan.
They declined Tetris, saying it was too Retro.
Their loss was Rogers’ gain.
Gilman Louie and Henk Rogers signed a letter of intent for Bullet-Proof Software to publish Tetris in Japan for just about every platform Imaginable.
Rogers’ offer was standard: a cash advance as well as royalties on every copy sold.
Spectrum HoloByte had no plans for getting into the Japanese market, and Rogers seemed more than capable of delivering Tetris to the country.
When Gilman Louie phoned Jim Mackonochie at Mirrorsoft to tell him the news, he received a surprise.
Rogers couldn’t have the console and arcade rights for Japan, because those were already sold.
The buyer was Atari Games, which planned to publish the games under their subsidiary, Tengen.
Like everyone else, engineers at Atari Games were playing the PC version of Tetris, and were addicted.
It became common water-cooler talk at the office, which motivated Atari Games to grab the rights.
To make matters worse for Rogers, Atari Games got it for a steal.
In exchange for console and arcade rights in Japan and North America, Atari Games gave Mirrorsoft the PC rights to Blasteroids, a shallow update of the arcade game Asteroids.
No royalties or cash to consider.
Gilman Louie was furious, but there was nothing he could do.
Mirrorsoft had more power thanks to their direct connection to the Maxwell Corporation.
Louie phoned Henk Rogers to give him the news.
Rogers could have the PC rights, but if he wanted the console and arcade rights, he would have to contact Atari Games.
When Rogers contacted them and inquired about the rights, Atari Games declined.
Undeterred, Rogers flew to California and camped out in the Atari Games parking lot.
He waited for an opportunity to talk to their president, Hideyuki Nakajima.
As Nakajima was leaving for the day, Rogers swooped in and made his sales pitch.
Eventually, Nakajima agreed to a meeting.
Over a sushi dinner, the two businessmen hashed out the details.
Nakajima couldn’t sell the arcade rights; he had already sold them to Sega.
But he was willing to sell the console rights in Japan.
Nakajima didn’t care too much about having the console rights in Japan, because he was focusing on the North American market.
The price tag was steep: Rogers had to cough up $300,000 for the console rights.
But he was confident the game was a hit.
However, initial sales in Japan were low.
Bullet-Proof Software only received 40,000 orders.
Rogers contacted Nintendo president Hiroshi Yamauchi in hopes that he could help push the game.
Yamauchi was curious, so he passed Tetris down to one of his designers, Shigeru Miyamoto.
Several days later, Yamaguchi asked Miyamoto if Tetris was a good game.
“Yes,” replied Miyamoto.
When Yamaguchi asked why, Miyamoto responded:
“Because your secretaries and accountants are playing it.”
With that, Yamauchi understood Tetris’ universal appeal, and he agreed to help push sales of Tetris.
Orders increased from 40,000 to over 200,000.
On December 22nd, 1988, Bullet-Proof Software released Tetris for the Nintendo Famicom, where it became their best selling game of all time, selling 2 million copies.
But it added yet another branch to a complicated tree of licensing and sub–licensing.
Everything hinged on one contract: Robert Stein’s deal with the Russians at ELORG… and that deal was in jeopardy.
In 1988, Nintendo was on top of the video game world.
They were on pace to sell seven million Nintendo Entertainment Systems that year.
Industry experts predicted the market for Nintendo games was larger than all home computer software.
And they weren’t done yet.
Waiting in the wings at Nintendo of Japan was a new system: the handheld Game Boy.
In North America, it was standard to package new Nintendo consoles with a game, but which one?
In December of 1988, Henk Rogers was meeting with Nintendo of America president Minoru Arakawa at their headquarters in Redmond, Washington.
When Rogers heard about their situation, he suggested Tetris.
“If you include Mario, the Game Boy will be for little boys.
But if you include Tetris, the Game Boy will be for everybody,” he said.
Arakawa was intrigued.
