159-427: Atari Age was a magazine distributed to Atari Club members from 1982 until 1984. It was published by The Atari Club, a subsidiary of Atari, Inc. . The magazine only covered Atari products and events, offering exclusive deals to its readers, and serving as an advertising and merchandise outlet for the company. Atari used the magazine to build brand loyalty, promoting Atari products in a non-objective manner. The magazine
318-490: A "Syzygy Engineered" label on the control panel of each Computer Space game sold to reflect their work in the game. Computer Space did not fare well commercially when it was placed in Nutting's customary market: bars. Feeling that the game was simply too complex for the average customer unfamiliar and unsure with the new technology, Bushnell started looking for new ideas. About 1,500 Computer Space cabinets were made, but were
477-692: A "competitor" called Kee Games in September 1973, headed by Bushnell's next door neighbor Joe Keenan, to circumvent pinball distributors' insistence on exclusive distribution deals; both Atari and Kee could market (virtually) the same game to different distributors, with each getting an "exclusive" deal. Kee was further led by Atari employees: Steve Bristow, a developer that worked under Alcorn on arcade games, Bill White, and Gil Williams. While early Kee games were near-copies of Atari's own games, Kee began developing their own titles such as that drew distributor interest to Kee and effectively helping Bushnell to realize
636-574: A 10 to 15% growth through 1982, which it considered fair given the current recession . However, earlier in 1982, Warner had expected a 50% growth and using Atari's profits to help support Warner's other media industries, and analysts were less confident in Warner's current outlook; one asked "Why did it happen so quickly? And why were they not in tune with it while it was building?" Later that month, Warner announced that Kassar along with one other Atari executive had sold numerous shares of Warner stock prior to
795-416: A black and white television from Walgreens , the special game hardware, and a coin mechanism from a laundromat on the side which featured a milk carton inside to catch coins. It was placed in a Sunnyvale tavern by the name of Andy Capp's to test its viability. The test was extremely successful, so the company created twelve more test units, ten which were distributed across other local bars. They found that
954-515: A catalog of Atari-related merchandise and paraphernalia. The first issue of the magazine was May/June 1982, with design director Tony Prizzi and Atari Club director Parker Jerrell. Atari Age ceased publication in 1984, after Warner Communications sold the consumer division of Atari to Jack Tramiel , the founder of Commodore International , who focused his efforts on the newly renamed Atari Corporation's personal computers in order to compete with his old company. Atari, Inc. Atari, Inc.
1113-571: A coin-op design and production company. Using investments and funds from a coin-operated machine route, they leased a former concert hall and roller rink in Santa Clara to produce Pong cabinets on their own with hired help for the production line. Bushnell had also set up arrangements with local coin-op-game distributors to help move units. Atari shipped their first commercial Pong unit in November 1972. Over 2,500 Pong cabinets were made in 1973, and by
1272-698: A combined 90 new Atari games. By 1983, an estimated 100 companies were attempting to leverage the CES into a foothold in the market. AtariAge documented 158 different vendors that had developed for the Atari VCS. In June 1982, the Atari games on the market numbered just 100 which by December, grew to over 400. Experts predicted a glut in 1983, with only 10% of games producing 75% of sales. BYTE stated in December, "in 1982 few games broke new ground in either design or format ... If
1431-608: A difficult product to sell. While Bushnell blamed Nutting for its poor marketing, he later recognized that Computer Space was too complex of a game as players had to read the instructions on the cabinet before they could play. Bushnell said: "To be successful, I had to come up with a game people already knew how to play; something so simple that any drunk at any bar could play." Bushnell began seeking other partners outside of Nutting, and approached pinball game manufacturer Bally Manufacturing , who indicated interest in funding future efforts in arcade games by Bushnell and Dabney if Nutting
1590-551: A division of MCA Inc. to set up a joint venture Studio Games, whereas the venture gave them access to properties handled by MCA's sister studio Universal Pictures . Video game crash of 1983 The video game crash of 1983 (known in Japan as the Atari shock ) was a large-scale recession in the video game industry that occurred from 1983 to 1985 in the United States . The crash
1749-531: A driving game, Bushnell had concerns that it might be too complicated for Alcorn's first game. In May 1972, Bushnell had seen a demonstration of the Magnavox Odyssey , which included a tennis game. According to Alcorn, Bushnell decided to have him produce an arcade version of the Odyssey's Tennis game, which would go on to be named Pong . Bushnell had Alcorn use Dabney's video circuit concepts to help develop
