With dozens of Pong clone consoles over saturating the market following the Magnavox Odyssey, an implosion of this early market was inevitable. Something new and different was required. The consumer needed to be offered a system that had more variation, colour and sounds. Silicon Valley's Fairchild Semiconductor had noticed this and was developing something special, launching the Video Entertainment System (renamed the Fairchild Channel F- F for FUN- the following year) in November 1976.

In addition to featuring two variants of Pong built-in, the VEC was the worlds first programmable video game system that used ROM chip cartridges. They were designed to work in conjunction with the CPU in the console, allowing for a far greater choice for the consumer. New games could be added with these carts instead of consumers having to buy a complete new system. This new system was the next step in console evolution. It didn't contain the tangles of discrete circuits that filled these earlier dedicated machines, in their place were circuits designed by Jerry Lawson that were based around an already in production F8 Processor. The updated design allowed up to 8 colours on screen at any one time and had a resolution 128 x 64 pixels. In addition to that, it allowed for programmable AI which the player was able to pit themselves against- playing against the computer.

The chunky and somewhat cumbersome industrial controllers of the Magnavox Odyssey were also gone. The VEC sported an easily held joystick offering a full 360 degree movement, along with a twisting action to provide a traditional paddle motion. This Joystick could also be pressed down or pulled up which acts like an action or fire button.

In late 1978, Zircon International Incorporated bought the rights to the system before releasing an updated version called the Channel F System 2. It was this second version that was licensed in Europe under various names, such as the Adman Grandstand in the UK and the Saba Videoplay in Germany. It was more of less the same inside technically, but could output sound through the TV and now had detachable controllers that could be stored on the rear of the console.

Neither system sold particularly well, but it remains a game changer and was pivotal for ushering in many of the design principles that we've seen in video games consoles ever since.