Atari Inc. founder Nolan Bushnell has seen the video game industry change a lot – and not always for the better – in the nearly 40 years since he built his first game.   With graphics approaching photorealistic levels and "sleaze" rampant in many storylines, the video game industry is in danger of becoming a "cess pool," the gaming pioneer said during his keynote address at the recent Vidfest digital media conference in Vancouver. It’s been taken for granted that photorealism is one of the "Holy Grails" of game design, but Bushnell asked the crowd to consider if it was really a necessary part of a successful title. "Photorealism is very interesting, but it will do two things: it will drive up costs, and it will diminish the potential for product differentiation," he said, adding that historically, rising costs lead to stagnation and a follow-the-herd mentality. "When you up costs, the correlation is that innovation drops, because innovation is risky," he said, "and sequelism is lower-risk from a marketing standpoint." And, Bushnell said, "as you get into photorealism you will have stuff that will be intense," such as lifelike gore and blood. That depiction of violence against humans – whether simulated or not – might lead to a crackdown on the video game industry, he added. "I’m not a prude, but what it does is acts as a lightning rod for people who want to regulate things that have previously been free of interference," he said. Despite the seemingly mainstream popularity of video game culture, Bushnell said that the reality is "most people in the world don’t play video games and will never play video games." The demographics of the gaming population are heavily skewed to males under 35, a fact that has left much of the remaining population – the over-35 group and women of all ages – a huge untapped market. However, forthcoming innovations such as Nintendo Co. Ltd.’s touch-based portable DS system and the company’s upcoming Wi-Fi wand-based console might help lure some of that demographic to gaming, Bushnell added. Other trends could drive the adoption of video games as well, however. The ubiquity of wireless phones – and the increasing trend toward wireless capabilities in portable game consoles – means presence-based games could gain ground, and win new converts to gaming. When you can immerse yourself in a game while out of the home, "it blurs the line between what is real and what is a game," Bushnell said. Hardware-based encryption – rather than a software key or lock that can easily be circumvented – "will actually allow you to sell a game in China," he said, referring to that country’s high rate of software piracy. With more than a billion potential gamers, China is a huge but as-yet-untapped source of growth. Finally – and perhaps redundantly – the twilight of the arcade is nigh, according to Bushnell. With home console units soon to boast terabytes of memory and gigabits per second of bandwidth, the ultimate gaming experience will reside in every living room, he said. The social good of games is also a topic given short shrift, Bushnell continued. For instance, educators could benefit immensely from turning to games to teach, instead of vilifying them as time-wasters. "I believe that any educational game is better than Mr. Jensen with a piece of chalk in 5th Grade history class," he said. All talk of photorealism and advanced platforms aside, Bushnell said the key to a successful game title is not necessarily a reliance on cutting-edge technology or lowest-common-denominator storylines, but old-fashioned creativity. "Innovation is the stealth way to turn a modest sum of money into millions and millions of dollars," Bushnell told the audience. "Look at innovation as the antidote to huge capital expenditures." Innovation was what led to Bushnell creating Pong, widely acknowledged as the grandfather of video games, in 1974. Even with the rudimentary hardware available at the time, Bushnell managed to incorporate an innovative feature that helped ensure Pong’s success: the ability to use the edges of the paddle to send the ball back to an opponent at wildly unpredictable angles. "We made the ball respond to where it hit the paddle, and that little innovation made all the difference," he said. Recognizing the potential of video games as an out-of-home focus for social interaction, Bushnell purchased Pizza Time Theatres – the parent company of the Chuck E. Cheese chain of arcades-cum-pizza parlours – in 1977. Like Pong, it was hard to convince investors of the idea’s merit at first, and Bushnell says the chain’s talking rat mascot didn’t help matters. Eventually, however, the "viral marketing" effect of the schoolyard led to each new store being besieged by kids and families as soon as it opened its doors. "The minute we turned on the sign or opened the front door, all hell would break loose," Bushnell said, adding that, in all honesty, "the people who showed up on that first day got a real crappy experience." Bushnell’s latest venture is a sort of Chuck E. Cheese for the 21st century called uWink, a concept he hopes will win over some of those demographics – most notably women – who have been underserved by video games until now. Billed as "media bistros," uWink locations will feature touch-screen game units at every seat or table, with larger tables – referred to as party tables – featuring their own six-way group or team games as well as an entertainment facilitator. Food and drinks will also be a focus of the venture, with tasting notes on wine menus and suggested pairings with food items. The first uWink location is set to open in Las Vegas this summer.