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#17330856193011908-567: A flexible video game console that was capable of playing all four of Atari's then-current games. Bushnell was concerned that arcade games took about $ 250,000 to develop and had about a 10% chance of being successful. Similarly, dedicated home consoles had cost about $ 100,000 to design but with increased competition, had a limited practical shelf-life of a few months. Instead, a programmable console with swappable games would be far more lucrative. Development took place at Cyan Engineering , which initially had serious difficulties trying to produce such
2067-516: A form for the VCS, and Space Invaders for the VCS was released in March 1980. The game became the VCS's "killer app" , helping to sell the console alongside the game, and made Atari an estimated $ 100 million . It also set a roadmap for future game releases on the VCS under Kassar, with more scheduled release plans throughout the year and looking for more licensed arcade conversions and tie-in media. Until 1980,
2226-430: A frighteningly regular basis, from a highly-placed someone supposedly in charge of all publicity concerning the computer systems. And chilling as the individual happenstance was, it seems to have been endemic at Atari at the time." Despite losses, Atari remained the number one console maker in every market except Japan. Nintendo , a Japanese video game company, planned to release its first programmable video game console,
2385-510: A generic adventure game to the Superman -themed title. Robinett refused, but did help fellow programmer John Dunn to make the conversion after he volunteered. Further, after Warner refused to include programmer credits into game manuals over concern that competitors may try to hire them away, Robinett secretly stuck his name into Adventure in one of the first known Easter eggs as to bypass this issue. The transition from Bushnell to Kassar led to
2544-429: A home console by 1974, and initial design work on console began in earnest in late 1974 by Alcorn, Harold Lee and Bob Brown. Atari struggled to find a distributor for the console but eventually arranged a deal with Sears to make 150,000 units by the end of 1975 for the holiday season. Atari was able to meet Sears' order with additional $ 900,000 investments during 1975. The home Pong console (branded as Sears Tele-Game)
2703-436: A landfill near Alamogordo, New Mexico , though Atari did not comment about their activity at the time. Misinformation related to sales of Pac-Man and E.T. led to the urban legend of the Atari video game burial , that millions of unsold cartridges were buried there. Gaming historians received permission to dig up the landfill as part of a documentary in 2014, during which former Atari executive James Heller, who had overseen
2862-511: A large number of departures from the company over the next few years. Four of Atari's programmers—David Crane, Bob Whitehead, Larry Kaplan, and Alan Miller—whose games had contributed collectively to over 60% of the company's game sales in 1978, left Atari in mid-1979 after requesting and being denied additional compensation for their performance, and formed Activision in October of that year to make their own Atari VCS games based on their knowledge of
3021-482: A large surge in VCS sales, and Atari's consumer division ended the year with $ 200 million in sales. Warner removed Bushnell as chairman and co-CEO of the company, but offered to let him stay on as a director and creative consultant. Bushnell refused and left the company. Bushnell purchased the rights for Pizza Time Theatre for $ 500,000 from Warner before leaving. Keenan was moved to Atari's chairman and Kassar assigned as president after Bushnell's departure; Keenan left
3180-407: A larger infusion of funds. Bushnell had considered going public , then tried to sell the company to MCA and Disney but they passed. Instead, after at least six months of negotiations in 1976, Atari took an acquisition offer from Warner Communications for $ 28 million that was completed in November 1976, of which Bushnell received $ 15 million . Bushnell was kept as chairman and CEO while Keenan
3339-489: A lifespan of about three years, and decided to build the most powerful machine they could given that time frame. They set a goal to be able to support 1978-vintage arcade games, as well as features of the upcoming personal computer such as the Apple II . The project resulted in the first home computers from Atari, the Atari 800 and Atari 400 , both launched in 1979. These computer systems were mostly closed systems , and most of
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#17330856193013498-557: A limited number of units to Namco via its prior Atari Japan venture, and led Namco to create its own clone of the game to meet demand in Japan, and helped to establish Namco as a major company in the Japanese video game industry. Subsequently, Atari moved to microprocessors for its arcade games such as Cops ‘N Robbers , Sprint 2 , Tank 8 , and Night Driver . Alongside continuing work in arcade game development and their preparations to launch
