For those growing up in the 1980s, the name "Coleco" stirs up nostalgic memories of a gaming era long past. Its home-gaming system, the ColecoVision, competed with the likes of Atari and Intellivision, and was arguably the company's most iconic product.
Unfortunately, like so many others at the time, Coleco had too many eggs in one basket and fell victim to the 1983 video game crash. Despite going out of business decades ago, Coleco left its mark in gaming history with a fascinating story and its many attempts to pioneer the burgeoning home computer market.
From leather company to toymaker
The Coleco brand was around for a lot longer than most realize. The name is a portmanteau for Connecticut Leather Company—a company founded in 1932, which sold leather and shoe repair tools to shops specializing in the craft. It later began selling rubber boots and saw an explosion of growth in 1939 at the start of World War II.
By 1945, Coleco had expanded into selling new and used shoe machinery, hat cleaning equipment, and shoeshine stands. A little over five years later, it added leather crafting kits. As it turns out, its crafting kits are what transformed the company from a primarily industrial-focused supplier into a consumer-focused toymaker.
During the 1954 New York Toy Fair, Coleco won the Child Guidance Prestige Toy award for its leather moccasin kit. The recognition prompted the company to enter the toy industry in full force. Using a new vacuum plastic molding technology, it began mass-producing plastic toys and wading pools. Its enormous success led Coleco to sell off its leather and shoe repair assets. It changed its name from Connecticut Leather Company to Coleco Industries in 1961 and went public with an IPO valued at $5 per share.
Walt Disney Productions "Thank You" print ad for the 1954 NY Toy Fair, featuring some bold mid-century design work, and a trim Mickey Mouse somewhere between the style of the 1950s comic strips and the Tom Oreb commercial design pic.twitter.com/PLe1CNK5HJ— Dan Cunningham (@HonuDan) February 24, 2020
In 1963, it acquired an inflatable swimming pool company called Kestral Corporation and became the world's largest seller of above-ground swimming pools. It then picked up Playtime Products in 1966 and Eagle Toys of Canada in 1968. By 1969, Coleco had 10 factories producing a variety of toys.
Coleco's first-generation home video game console
Coleco tried breaking into a new market in the 1970s manufacturing snowmobiles, but that venture flopped. However, by the mid-70s, CEO Arnold Greenberg saw a lucrative opportunity as home video gaming consoles hit the market.
1976 Coleco Telstar Classic | Image: Philmortonfan, Wikimedia
The company launched its first system, the Coleco Telestar, in 1976. The Pong knockoff was based on the successful console first introduced by Atari and then copied by many others.
The system used General Instrument's "Pong-on-a-chip," which was in short supply. As fate would have it, Coleco was one of the first to order the silicon and was the only company that received a complete shipment. The Telestar did well at first, selling nearly one million units. However, like many other Pong makers at the time, oversaturation almost led Coleco to declare bankruptcy in 1980, when it abandoned the home console market and began making handheld electronic "video games."
One of Coleco's first successful handheld games was Electronic Quarterback. It was not a video game in the traditional sense. It was an entirely solid-state device that played a very crude single-player version of football with LEDs representing the players on the field. It later produced several two-player handhelds in its "Head-To-Head" series, including Football, Basketball, Baseball, Soccer, and Hockey.
Image credit: Clusternote, Wikimedia
Coleco also manufactured solid-state versions of Donkey Kong and Ms. Pac-Man, as well as some educational games. The real winners in Coleco's handheld stables were its "Mini-Arcade" units, first launched in 1982.
The Pac-Man Mini-Arcade was its most successful, selling over 1.5 million units in its first year. Galaxian, Donkey Kong, and Frogger also sold a combined 1.5 million units the first year, causing Coleco to re-evaluate its stance on the home video arcade market.
The ColecoVision and the Donkey Kong bundle
In late 1982 Coleco re-entered the home console market with the ColecoVision, a home-gaming system that aimed to take a slice of the pie that the Atari 2600 and Intellivision had captured for a few years.
Coleco was not the first company that had attempted to compete there, but ColecoVision was the first to see some success in taking a small share of that market.
Some may argue that the ColecoVision's most significant selling point was that it came bundled with a port of Nintendo's Donkey Kong. Initially, Nintendo president Hiroshi Yamauchi had given Coleco exclusive rights to produce Donkey Kong for its system. Nintendo Life notes, the deal was only a verbal agreement, and Nintendo handed rights over to Atari, which they announced at CES 1982.
Upon discovering this, Coleco went to Yamauchi's daughter, who was also her father's interpreter, to find out how Atari had swindled them out of the Donkey Kong exclusivity. After subsequent talks, Coleco managed to get a signed contract to port the highly anticipated title to the ColecoVision, but exclusivity was off the table because of other commitments.
Then Coleco did something unprecedented. It decided to bundle Donkey Kong with its upcoming console. The industry scoffed at the notion that Coleco was giving away what would have been its top-selling software title. At this point, it is worth mentioning that ColecoVision's Donkey Kong was near arcade quality and far superior to the ports for the Atari 2600 and Intellivision, but more on why in a moment...