He heard about the success of Tetris for the Famicom in Japan.
Tengen was preparing to release Tetris for the Nintendo Entertainment System in North America, but the handheld rights were still up for grabs.
Rogers was more than happy to help.
He knew he could make millions in this deal, especially if Tetris was a pack-in title.
After his experience getting the Tetris rights in Japan, he knew that Robert Stein was the man to talk to.
Rogers called Stein and inquired about the handheld rights to Tetris.
He offered $25,000 in advance.
Stein, who still didn’t have the handheld or arcade rights, was also fielding calls for Mirrorsoft, asking for the handheld rights.
He was wishy-washy in his response.
He would have to check with the Russians and get back to Rogers.
But Stein was about to hit another roadblock.
Somewhere in the tangled web of licensing, ELORG wasn’t getting paid.
They tasked their new director, Nikoli Belikov, with sorting out the mess.
Belikov was a large man with a reputation for being cutthroat.
Pajitnov described him as, “an excellent actor.”
He was a worthy negotiator.
Belikov read Stein and ELORG’s contract, which was signed in May of 1988.
It promised payment within three months.
The payment was now three months overdue.
Stein was stuck.
He had Mirrorsoft and Henk Rogers wanting handheld rights;
Unlicensed arcade versions of Tetris were already being sold.
He figured his best chance to sort everything out was to fly to Moscow and meet with Belikov.
Meanwhile, Henk Rogers felt ignored.
He grew suspicious of Robert Stein.
Not only that, but he got word that Gilman Louie of Spectrum HoloByte was trying to sell the handheld rights for Tetris to Nintendo.
When Minoru Arakawa asked Rogers about it, Rogers was adamant.
“I know Gilman doesn’t have those rights.
Give me a chance to finalize that deal.”
Rogers decided that it would be easier if he just dealt with the Russians himself, and headed off to Moscow.
In the UK, Mirrorsoft caught wind of Nintendo’s interest in handheld rights.
Parent company Maxwell Corporation sent Kevin Maxwell, the son of owner Robert Maxwell, to Moscow.
Maxwell Corporation had connections with Russian diplomats, and would have much more power securing the handheld and arcade rights.
In February of 1989, all three men: Stein, Rogers, and Maxwell, flew to Moscow to get their piece of the Tetris pie.
The battle for Tetris was about to begin.
Henk Rogers arrived in Moscow without any clue where to go.
He knew Stein was negotiating with ELORG, but he had trouble finding their whereabouts.
At first, he tried to make friends by playing Go with some locals, but that got him nowhere.
So Rogers hired an interpreter to help him find ELORG.
After a day of riding around Moscow, they finally got the location.
Henk Rogers walked into ELORG and asked to speak to someone about the rights to Tetris.
As he waited in the lobby, he could feel the tension.
“You don’t walk into a place like that uninvited,” he said.
When Belikov was told a foreigner from Japan had come to discuss Tetris, he was surprised.
It was against government protocol to meet with foreigners without proper clearance, but Belikov was curious and decided to meet him.
If nothing else, having a third bidder for Tetris would help in his negotiations.
Belikov met Rogers in the lobby.
“Who are you?” he asked.
Rogers took out a copy of Tetris on the Famicom and handed it to Belikov.
“We are the biggest publisher of Tetris in the world right now,” he boasted.
Belikov looked at the game, confused.
As far as he knew, no one had the console rights to Tetris.
“ELORG hasn’t given video game console rights to anyone!” Belikov barked.
Rogers made his case, explaining the chain of licensing and sub-licensing that gave him the rights:
ELORG, to Andromeda, to Mirrorsoft, to Tengen, to Bullet-Proof Software.
Belikov was confused.
He had never even heard of Tengen.
“The only rights were transferred to Andromeda Software, and only for using Tetris on personal computers!
You are illegally selling something that doesn’t belong to you!” he said.