3657-507: A logo for Atari. Opperman has stated that the logo that was selected was based on the letter "A" but considering Atari's success with Pong , created the logo to fit the "A" shape, with two players on opposite sides of a center line. However, some within Atari at this time dispute this, stating that Opperman had provided several different possible designs and this was the one selected by Bushnell and others. The logo first appeared on Atari's arcade game Space Race in 1973, and had become known as
3816-481: A machine. However, in early 1976, MOS Technology released the first inexpensive microprocessor, the 6502 , which had sufficient performance for Atari's needs. Atari hired Joe Decuir and Jay Miner to develop the hardware and custom Television Interface Adaptor for this new console. Their project, under the codename of "Stella", would become the Atari Video Computer System (Atari VCS). Atari, as
3975-434: A perpetual license for Baer's patents and to share technical information and grant a license to use the technology found in all current Atari products and any new products announced between June 1, 1976, and June 1, 1977. Around 1973, Bushnell began to expand out the company, moving their corporate headquarters to Los Gatos . Bushnell contracted graphic design artist George Opperman , who ran his own design firm, to create
4134-533: A poor reputation in the industry. One dealer told InfoWorld in early 1984 that "It has totally ruined my business ... Atari has ruined all the independents." A non-Atari executive stated: "There were so many screaming, shouting, threatening dialogues, it's unbelievable that any company in America could conduct itself the way Atari conducted itself. Atari used threats, intimidation and bullying. It's incredible that anything could be accomplished. Many people left Atari. There
4293-523: A private company under Bushnell, gained a reputation for relaxed employee policies in areas such as formal hours and dress codes, and company-sponsored recreational activities involving alcohol, marijuana , and hot tubs. Board and management meetings to discuss new ideas moved from formal events at hotel meeting rooms to more casual gatherings at Bushnell's home, Cyan Engineering, and a coastal resort in Pajaro Dunes . Dress codes were considered atypical for
4452-401: A professional setting, with most working in jeans and tee shirts. Many of the workers hired early on to construct games were hippies who knew enough to help to solder components together and took minimal wages. Several former employees, speaking in years that followed, described this as the common culture of the 1970s and not unique to Atari. This approach changed in 1978 after Ray Kassar
4611-667: A strict licensing policy for the NES that included equipping the cartridge and console with lockout chips, which were region-specific, and had to match in order for a game to work. In addition to preventing the use of unlicensed games, it also was designed to combat software piracy , rarely a problem in North America or Western Europe, but rampant in East Asia. The concepts of such a control system remain in use on every major video game console produced today, even with fewer "cartridge-based" consoles on
4770-510: A total of 10,000 across its three divisions of arcade games, consumer home consoles, and home computers. The company had more than fifty facilities in the Silicon Valley area. For the first nine months of 1982, Atari contributed half of Warner's $ 2.9 billion revenue and one-third of their $ 471 million operating profit. However, at the same time, the company was seeing a high rate of turnover in management positions, which Kassar attributed to
4929-406: A toy robot called R.O.B. to convince toy retailers to allow it in their stores. Furthermore, the design for the NES used a front-loading cartridge slot to mimic how video cassette recorders , popular at that time, were loaded, further pulling the NES away from previous console designs. By the time the U.S. video game market recovered in the late 1980s, the NES was by far the dominant console in
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5088-407: Is retrospectively considered the second generation of console video gaming in North America. To a lesser extent, the arcade video game market also weakened as the golden age of arcade video games came to an end. Lasting about two years, the crash shook a then-booming video game industry and led to the bankruptcy of several companies producing home computers and video game consoles. Analysts of
5247-576: The Family Computer (later redesigned and branded as the Nintendo Entertainment System) in Japan in July 1983. Looking to sell the console in international markets that same year, Nintendo offered a licensing deal whereby Atari would build and sell the system, paying Nintendo a royalty. The deal was in the works throughout 1983, and the two companies tentatively decided to sign the agreement at
5406-903: The TRS-80 Color Computer sold at $ 379 (equivalent to $ 1,197 in 2023), and Commodore International had just reduced the price of the VIC-20 to $ 199 (equivalent to $ 628 in 2023) and the Commodore 64 to $ 499 (equivalent to $ 1,575 in 2023). Because computers generally had more memory and faster processors than a console, they permitted more sophisticated games. A 1984 compendium of reviews of Atari 8-bit software used 198 pages for games compared to 167 for all other software types. Home computers could also be used for tasks such as word processing and home accounting. Games were easier to distribute, since they could be sold on floppy disks or cassette tapes instead of ROM cartridges. This opened
