The hardware was designed by a small team led by Ralph H. Baer at Sanders Associates, while Magnavox completed development and released it in the United States in September 1972 and overseas the following year.

The Odyssey consists of a white, black, and brown box that connects to a television set, and two rectangular controllers attached by wires.

The Odyssey consists of a black, white, and brown oblong box connected by wires to two rectangular controllers.

[2] The Odyssey lacks sound capability and can only display monochrome white shapes on a blank black screen.

The main console has two dials, one of which moves the vertical line across the screen, and one which adjusts the speed of the computer-controlled dot.

[4] In addition to the overlays, the Odyssey came with dice, poker chips, score sheets, play money, and card decks.

Named the Electronic Rifle, the rifle-shaped device registered a hit when pointed at a light source such as a dot on the television screen.

[1][9] By December 1966, they had completed an initial prototype later christened "TV Game #1", which could display and move a vertical line on a television screen.

[1] Baer spent the next few months designing further prototypes, and in February 1967, assigned technician Bill Harrison to begin building the project.

[11] Though the pair found Rusch difficult to work with, he soon proved his value to the team by coming up with a way to display a third, console-controlled spot on the screen in addition to the previous two player-controlled ones, and proposing the development of a ping-pong game.

It was picked up again in September, this time without Rusch, and went through two more iterations resulting in January 1969 in the seventh prototype, known as the "Brown Box" due to the wood-grain stickers on the casing.

Baer demonstrated the system to several companies, who all expressed enthusiasm; only RCA wanted to purchase the device, however, and an agreement could not be reached.

They designed the exterior of the machine and re-engineered some of the internals with consultation from Baer and Harrison; they removed the ability to display color, used only the three dial controller, and changed the system of selecting games from a dial to separate game cards that modified the console's circuitry when plugged into the console.

[13][16] Magnavox performed market surveys and playtests in Los Angeles and Grand Rapids, Michigan, and demonstrated it to dealers in Las Vegas in May 1972.

[17][18] Magnavox initially ordered 50,000 units, but before release increased its production capabilities and built a larger inventory, as market testing found an enthusiastic response to the console.

The Odyssey was sold only through Magnavox dealers, who handled their own advertising in their local markets; the company hoped that as the video game console was the first such product, consumers would visit its stores specifically for it.

[4][25][26][27] In late 1973, Magnavox ran a large advertising campaign for its 1974 products, including sponsoring Frank Sinatra's November television special Ol' Blue Eyes Is Back.

[19][23] It was released in 1974 in limited quantities in 11 other countries: Australia, Belgium, France, Germany, Greece, Israel, Italy, the Soviet Union, Spain, Switzerland, and Venezuela.

Instead, it sought a cheaper alternative; in May 1974 it signed a contract with Texas Instruments for integrated circuits to replace the transistors and diodes of the original system, and designed a limited version of the console around them.

[32] In 2004, Baer was awarded the National Medal of Technology for "his groundbreaking and pioneering creation, development and commercialization of interactive video games, which spawned related uses, applications, and mega-industries in both the entertainment and education realms".

[33] The Museum of Modern Art (MoMA) added the Magnavox Odyssey to its permanent collection of video games in 2013.

[35] In May 1972, Nutting Associates chief engineer Nolan Bushnell, designer of the first commercial arcade video game, Computer Space, saw a demonstration of the Odyssey.

In April 1974, however, Magnavox sued Atari along with several competitors, including Allied Leisure, Bally Midway, and arcade distributor Empire, for infringing on its patents for video games played on a television screen.

[37] Baer later stated that the lawsuits were not filed right away because Magnavox and Sanders needed to wait until they could expect to be awarded more money than it would cost to pursue the suits.

At the time of judgement, only Seeburg Corporation and Chicago Dynamic Industries—though bankrupt—remained out of the defendants of the initial three lawsuits, with all other companies having settled out of court.

[13][19][39] Over the next twenty years, Sanders and Magnavox sued several other companies over the issue, focusing on "paddle-and-ball" type games like Pong and Table Tennis that more clearly violated the patent; the final lawsuits ended in the mid-1990s.

[9][40][41] Many of the defendants unsuccessfully attempted to claim that the patents only applied to the specific hardware implementations that Baer had used, or that they were invalidated by prior computer or electronic games.

[42] In 1985, Nintendo sued and tried to invalidate the patents, claiming as prior art the 1958 Tennis for Two game built by William Higinbotham.

[3] Magnavox won more than US$100 million in the various lawsuits and settlements involving the Odyssey related patents before they expired in the early 1990s.