Rogers had come to Moscow to secure the handheld rights, but now he was in danger of losing everything.
‘Either I’m going to come out of here with the rights to Tetris, or I’m going to be in some gulag,’ he thought.
After some discussion, Rogers and Belikov set up a meeting for the next day.
The next day, Henk Rogers arrived at ELORG and was ushered into a large room with a massive table.
On one end of the table was ELORG’s negotiator, Nikoli Belikov, Tetris creator Alexey Pajitnov, and several members of the ELORG team.
Henk Rogers sat alone on the other side.
Usually, his sales pitches touched on his close connection with Nintendo, and how they had a majority of the video game market share.
But the Russians didn’t know anything about Nintendo, or the video game market.
So he shifted gears, and gave them a crash course on the video game business.
ELORG showed Rogers their original contract with Robert Stein of Andromeda Software.
Rogers scanned it, and found the line that was causing all the trouble.
The contract between Andromeda Software and ELORG stated that Stein had the rights to port Tetris to quote, “…different types of computers…”
To the Russians, this meant exactly that: computer systems.
To Stein, the distinction between computer system and console didn’t exist.
On top of that, ELORG was making pennies on Tetris; a percent of a percent.
It was a horrible contract.
Rogers made his case to ELORG, explaining his offer for handheld rights in detail.
He offered a fixed amount for each cartridge sold.
It was a nice change of pace after dealing with Robert Stein.
Pajitnov, in particular, was impressed.
Rogers understood the business end of things, but as a former developer, the two were kindred spirits.
After Rogers’ pitch, Belikov wanted to move forward and asked for a formal offer for handheld rights to Tetris.
“Write everything down,” he said.
Belikov then asked Rogers when he would be back in Moscow.
“Either I leave with the deal or without the deal. I’m not coming back,” Rogers replied.
After the meeting, Henk Rogers and Alexey Pajitnov continued talking.
“Somehow we liked each other almost immediately.
He was the friend I was looking for in Russia,” said Rogers.
That night, Pajitnov showed Rogers around Moscow.
They explored the city, drank vodka;, and discussed ideas for a sequel to Tetris.
For Pajitnov, it was refreshing to have a casual conversation about his creation.
“He offered me nothing and asked for nothing,” he said.
The two formed a friendship that would have a major impact on the future of Tetris.
The next day, Rogers returned to ELORG with a one-page offer for the handheld rights to Tetris.
Rogers knew Stein would be coming, so he added pressure by having the offer expire in one week.
After his crash course on the video game business, Nikoli Belikov prepared for his upcoming meetings with Robert Stein and Kevin Maxwell.
Belikov thought Stein was abusing his rights to Tetris.
Stein reaped all the rewards, while the Russians got next to nothing.
It was also apparent that Tetris creator Alexey Pajitnov preferred Rogers over Stein.
it was time for the Communists to play the game of capitalism.
Robert Stein entered the ELORG offices with one goal in mind: to secure the handheld and arcade rights to Tetris.
The arcade rights were especially important, considering Tengen and Sega were already selling machines.
But Nikoli Belikov had other plans.
Belikov presented Stein with their original contract.
“Mr. Stein: tell me honestly, what is this document called?” he asked.
“An agreement,” replied Stein.
“It’s not an agreement!” snapped Belikov.
“It’s a set of some irresponsible phrases or other, under which rights are transferred to one party without compensation for the other!”
Belikov presented Stein with an amendment to the original contract.
ELORG wanted their money, so the amendment detailed penalties for late payment.
Belikov refused to negotiate until Stein signed it.
Stein agreed to read over the amendment, and return in a few days.
It wasn’t the friendliest meeting, but Stein was confident that once all of this was smoothed over, he would secure the handheld and arcade rights.
Belikov’s next meeting was with Kevin Maxwell, the son of Maxwell Corporation owner Robert Maxwell.
Robert Maxwell had connections to Russian bureaucrats, including general secretary Mikhail Gorbachev.
