Coleco originally manufactured shoe leather, which later led to a business in leather craft kits in the 1950s. The leather part of the business was then sold off. Under CEO Arnold Greenberg, the company entered the video game console business with the Telstar in 1976. Nearly all of these new games were based on General Instrument's "Pong-on-a-chip". However, General Instrument had underestimated demand, and there were severe shortages. Coleco had been one of the first to place an order, and was one of the few companies to receive an order in full.

Coleco continued to do well in electronics. They transitioned next into handheld electronic games, a market popularized by Mattel. Coleco produced two very popular lines of games, the "head to head" series of two player sports games, (Football, Baseball, Basketball, Soccer, Hockey) and the mini-arcade series of licensed video arcade titles such as Donkey Kong and Ms. Pacman. The Adam Computer flopped and Coleco withdrew from electronics early in 1985.