In May 1972, the first home video game console was released The Magnavox Odyssey. Ralph Baer, called "the father of video games" by IGN, designed the console by starting from a solid idea he had had as early as 1951 while working with televisions. He realized that user interactivity with the machine was possible, desirable and marketable.
The Odyssey sold approximately 330,000 units before it was discontinued in 1975, an end generally credited to somewhat poor and confusing marketing of the system and its capabilities as well as prohibitively high prices. However, the Odyssey continued to make money for Magnavox as it won court cases and settlements against major companies such as Nintendo, Mattel, Activision and, most famously, Atari for their creation of Pong.
David Winter at Pong-Story.com explains:
After founding Atari on 27th June 1972, [Nolan] Bushnell [the President of Atari] and Alan Alcorn (his first employee) designed the famous prototype of their PONG arcade machine. Once finished a couple months later, it was placed on trial in a local bar called Andy Capp's Tavern in Sunnyvale [California]. Later in 1974, the arcade video game business having flourished, Magnavox filed a lawsuit for patent infringement against Seeburg, Bally-Midway and Atari. Although Bushnell insisted that he didn't copy the Ping-Pong (Tennis) game of the Odyssey, Federal District Court judge John F. Grady was not convinced that Bushnell had designed PONG before attending the [public] Odyssey demonstration [much earlier].
The Odyssey's ping pong game led directly to the release of Pong, one of the most influential and famous games of all time.