5565-511: The VIC-20 . A short-lived Atari Electronics division was created to make electronic games that ran from 1979 to 1981. They successfully released one product, a handheld version of Atari's arcade Touch Me game, which played similar to Simon , in 1979. The division began work on Cosmos , a system that was to combine LED lights and a holographic screen. Atari had promoted the game at the 1981 CES, but following Alcorn's departure in 1981, opted not to follow through on making it and closed down
5724-401: The golden age of arcade video games that lasted until around 1983; Atari contributed several more games that were considered part of this golden age, including Missile Command , Centipede , and Tempest . A project to design a successor to the VCS started as soon as the system shipped in mid-1977. The original development team, including Meyer, Miner and Decuir, estimated the VCS had
5883-407: The home computer market with their first 8-bit computers , but their products did not fare as well as their competitors'. Atari lost more than US$ 530 million in 1983, leading to Kassar's resignation and the appointment of James J. Morgan as CEO. Morgan attempted to turn Atari around with layoffs and other cost-cutting efforts, but the company's financial hardships had already reverberated through
6042-464: The "Fuji" due to its resemblance to Mount Fuji . In 1976, Atari hired Opperman to establish the company's own art and design division. From late 1972 to early 1973, a rift in the business relationship between Bushnell and Dabney began to develop, with Dabney feeling he was being pushed to the side by Bushnell while Bushnell saw Dabney as a potential roadblock to his larger plans for Atari. By March 1973, Dabney formally left Atari, selling his portion of
6201-433: The 1983 crash. The company created the proprietary 10NES system, a lockout chip which was designed to prevent cartridges made without the chip from being played on the NES. The 10NES lockout was not perfect, as later in the NES' lifecycle methods were found to bypass it, but it did sufficiently allow Nintendo to strengthen its publishing control to avoid the mistakes Atari had made and initially prevent bootleg cartridges in
6360-568: The 8-bit computer family, and the specialized magazine ANALOG Computing was established for Atari computer programmers to share programming information. While Atari did not formally release development information, they supported this external community by launching the Atari Program Exchange (APX) in 1981, a mail-order service that programmers could offer their applications and games to other users of Atari's 8-bit computers. By this point, Atari's computers were facing new competition from
6519-581: The 8-bit era by producing unlicensed NES games. Initially, Nintendo was the only developer for the Famicom. Under pressure from Namco and Hudson Soft , it opened the Famicom to third-party development, but instituted a license fee of 30% per game cartridge for these third-parties to develop games, a system used by console manufacturers to this day. Nintendo maintained strict manufacturing control and requiring payment in full before manufacturing. Cartridges could not be returned to Nintendo, so publishers assumed all
Atari Age - Misplaced Pages Continue
6678-575: The Asian regions. Outside of Japan, Nintendo placed its Nintendo Seal of Quality on all licensed games released for the system to try to promote authenticity and detract from bootleg sales, but failed to make significant traction to stalling these sales. As Nintendo prepared to release the Famicom in the United States, it wanted to avoid both the bootleg problem it had in Asia as well as the mistakes that led up to
6837-437: The Atari 400/800 system seller, but quickly emphasized the lack of software for the computers due to the system's closed nature and the limited rate that Atari's programmers could produce titles. Third-party programmers found means to get technical information about the computer specifications either directly from Atari employees or from reverse engineering , and by late 1980, third-party applications and games began to emerge for
6996-464: The Atari VCS was the only major programmable console on the market and Atari the only supplier for its games, but that year is when Atari began to experience its first major competition as Mattel Electronics brought the Intellivision to market. Activision also released its first set of third-party games for the Atari VCS. Atari took action against Activision starting 1980, first by trying to tarnish
7155-399: The Atari VCS, Atari launched two more products in 1977. The first was their Atari Pinball division, which included Steve Ritchie and Eugene Jarvis . Around 1976, Atari had been concerned that arcade operators were getting nervous on the prospects of future arcade games, and thus launched their own pinball machines to accompany their arcade games. Atari's pinball machines were built following
