At the time video games had emerged as a popular form of entertainment in the late 1970s, music was stored on physical media in analog waveforms such as compact cassettes and phonograph records. Such components were expensive and prone to breakage under heavy use, making them less than ideal for use in an arcade cabinet, though in rare cases such as Journey, they were used. A more affordable method of having music in a video game was to use digital means, where a specific computer chip would change electrical impulses from computer code into analog sound waves on the fly for output on a speaker. Sound effects for the games were also generated in this fashion. An early example of such an approach to video game music was the opening chiptune in Tomohiro Nishikado's Gun Fight (1975).
While this allowed for inclusion of music in early arcade video games, it was usually monophonic, looped or used sparingly between stages or at the start of a new game, such as the Namco titles Pac-Man (1980) composed by Toshio Kai or Pole Position (1982) composed by Nobuyuki Ohnogi. The first game to use a continuous background soundtrack was Tomohiro Nishikado's Space Invaders, released by Taito in 1978. It had four descending chromatic bass notes repeating in a loop, though it was dynamic and interacted with the player, increasing pace as the enemies descended on the player. The first video game to feature continuous, melodic background music was Rally-X, released by Namco in 1980, featuring a simple tune that repeats continuously during gameplay. The decision to include any music into a video game meant that at some point it would have to be transcribed into computer code. Some music was original, some was public domain music such as folk songs. Sound capabilities were limited; the popular Atari 2600 home system, for example, was capable of generating only two tones at a time.
As advances were made in silicon technology and costs fell, a definitively new generation of arcade machines and home consoles allowed for great changes in accompanying music. In arcades, machines based on the Motorola 68000 CPU and accompanying various Yamaha YM programmable sound generator sound chips allowed for several more tones or "channels" of sound, sometimes eight or more. The earliest known example of this was Sega's 1980 arcade game Carnival, which used an AY-3-8910 chip to create an electronic rendition of the classical 1889 composition "Over The Waves" by Juventino Rosas.
Konami's 1981 arcade game Frogger introduced a dynamic approach to video game music, using at least eleven different gameplay tracks, in addition to level-starting and game over themes, which change according to the player's actions. This was further improved upon by Namco's 1982 arcade game Dig Dug, where the music stopped when the player stopped moving. Dig Dug was composed by Yuriko Keino, who also composed the music for other Namco games such as Xevious (1982) and Phozon (1983). Sega's 1982 arcade game Super Locomotive featured a chiptune rendition of Yellow Magic Orchestra's "Rydeen" (1979); several later computer games also covered the song, such as Trooper Truck (1983) by Rabbit Software as well as Daley Thompson's Decathlon (1984) and Stryker's Run (1986) composed by Martin Galway.
Home console systems also had a comparable upgrade in sound ability beginning with the ColecoVision in 1982 capable of four channels. However, more notable was the Japanese release of the Famicom in 1983 which was later released in the US as the Nintendo Entertainment System in 1985. It was capable of five channels, one being capable of simple PCM sampled sound. The home computer Commodore 64 released in 1982 was capable of early forms of filtering effects, different types of waveforms and eventually the undocumented ability to play 4-bit samples on a pseudo fourth sound channel. Its comparatively low cost made it a popular alternative to other home computers, as well as its ability to use a TV for an affordable display monitor.
Approach to game music development in this time period usually involved using simple tone generation and/or frequency modulation synthesis to simulate instruments for melodies, and use of a "noise channel" for simulating percussive noises. Early use of PCM samples in this era was limited to short sound bites (Monopoly), or as an alternate for percussion sounds (Super Mario Bros. 3). The music on home consoles often had to share the available channels with other sound effects. For example, if a laser beam was fired by a spaceship, and the laser used a 1400 Hz square wave, then the square wave channel that was in use by music would stop playing music and start playing the sound effect.
The mid-to-late 1980s software releases for these platforms had music developed by more people with greater musical experience than before. Quality of composition improved noticeably, and evidence of the popularity of music of this time period remains even today. Composers who made a name for themselves with their software include Koichi Sugiyama (Dragon Quest), Nobuo Uematsu (Final Fantasy), Rob Hubbard (Monty On the Run, International Karate), Koji Kondo (Super Mario Bros., The Legend of Zelda), Miki Higashino (Gradius, Yie-Ar Kung Fu, Teenage Mutant Ninja Turtles), Hiroshi Kawaguchi (Space Harrier, Hang-On, Out Run), Hirokazu Tanaka (Metroid, Kid Icarus, EarthBound), Martin Galway (Daley Thompson's Decathlon, Stryker's Run, Times of Lore), David Wise (Donkey Kong Country), Yuzo Koshiro (Dragon Slayer, Ys, Shinobi, ActRaiser, Streets of Rage), Mieko Ishikawa (Dragon Slayer, Ys), and Ryu Umemoto (visual novels, shoot 'em ups). By the late 1980s, video game music was being sold as cassette tape soundtracks in Japan, inspiring American companies such as Sierra, Cinemaware and Interplay to give more serious attention to video game music by 1988.The Golden Joystick Awards introduced a category for Best Soundtrack of the Year in 1986, won by Sanxion.
Some games for cartridge systems have been sold with extra audio hardware on board, including Pitfall II for the Atari 2600 and several late Famicom titles. These chips add to the existing sound capabilities.