The ColecoVision launched bundled with Donkey Kong in August 1982, and sales flew off the charts. Coleco moved over 500,000 units by Christmas, outselling the Atari 5200 that was released in November. Sales continued to accelerate, and by early 1983 consumers had purchased over one million units.
The bundling of Donkey Kong was a plus for those looking for a home arcade machine, but the ColecoVision's internals is what sealed the deal for many. Coleco was the first company to shove a computer processor, the Zilog Z80, into a gaming console. It also sported 1K of working RAM and a whopping 16K of video RAM.
Image credit: Kuba Bożanowski
The hardware could deliver near-perfect duplicates of arcade classics like Donkey Kong, Frogger, and Burger Time, without the need for a fist full of quarters. Had the machine not delivered such performance, bundling Donkey Kong would hardly have swayed the masses.
Directly on the heels of the console's success, Coleco decided to release three ill-fated expansions for the ColecoVision. The first was a plug-in device with the nondescript name "Expansion Module #1." This device enabled the ColecoVision to play Atari 2600 cartridges.
Atari quickly sued, claiming the expansion module infringed its hardware patents. Coleco proved that it made the device with off-the-shelf parts and that it only provided power and clock input and video output without processing or translating Atari cartridges. Subsequently, the companies settled out of court with Coleco licensing Atari's patents. The Expansion Module #1 would eventually become a self-contained Atari 2600 clone called the Gemini that did not sell very well.
A second device, Expansion Module #2, was a "fully-functional driving unit." It featured a steering wheel, gas pedal, and dashboard. Unlike the previous module, which utilized the ColecoVision's expansion bay, the accessory plugged into the controller port.
It came bundled with the arcade game Turbo but did not play like the arcade version because of the gas pedal. Instead of being analog, the accelerator was actually a digital switch either on or off, making speed control clunky. Aside from Turbo, there were only four other titles with Module #2 support—Bump'n Jump, Destructor, Dukes of Hazzard, and Fall Guy. Because of its limitations, the racing wheel was not well-received.
The third and last ColecoVision expansion was the Adam home computer. Like other video game companies, particularly Mattel and its Intellivision Master and Keyboard Components, Coleco envisioned a home gaming system that users could convert into a home computer. However, the Adam was plagued with system-critical bugs.
Additionally, the timing for the device was terrible. Less expensive, dedicated personal computers had already flooded the market, making sales for the Adam abysmal. It launched in August, intending to sell 500,000 units by the end of the year. Plagued by delays, shortages, and the subsequent bad press, Coleco ended up selling less than 100,000 units, many of which were defective, before pulling the plug.
At the height of ColecoVision's success, the home-arcade market was headed for another crash. Affordable personal computers that could do the same thing and more than consoles became the "in-item," and in 1983, the console market imploded. Coleco struggled on for another two years before pulling out of the electronics industry in 1985.
Pulling the plug... but Coleco survived another decade
That was not the end of the company, however. Remember, its early success was in non-electronic toys, so that's what Coleco fell back on. In 1983, Coleco released a fad toy called the Cabbage Patch Kids. It was a series of collectible dolls. Each unique "Kid" came with a name and an "adoption certificate." Cabbage Patch Kids exploded in popularity and quickly became hard to find after allotments reached stores.
Using capital gained from the Cabbage Patch craze, Coleco acquired Leisure Dynamics in 1983 and Selchow and Righter in 1986. The purchases gave it the rights to produce and sell various board games, including Aggravation, Perfection, Scrabble, Parcheesi, and Trivial Pursuit. However, the Selchow and Righter acquisition proved disastrous as the popularity of its games was waning. Coleco was left with warehouses of unsold board games.
One of the last products Coleco produced was a plush Alf doll, released in 1986. The stuffed toy was based on the popular Alf TV series. Kids loved it, prompting Coleco to expand the Alf toy line. It released a talking Alf and a "Storytelling Alf," which had a built-in cassette tape player, which saw modest success.
Unfortunately, the industry crash and the inevitable waning of the Cabbage Patch fad were too much for the company to bear. In 1988, Coleco declared bankruptcy under Chapter 11. It restructured the company and sold off all of its North American assets. It closed many of its plants and sold its swimming pool division to Canada's SLM Action Sports Inc. A year later, Hasbro purchased the remains of the business, and Coleco as a company was no more.
As for the name, River West Brands picked up the trademark in 2005 and tried to re-introduce the brand with the Coleco Sonic in 2006. The Sonic was a handheld gaming device with 20 built-in Sega Master System and Sega Game Gear games.
In 2014, it formed Coleco Holdings to produce Coleco-branded products. The only project that the new subsidiary would announce was a cartridge-based video game system called the Coleco Chameleon. Unfortunately, the Chameleon was not even an original product. It was simply a rebranding of the ill-fated Retro VGS that could not meet its Indiegogo goal of $1.95 million. The device was met with much criticism, and Coleco Holdings never produced a working prototype.
As far as it is known, Coleco Holdings still owns the brand name, but nothing has been heard from the company since 2016.
TechSpot's Gone But Not Forgotten Series
The story of key hardware and electronics companies that at one point were leaders and pioneers in the tech industry, but are now defunct. We cover the most prominent part of their history, innovations, successes and controversies.