7314-543: The Atari VCS, the four programmers developed their own games and cartridge manufacturing processes. Atari quickly sued to block sales of Activision's products, but failed to secure a restraining order , and ultimately settled the case in 1982. While the settlement stipulated that Activision must pay royalties to Atari, this case ultimately legitimized the viability of third-party game developers. Activision's games were as popular as Atari's, with Pitfall! (released in 1982) selling over 4 million units. Prior to 1982, Activision
7473-456: The Electronics division. Moving into 1980, the VCS still lacked a system-selling game. After Space Invaders had hit arcades in 1979, Warner instructed Kassar to try to get the rights to an arcade conversion for the game from Taito, while prototype work had already been started on a possible game by Rick Maurer on his own. Once Kassar has secured the rights, Maurer was able to take his work to
7632-617: The Famicom in the United States. A planned deal with Atari to distribute the Famicom in North America fell apart in the wake of the crash, resulting in Nintendo handling the international release themselves two years later. Additionally, retailer opposition to video games was directly responsible for causing Nintendo to brand its product the Nintendo Entertainment System (NES) rather than a "video game system", and using terms such as "control deck" and "Game Pak", as well as producing
7791-437: The Japanese consoles effectively went uncontested over the next few years. By 1986, three years after its introduction, 6.5 million Japanese homes – 19% of the population – owned a Famicom, and Nintendo began exporting it to the U.S., where the home console industry was only just recovering from the crash. The impact on the retail sector of the crash was the most formidable barrier that confronted Nintendo as it tried to market
7950-451: The June 1983 CES . However, Coleco demonstrated its new Adam computer with Nintendo's Donkey Kong . Kassar was furious, as Atari owned the rights to publish Donkey Kong for computers, which he accused Nintendo of violating. Nintendo, in turn, criticized Coleco, which only owned the console rights to the game. Coleco had legal grounds to challenge the claim though since Atari had only purchased
8109-522: The Mattel and Atari systems and hiring away their trained game programmers. While Mattel and Coleco implemented lockout measures to control third-party development (the ColecoVision BIOS checked for a copyright string on power-up), the Atari 2600 was completely unprotected and once information on its hardware became available, little prevented anyone from making games for the system. Nintendo thus instituted
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#17330856193018268-474: The North American video game industry, as American video game companies were increasingly licensing products from Japanese companies, who in turn were opening up North American branches. By 1982–1983, Japanese manufacturers had captured a large share of the North American arcade market, which Gene Lipkin of Data East USA partly attributed to Japanese companies having more finances to invest in new ideas. As
8427-448: The United States, leaving only a fraction of the market to Atari. By 1989, home video game sales in the United States had reached $ 5 billion, surpassing the 1982 peak of $ 3 billion during the previous generation. A large majority of the market was controlled by Nintendo; it sold more than 35 million units in the United States, exceeding the sales of other consoles and personal computers by a considerable margin. New Japanese companies entered
8586-569: The United States, the computer game market was able to gain a strong foothold in 1983 and beyond. Developers that had been primarily in the console games space, like Activision, turned their attention to developing computer game titles to stay viable. Newer companies also were founded to capture the growing interest in the computer games space with novel elements that borrowed from console games, as well as taking advantage of low-cost dial-up modems that allowed for multiplayer capabilities. The computer game market grew between 1983 and 1984, overtaking
8745-460: The VCS and improve quality assurance of the console and games. As they approached the end of 1978, Atari had prepared 800,000 VCS units, but sales were languishing ahead of the holiday sales period. Kassar's influence on Atari grew throughout 1978, leading to conflict between Bushnell and Warner Communications. Among other concerns about the direction Kassar was taking the company, Bushnell cautioned Warner that they needed to continue to innovate on
8904-486: The VCS to start a second wave of games for release in 1978. In contrast to the launch titles that were inspired by Atari's arcade games, the second batch of games released in 1978 were more novel ideas including some based on board games, and were more difficult to sell. Warner's Manny Gerard, who oversaw Atari, brought in Ray Kassar , formerly a vice president at Burlington Industries , to help market Atari's products. Kassar
9063-499: The VCS, Atari continued to manufacture dedicated home console units through 1977 though discontinued these by 1978 and destroyed their unsold stock. Another one-off device from the consumer products division released in 1977 was Atari Video Music , a computerized device that takes an audio input and creates graphics displays to a monitor. The unit did not sell well and was discontinued in 1978. Atari continued its arcade game line as it built up its consumer division. Breakout in 1976
