Quite true. However, this also assumes that the military, universities, and independent companies weren't working on 3D engines at that time or before, either. Technically, unless you mean an engine that is capable of full modern 3D rendering, lens flares, physics and all that, Spasim in 1974 (not to be confused with NASA's SPASIM), on PLATO, was the first multiplayer game (with up to 32 players) with a 3D engine. As for the first game with a real 3D engine, I'm too lazy after this to look it up. I would just like to note that even then, the Lowest Common Denominator still had appeal over good design, but the author did change the game from what made people play it.