Mirrorsoft was confident that Kevin Maxwell would get the ball rolling in their favor to secure the handheld rights.
Belikov began the meeting by sliding the Famicom Tetris box across the table.
“What is this?” he bluffed.
Maxwell had no idea. He guessed It was a pirated copy of Tetris.
“Only more reason for Mirrorsoft and ELORG to make a deal and get rid of these fakes,” he said.
Maxwell’s ignorance of the situation was his downfall.
For Belikov, it was confirmation that no one had the home console rights to Tetris.
It would be foolish for Belikov to completely blow off Maxwell, even if he knew he was full of it.
Their connections to Russia were relevant, and they had deep pockets.
“if it was indeed a pirated copy of Tetris,” Belikov said, “then Mirrorsoft should make a bid for the home console rights.”
He threw in another deal as well: ELORG would receive publishing rights to several Maxwell Corporation reference books and encyclopedias.
In exchange, Mirrorsoft was given a Right of First Refusal for any new rights to Tetris.
Maxwell was satisfied with the arrangement and returned home, thinking he had moved things in a positive direction for Mirrorsoft.
In reality, he had compromised everything.
Back in his hotel room, Robert Stein read over the amendment to his original contract with ELORG.
It was basically the same, plus some extreme penalties for late payments.
Getting the arcade rights was crucial, and in order to get them, Stein had to sign the amendment.
He signed it and returned to ELORG the next day.
With that out of the way, negotiations could continue.
But Belikov claimed ELORG wasn’t ready to sell the handheld rights.
The arcade rights, however, were for sale.
The cost: $150,000 for advanced royalty payments, with a six week deadline.
It was a lot of money, but at least Stein would avoid any licensing issues for Tengen and Sega’s arcade version of Tetris.
Stein returned home, feeling satisfied.
But there was one crucial detail Stein missed in the new amendment.
Belikov added a definition for a computer, which said that a computer, “…consists of a processor, monitor, disk drive, keyboard, and operating system.”
Since the document was back dated, it effectively stripped away all the console rights Stein thought he owned.
The large penalties for late payments had all been a distraction.
The Russians at ELORG had played the game of capitalism… and won.
After his meetings, Belikov called Rogers to inform him that Kevin Maxwell and Mirrorsoft also wanted the handheld rights for Tetris.
“I can’t outbid Maxwell, but I can give you honesty and promise to pay you for each cartridge,” said Rogers.
Several days later, Rogers presented ELORG with a finalized contract and walked through every detail.
It was official: Rogers and Nintendo secured the handheld rights to Tetris for the Game Boy.
After signing the contract, Belikov presented Rogers with an offer: make a bid on the home console rights to Tetris.
Rogers knew Nintendo would be interested.
“Nintendo will outbid any competitor,” Rogers said.
Belikov asked for an offer in writing within three weeks, and with that, the meeting was adjourned.
Rogers headed back to Japan.
He had no time to spare.
As soon as he got back to Japan, Henk Rogers phoned Minoru Arakawa at Nintendo of America with the news.
Nintendo not only had the handheld rights to Tetris, but due to contractual issues, they had a chance to snag the home console rights as well.
Arakawa relayed the message to Nintendo of America Vice President Howard Lincoln.
Lincoln’s eyes lit up.
This deal could make millions for Nintendo.
It would also be sweet revenge against Atari Games, a former Nintendo licensee that was now suing them for 100 million dollars.
The suit stemmed from Atari Games’ frustration with Nintendo’s licensee policies.
They alleged anti-trust violations and unfair competition.
At the same time, Atari games released a batch of unlicensed games under their subsidiary, Tengen.
They were the very first unlicensed games on the Nintendo Entertainment System.
One of Tengen’s upcoming releases was the console version of Tetris.
Taking Tengen’s rights to Tetris would hurt, and Lincoln knew it.