9222-489: The VIC-20 and C64 sold for much lower prices than competing home computers. In addition, both Commodore computers were designed to utilize the ubiquitous Atari controllers so they could tap into the existing controller market. "I've been in retailing 30 years and I have never seen any category of goods get on a self-destruct pattern like this", a Service Merchandise executive told The New York Times in June 1983. The price war
9381-623: The Western markets. These strict licensing measures backfired somewhat after Nintendo was accused of monopolistic behavior. In the long run, this pushed many western third-party publishers such as Electronic Arts away from Nintendo consoles and supported competing consoles such as the Sega Genesis or Sony PlayStation . Most of the Nintendo platform-control measures were adopted by later console manufacturers such as Sega, Sony, and Microsoft, although not as stringently. With waning console interests in
9540-404: The actual demand for cartridges in 1982, which contributed to the stockpiling of unsold inventory during the crash. Inexpensive home computers had been first introduced in 1977. By 1979, Atari, Inc. unveiled the Atari 400 and 800 computers, built around a chipset originally meant for use in a game console, and which retailed for the same price as their respective names. In 1981, IBM introduced
9699-471: The amount of new software coming in would only allow a few big hits, that retailers had devoted too much floor space to systems, and that price drops for home computers could result in an industry shakeup. Atari had a large inventory after significant portions of the 1982 orders were returned. In addition, the rapid growth of the video game industry led to an increased demand, which the manufacturers over-projected. In 1983, an analyst for Goldman Sachs stated
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#17330856193019858-501: The arcade conversion of Taito 's Space Invaders for the VCS became the console's system seller and killer application . Atari's success drew new console manufacturers to the market, including Mattel Electronics and Coleco , and fostered third-party developers such as Activision and Imagic . Looking to stave off new competition in 1982, Atari leaders made decisions that resulted in overproduction of units and games that did not meet sales expectations. Atari had also ventured into
10017-552: The cancellation of the Intellivision III , "Who was going to pay $ 200-plus for a machine that could only play games?" Commodore explicitly targeted video game players. Spokesman William Shatner asked in VIC-20 commercials "Why buy just a video game from Atari or Intellivision?", stating that "unlike games, it has a real computer keyboard" yet "plays great games too". Commodore's ownership of chip fabricator MOS Technology allowed manufacture of integrated circuits in-house , so
10176-400: The combination of low supply and low prices. By that year, Gutman wrote, "Video games were officially dead and computers were hot". He renamed his magazine Computer Games in October 1983, but "I noticed that the word games became a dirty word in the press. We started replacing it with simulations as often as possible". Soon "The computer slump began ... Suddenly, everyone was saying that
10335-452: The company a few months later to join Bushnell in managing Pizza Time Theatre, and Kassar was promoted to CEO and chairman of Atari. With Bushnell's departure, Kassar implemented significant changes in the workplace culture in early 1979 to make it more professional, and cancelled several of the engineering programs that Bushnell had established. Kassar also had expressed some frustration with
10494-538: The company for US$ 250,000 . While Dabney would continue to work for Bushnell on other ventures, including Pizza Time Theaters , he had a falling out with Bushnell and ultimately left the video game industry. In mid-1973, Atari acquired Cyan Engineering , a computer engineering firm founded by Steve Mayer and Larry Emmons, following a consulting contract with Atari. Bushnell established Atari's internal Grass Valley Think Tank at Cyan to promote research & development of new games and products. Atari secretly spawned
10653-437: The company on in a consulting position. GCC developed arcade and VCS games for Atari, and also programmed most of the games for the upcoming Atari 5200 system. Atari launched its second major programmable console, the Atari 5200 , in late 1982. The unit was based on the same design features that had gone into the Atari 800 and Atari 400 computers, but repackaged as a home console. Alongside the 5200's release, Atari announced it
10812-401: The company's reputation, then by taking legal action accusing the four programmers of stealing trade secrets and violating non-disclosure agreements . This lawsuit was eventually settled out of court in 1982, with Activision agreeing to pay a small license fee to Atari for every game sold. This effectively validated Activision's development model and made them the first third-party developer in
10971-400: The company, but over the next few years, gave Kassar more of a leadership role in the company. Bushnell was fired in 1978, with Kassar named CEO in 1979. From 1978 through 1982, Atari continued to expand at a great pace and was the leading company in the growing video game industry. Its arcade games such as Asteroids helped to usher in a golden age of arcade games from 1979 to 1983, while
