In 1961, MITstudents Martin Graetz, Steve_Russell, and Wayne Wiitanen created the game http://wiki.answers.com/wiki/Spacewar!
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The original version of Spacewar! ran on the DEC PDP-1 computer at MIT, which had only 2K words of 18 bit magnetic core memory, was finished in February 1962. The final MIT version was finished in late April 1962. Note that the "!" is part of its name, according to Steve "Slug" Russell and Peter Samson, two of its original developers (who I worked with on the project to restore the Computer History Museum's DEC PDP-1 to operation, so that the game could again be loaded from an original MIT paper tape and played).
Spacewar!It ran on a DEC PDP-1 with 2K 12 bit words of magnetic core memory.
Spacewar! on the DEC PDP-1. It was written by the same guy (Steve Russel) that wrote MIT's first real LISP compiler for the IBM 709 after discovering an algorithm for a key LISP function that even Mccarthy (LISP's inventor) thought could only be written for an interpreter.
SPACEWAR! (the exclamation mark is part of the name) It ran on a 4K word DEC PDP-1 computer that cost about $120,000. The program was written by Steve Russell at MIT. Torpedos were unaffected by the sun's gravity because he ran out of memory and had to leave out those routines. I was able to witness the reincarnation of SPACEWAR! when I helped the Computer History Museum in Mountain View, CA restore 1 of their 3 PDP-1s to full operation.
The first computer game ever created was likely Bertie The Brain, a Tic Tac Toe game that was made in 1950. While it was technically not a video game, it was a computer game since it used logic. It only existed for 2 weeks for an exhibition. Before that was something known as the CRT Amusement Device, made it 1947. It was technically a video game, but it was not a computer game. It used basic electronics to produce visual effects, but used no logic circuitry. In 1951, there was a computer game called Nim that was played on the Nimrod computer. The Nimrod did not use a CRT display (meaning it was not a "video game"), just columns of lights. Spacewar was one of the earliest digital computer games. It was invented in 1962 by Steve Russell.
Tennis For Two was the first computer game.