So they sent Rogers back to Moscow to make a formal offer.
With him was a high-profile attorney who had previously worked in the Soviet Union and was fluent in Russian.
Their offer to ELORG was incredible:
As promised, Belikov contacted Mirrorsoft for Right of First Refusal.
On March 15th, 1989, he sent them a Telex, and gave them one day to respond with a counteroffer.
When nothing came back, ELORG was ready to sign the deal with Nintendo.
Due to the enormous amount of money at stake, a Nintendo employee had to sign the contract.
Lincoln and Arakawa went themselves.
They traveled in secret: any chance of Atari Games finding out could jeopardize the agreement.
They told Nintendo of America employees they were traveling to Japan, and took off for Moscow.
Negotiations continued when they arrived.
Lincoln was sure Atari Games would come after them.
He wanted a clause stating that the Russians would help defend their rights in any litigation.
Lincoln also suggested royalty payments to Alexey Pajitnov for creating the game.
Belikov found the suggestion… inappropriate.
Pajitnov had made the game on company time.
It belonged to the state.
Belikov suggested that ELORG could make the cartridges.
They even inquired about making their own version of the Nintendo Entertainment System.
During the final stage of negotiations, Jim Mackonochie of Mirrorsoft finally returned the Telex message to ELORG.
As far as Mackonochie was concerned, Mirrorsoft already had the console rights.
ELORG must be mistaken.
That was all ELORG needed to hear, and on March 22nd, 1989, Nintendo and ELORG signed an agreement for the home console rights to Tetris.
That same day, Belikov fired off another Telex to Mirrorsoft and Robert Stein.
The home console rights and handheld rights to Tetris were no longer available.
They belonged to Nintendo.
Robert Stein was dumbfounded.
“I was so focused on getting what I wanted, that I forgot about watching what they wanted,” he said.
He felt he was the victim of lying, backstabbing and cheating.
He accused Henk Rogers of colluding with the Russians on the amended contract.
He also argued that Kevin Maxwell’s meeting with Belikov had screwed everyone over.
“He was burying me, burying us all,” Stein said.
At least there was a small consolation prize:
Stein still had the home computer and arcade rights to Tetris.
Kevin Maxwell was furious when he heard the news.
“You are now in grave breach twice over of our agreements with you,” he said in a reply Telex to ELORG.
He also threatened to get Soviet authorities involved.
He wasn’t bluffing;
the Russian government questioned Nikoli Belikov;
they searched his files.
But Belikov stood his ground, and assured Nintendo that they would honor their commitment.
When Kevin Maxwell told his father the news about Tetris, he reportedly, quote, “went apeshit.”
Robert Maxwell took his anger all the way to Mikhail Gorbachev, now general secretary of the Soviet Union.
Gorbachev had more important matters at hand.
His country was on the verge of collapse.
“You should no longer worry about the Japanese company,” Gorbachev told Maxwell.
And with that, Mirrorsoft gave up the fight for Tetris.
On March 31st, 1989, president Hideyuki Nakajima of Atari Games received a surprising fax from Howard Lincoln, of Nintendo of America.
It was a Cease & Desist, ordering them to halt from, “any further manufacture, advertisement, promotion, offer for sale, or sale of Tetris for the NES, or any other home system.”
The rights now belonged to Nintendo.
“We knew we had those bastards by the balls,” said Lincoln.
On April 6th, 1989, Nintendo sent out an official press release, announcing plans to release Tetris that summer on the NES.
The next day, Atari Games, via their subsidiary Tengen, sent a reply to Nintendo.
“We are in receipt of your letter….and quite frankly are quite confused.
As Nintendo has known since last year, Tengen received all NES rights to the game ‘Tetris’ in early 1988.
These rights are, in Tengen’s view, clear and unequivocal…”
But Atari Games was panicking.
A week later, they filed a copyright application for their version of Tetris.
