The next morning, he met Nolan Bushnell in a large warehouse on the outskirts of Los Angeles.
Nolan paced the concrete floor, gesturing wildly at taped outlines on the ground. He was outlining a concept they'd first discussed back in the early 70s.
Nolan wanted to build a family entertainment restaurant, called Pizza Time Theatre.
The mascot was planned top be a rat named Chuck E. Cheese.
For years, Nolan had lacked the time, but now, with Paramount's backing, the project was finally moving from a sketch to reality.
The arcade industry still had an image problem in the late 1970s.
Coin machines were a lot of the time in bowling alleys, dive bars or pool halls.
And parents were right to view these places with suspicion.
Police, and local governments also frequently associated these spaces with truancy, gambling, drug use, and petty crime.
With many towns even banning arcade machines altogether, viewing them as corrupting influences on children.
The industry was sort of trapped in this "juvenile delinquent" stereotype until the upcoming success of wholesome, brightly colored hits like Space Invaders and Pac-Man that would help push arcades into malls and respectable family centers.
Just last year, in April 1976, a courtroom demonstration changed the arcade landscape when a pinball master Roger Sharpe proved to th New York City Council that pinball was a game of skill rather than chance.
Pinball had been banned in New York and other major cities since the 1940s because lawmakers associated it with illegal mob gambling.
To overturn the ban, Sharpe set up a pinball machine right inside the courtroom, and while playing, he accurately predicted his exact ball movements and target shots just seconds before executing them.
His precision left the city officials speechless, demonstrating that player capability, not random luck controlled the outcome.
This performance resulted in a vote to lift the decades-long ban, triggering an entertainment explosion that legitimized amusement arcades across America and paved the way for the upcoming golden age of coin-operated video games.
Of course, last year 1976, the first slot machine was also created, using the principles of arcade machines.
Was this good? Yes, Atari had a division specifically made to sell under the table machine parts to different companies who would then assemble them to be sold to Casinos, which increased the industry and brought profit.
Not even just them did this, Midway for example were also doing this everywhere around NYC.
But this also brought the fact that operators started exploiting legal gray areas by disguising gambling software inside standard arcade cabinets.
Illegal establishments utilized dual Circuit Boards inside a single arcade cabinet.
On the outside, the machine looked like a harmless game of Breakout.
However, the bartender would keep a hidden manual toggle switch or remote control behind the counter.
If an inspector or police officer walked into the room, the operator would quickly flip the switch to swap the screen from an illegal video poker game back to a standard video game
Star Wars and consoles were the best ways to change the image of the industry.
If Atari wanted to sell thousands of cabinets, they needed a clean, well-lit, family-friendly environment.
And Chuck E. Cheese was the perfect Trojan horse.
"The margins on the pizza will pay for the lease," Nolan explained.
He pointed to a dining area marked with blue tape. "But the profit is in the tokens. Parents buy tokens at the door and kids guide themselves to the machines."
"It keeps teenagers from loitering and it forces families to stay longer to spend their remaining tokens."
Duke walked through the taped-off floor plan.
He was impressed by the logic.
In his past life, the only thing he knew about Chuck E Cheese business model was that they did birthdays and that their pizzas came deformed a lot of the times.
But now Paramount would invest millions to build up these restaurants across suburbia.
The restaurant chain also provided another layer of defense against antitrust lawyers.
Opening pizzerias across the Midwest allowed Paramount to claim they were in the hospitality business and diversifying away from media consolidation.
They'd hire thousands of local teenagers, and buy from regional food distributors.
It would make the narrative of a menacing entertainment monopoly harder to sustain if they were attacked in the press.
Two days later, Duke brought the dual investment strategies before his team.
The oak table was surrounded by his executive team.
Barry Diller sat with his hands steepled reviewing financial projections.
While Robert Evans looked puzzled by the restaurant blueprints.
"Duke, I understand the need to keep the lawyers happy," Diller started. He tapped a pen against his notepad.
"But we're a media company... Launching a national chain of pizzerias requires a logistical supply chain."
"Sourcing cheese, managing what is normally teenage labor, maintaining equipment... In short, an operational nightmare that distracts from our core business."
"Are we sure we want to be in the hospitality business?"
Robert Evans leaned back, adjusting his glasses. "I have to agree with Barry on this one,"
"We sell an image of Art... Paramount doesn't sell pizzas, it feels cheap and dilutes the prestige of the brand."
Duke listened patiently, stood up and walked to a paint frame that displayed a corporate organizational chart.
He needed them to see the interconnected web. How each investment fed into the strength of the others.
"Barry, you're right about the challenges," Duke acknowledged. He pointed to the restaurant division on the chart.
"But the pizza is just the foot on the door. The restaurants are a distribution pipeline for our arcade hardware."
"If we own the locations, we guarantee our games always have a home."
It would also reinforce, Atari's position on the market if they could control a distribution place directly.
A place that competitors may not be able to enter, or they could let the ones that can play ball with them in.
It was just like the old times of the Golden Age of Hollywood.
A time where studios owned Production, Talent, Distribution.
The Studio would own the lot, the actor's career and the theaters. Each part of it reinforcing the other
And with Studios owning thousands of movie theaters across the country, they would use their market position to force these theaters to show their films, blocking independent competitors.
"And Robert, the prestige of the studio brand is necessary but we need to diversify still. I can assure you 90% of the people who go there, wont know Paramount owns Chuck E Cheese."
Duke shifted to the Activision investment, anticipating Diller's next objection.
"As for funding our own software competition, it's another necessity. If we hoard all the programming talent in-house, they'll unionize, strike, or defect."
"By giving them a platform to succeed, we make the Atari console the center of the gaming universe. We win by making our platform indispensable to outside creators."
The room fell quiet, everyone here trusted Duke's track record. Things now just remained to be seen.
___
I became an uncle, and man this shit's tiring. Anyways, this isnt dropped.