The name Alleyway references the in-game gateway that the player's spaceship (represented as a paddle) must pass through. While Alleyway is a portable clone of Breakout, it adds several new features, including alternating stages, bonus rounds, and hazards for the player to contend with at later levels.
The player's objective in Alleyway is to destroy all breakable bricks in each stage using a ball and paddle while keeping the ball from falling into the pit below, similar to that of Breakout. The paddle's speed can be adjusted by holding either the B or A button on the controller while moving the paddle, which can move only horizontally at a fixed height. At the start of each life, the player can reposition the paddle before releasing the ball and commencing gameplay. When released, the ball will always begin at a 45° angle above the paddle aimed toward its center. The player starts the game with five paddles; each time the ball falls into the pit below the paddle, a paddle is removed and the ball is reset.
The game ends when all the player's paddles are depleted. An additional paddle is granted for each 1000 points scored, until the player has over 10,000 points. The player may have up to nine paddles at once. The game lacks a continue feature, though the high score will be retained until the game is reset or turned off. As there is no battery-backed SaveRAM or password feature, Alleyway can only be completed in one sitting.
The ball will only travel at 15°, 30° or 45° angles. If the ball hits a brick, the brick disappears and the ball ricochets in a different direction at the same angle. The ball's speed depends on the type of brick that it hits: gray and black bricks increase its speed, while white and square, indestructible bricks have no effect. A sound effect is also played when the ball collides with an object or wall, with walls producing the lowest pitch and black bricks the highest.
The ball's direction and speed can be controlled by the paddle's velocity and point of contact. Changing direction the moment the ball comes into contact with the paddle, called a snap technique, will bounce the ball upward with increased speed. Moving the paddle quickly in the opposite direction than the ball is headed will result in the ball bouncing in the same horizontal direction as the paddle at a 15° angle. If the player contacts the ball with the body of the paddle before it falls into the pit below, it will bounce back into the playing field. However, if instead either corner of the paddle collides with the ball at that moment, it will be knocked directly into the pit.
Alleyways ball cannot be locked in an infinite loop of ricochets. Whenever the ball starts to loop between objects such as the ceiling, indestructible blocks and/or the paddle itself, its velocity will change at a random point after the second cycle on its next collision. As a result, the ball will travel at a slightly raised or lowered angle depending on its current trajectory, and will break out of the loop.
The game features 24 levels, based on eight block patterns in groups of three. After every three regular stages, the player proceeds to a bonus stage, giving the game a total of 32 levels. Most levels follow a generic design, though one group is modeled after Mario's head as it appears next to the remaining paddles icon. The player progresses to the next level once all bricks are destroyed, where the same pattern of bricks appears but behaves differently. Every second stage is a Scrolling Block Screen, featuring bricks that move from left to right; every third is an Advancing Block Screen, where the bricks move downward the height of one regular brick in short bursts, increasing in speed as the ball bounces off the paddle. Any part of a brick below a height of ten bricks above the paddle is automatically removed; thus they cannot impede the player's movement but cannot contribute towards the player's score either.
As the player progresses through patterns, new elements are added to the gameplay. After the fourth stage, the paddle's size is halved until the stage is cleared or a life is lost if the ball comes into contact with the top of the area. From this point on, the third stage variant features hidden bricks above the ceiling that descend progressively, using a similar—or same—layout that must also be cleared, meaning the pattern must be cleared twice. In later levels, bricks in the second stage variant may not move at the same speed or in the same direction. After the twelfth stage, indestructible bricks are incorporated into the brick patterns.
Bonus stages feature patterns based on various Nintendo Entertainment System Super Mario Bros. sprites, such as a Piranha Plant, Goomba or Bowser. Unlike regular levels, the ball will destroy blocks in these stages without ricocheting off them, and contact with the ceiling will not affect the paddle size. These stages are the only ones to feature background music during play, and cannot be paused. A timer is present for each bonus stage; it starts at 95 for the first and is reduced by five for each subsequent bonus stage completed beforehand. If the timer ends, the ball falls into the pit (no life is lost in this case), or all bricks are destroyed, the bonus stage ends. Destroying all bricks before the timer expires yields additional bonus points, which vary depending on the level. Once cleared, the brick pattern changes and gameplay reverts to the normal cycle. After finishing the final bonus round, the player is given a congratulations screen using the Mario graphic from the original Mario Bros. game. The game then loops back to the first stage, allowing for infinite play.
The game only displays four digits of the player's score, yet it has a maximum value of 65,535. Scores of 10,000 and above are displayed as a combination of icons and the numerical display. For every 10,000 points, a sprite from the NES Super Mario Bros. game is shown below the numerical score. A fire flower is shown for 10,000 points, a mushroom for 20,000, and a starman for 30,000 points and above. The game stops changing the sprite after awarding the starman icon. As a result the highest score that can be displayed is 39,999; however, the maximum score of 65,535 is shown as 35,565. Once the maximum score has been reached, the score will roll over only if the player completes a bonus stage. A roll over does not affect the recorded high score.
Alleyway marks one of the first appearances of Mario on the Game Boy system alongside Super Mario Land, although its original box and cartridge art showed an unidentified character in a spacesuit piloting the paddle. The artwork was changed to show Mario at the controls on the game's international release, however neither the manual nor the back of the box refer to the Nintendo mascot's presence in the game. Nintendo Power' preview made no mention of Mario in the title other than note of the pattern of bricks in Mario's shape for the first bonus level. Official confirmation of the pilot being Mario only came about in 1990 with Club Nintendos preview of the game's European release.
The game was one of the first titles made by the Nintendo R&D1 development team, alongside Tetris and Radar Mission. Years later, the game's designer Gunpei Yokoi would reuse much of Alleyways source code (such as paddle behavior and adapted physics engine) for the Game Boy game Kirby's Block Ball while working with Shigeru Miyamoto's team. Alleyway was re-released for download onto the Nintendo Power cartridge, occupying one memory block on the device.
Promotion of the title in Nintendo published material consisted of a segment taking up a third of the page the articles were on. Advertisements for Alleyway were grouped with those for the Game Boy itself and other titles for the system. Years after its initial release, a two-page section in the Super Game Boy Nintendo Strategy Guide bundled with the Super Game Boy accessory appeared, which gave advice and color codes for the game.
Not all comments about the game have been negative. The two Electronic Gaming Monthly reviewers that gave the highest scores did state they felt the design was perfect for the Game Boy, one adding "It's also a very good game that combines some new features ... with the original Break-Out theme" and concluding "Alleyway is good—but a bit long". German magazine Power Play gave the game a rating of 48%, but also praised the game's level variety. The book Rules of Play discusses the game as an example of improved design over a base core mechanic, citing the inclusion of distinct sound effects for ball collision as a means to praise the player for destroying bricks, and the varied level designs as "well done" and giving the player "an element of discovery to the overall experience."
Although Alleyway sold well enough during its production run, it has not been re-released as a Nintendo Player's Choice title. Interest in a re-release on later consoles however exists, such as IGN journalist Craig Harris's suggestion that it should be part of a "retro-revival" for the games on the Nintendo DS.