On April 18th, they sued Nintendo for infringing on their licensing deal for Tetris.
Almost everything was at stake.
Atari Games anticipated Tetris to be a colossal hit that would break the shields of the Nintendo juggernaut.
They assigned veteran programmer Ed Logg to program the NES version from the ground up;
they spent a substantial amount of money on marketing;
they took out a full-page ad in USA Today;
they produced 300,000 copies of Tetris;
they even held a huge launch party at the Russian Tea Room in New York City.
On May 17th, 1989, in the midst of their legal battles, Tengen released Tetris on the Nintendo Entertainment System.
As expected, it flew off the shelves, selling 150,000 copies within weeks.
Meanwhile, Howard Lincoln headed back to Moscow with a team of lawyers to prepare for the upcoming battle.
They interviewed everyone they could:
and employees of ELORG and the Russian Academy of Sciences.
They combed over every copy of the contracts between Robert Stein and ELORG.
On June 15th, 1989, Tengen and Nintendo opened their arguments in the US District Court of Northern, California.
Presiding over the case was Judge Fern Smith, the same judge in charge of their other lawsuit dealing with the unlicensed Tengen games.
Both Nintendo and Atari Games filed preliminary injunctions, which would prevent the other from selling their version of Tetris.
Atari Games argued that their license from Mirrorsoft was valid, and that the Russians were double-dipping.
Nintendo argued that the Russians never intended to sell anything other than the home computer rights to Mirrorsoft.
But the Smoking Gun was the amended contract, which defined a home computer system.
The NES definitely did not match that definition.
On June 22nd, Judge Fern Smith reached her decision.
She granted Nintendo a preliminary injunction, barring Atari Games from selling their version of Tetris.
The trial was scheduled for later that year in November.
It was a huge blow to Atari Games.
By then, almost half of the initial 300,000 copies had been sold, leaving them with a warehouse full of games.
When consumers heard the news, people rushed to snag their own copy.
Many who borrowed the game from rental stores simply kept it, happily paying the replacement fee.
On July 31st, 1989, Nintendo unleashed the Game Boy in North America, bundled with a copy of Tetris.
Nintendo felt their case had clear and compelling evidence.
They asked Judge Fern Smith for a summary judgment, which would end the trial before it began.
To their surprise, Judge Fern Smith agreed.
On November 13th, 1989, she ruled that Nintendo owned the home console rights to Tetris.
Atari Games announced they would appeal, but later decided against it.
They destroyed all of their remaining warehoused copies of Tetris.
That same month, Nintendo released their version of Tetris on the NES.
It would go on to sell more than 5 million copies.
The battle for the addictive Russian puzzle game was finally over.
Henk Rogers’ prediction that Tetris would make the Game Boy appeal to everyone was correct.
By 2003, Nintendo sold over 118 million Game Boys.
35 million of them were bundled with Tetris.
Although Nintendo emerged as the clear victors, just about everyone involved: Robert Stein, Spectrum HoloByte, Mirrorsoft, Henk Rogers, ELORG, and Atari Games made money on Tetris.
Everyone, that is, except its creator: Alexey Pajitnov.
By 1989, he had collected nothing from Tetris, and was still working at the Russian Academy of Sciences.
He was married with two children.
But in 1991, his fortunes changed.
Henk Rogers was determined to help his friend.
He helped Pajitnov and his family immigrate to the Seattle area, where Pajitnov founded his own software company.
In 1995, the rights to Tetris expired, which gave Pajitnov the opportunity to finally cash in on his creation.
By that point, ELORG was a private company, still under the direction of Nikoli Belikov.
ELORG purchased 50% of the rights to Tetris.
Rogers and Pajitnov partnered up and formed The Tetris Company, and purchased the other half.
After 13 long years, Alexey Pajitnov finally received royalty payments for his game.
To this day, the Tetris franchise has sold more than 170 million games making it the seventh best selling video game franchise of all time.
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