11130-513: The company. Bushnell and Dabney worked with Nutting Associates to manufacture their product. Dabney developed a method of using video circuitry components to mimic functions of a computer for a much cheaper cost and a smaller space. Bushnell and Dabney used this to develop a variation on Spacewar! called Computer Space where the player shot at two UFOs . Nutting manufactured the game. While they were developing this, they joined Nutting as engineers, but they also made sure that Nutting placed
11289-501: The console market, but overall video game revenue had declined significantly due to the considerable decline of the console market as well as the arcade market to an extent. The home computer industry, however, experienced a downturn in mid-1984, with global computer game sales declining in 1985 to a certain extent. Microcomputers dominated the European market throughout the 1980s and with domestic production for those formats thriving over
11448-560: The console with a licensed home version of Nintendo's arcade hit Donkey Kong . In 1982, the ColecoVision held roughly 17% of the hardware market, compared to Atari VCS' 58%. This was the first real threat to Atari's dominance of the home console market. Each new console had its own library of games produced exclusively by the console maker, while the Atari VCS also had a large selection of titles produced by third-party developers. In 1982, analysts marked trends of saturation, mentioning that
11607-429: The console's killer application ; sales of the VCS quadrupled, and the game was the first title to sell more than a million copies. Spurred by the success of the Atari VCS, other consoles were introduced, both from Atari and other companies: Odyssey² , Intellivision , ColecoVision , Atari 5200 , and Vectrex . Notably, Coleco sold an add-on allowing Atari VCS games to be played on its ColecoVision, as well as bundling
11766-403: The console. Similarly, Rob Fulop , who programmed the arcade conversion of Missile Command for the VCS in 1981 that sold over 2.5 million units, received only a minimal bonus that year, and left with other disgruntled Atari programmers to form Imagic in 1981. Beginning in 1979, the Atari coin-operated games division started releasing cabinets incorporating vector graphics displays after
11925-399: The consumer market, first with dedicated home versions of Pong and other arcade successes around 1975, and into programmable consoles using game cartridges with the Atari Video Computer System (Atari VCS or later branded as the Atari 2600) in 1977. To bring the Atari VCS to market, Bushnell sold Atari to Warner Communications in 1976. In 1978, Warner brought in Ray Kassar to help run
12084-770: The crash was happening in the United States, Japan's game industry started to shift its attention from arcade games to home consoles. Within one month in 1983, two new home consoles were released in Japan: the Nintendo Family Computer (Famicom) and Sega 's SG-1000 (which was later supplanted by the Master System ) heralding the third generation of home consoles retrospectively. These two consoles were very popular, buoyed by an economic bubble in Japan. The units readily outsold Atari and Mattel's existing systems, and with both Atari and Mattel focusing on recovering domestic sales,
12243-471: The demand for video games was up 100% from the previous year, but the manufacturing output had increased by 175%, creating a significant surplus. Atari CEO Raymond Kassar recognized in 1982 that the industry's saturation point was imminent. However, Kassar expected this to occur when about half of American households had a video game console. The crash occurred when about 15 million machines had been sold, which soundly under-shot Kassar's estimate. Michael Katz,
12402-461: The disruption of the exclusive distribution deals. In 1974, Atari began to see financial struggles and Bushnell was forced to lay off half the staff. Atari was facing increased competition from new arcade game producers, many which made clones of Pong and other Atari games. An accounting mistake caused them to lose money on the release of Gran Trak 10 . Atari also tried to open a division in Japan as Atari Japan to sell their games through, but
12561-454: The earth. You have to wonder how tenuous the connection will be between the game and the movie Marathon Man . What are you going to do, present a video game root canal?" By September 1983, the Phoenix stated that 2600 cartridges were "no longer a growth industry". Activision, Atari, and Mattel all had experienced programmers, but many of the new companies rushing to join the market did not have
12720-762: The end of its production in 1974, Atari had made over 8,000 Pong cabinets. Atari could not produce Pong cabinets fast enough to meet the new demand, leading to a number of existing companies in the electro-mechanical games industry and new ventures to produce their own versions of Pong . Ralph H. Baer , who had patented the concepts behind the Odyssey through his employer Sanders Associates , felt Pong and these other games infringed on his ideas. Magnavox filed suit against Atari and others in April 1974 for patent infringement. Under legal counsel's advice, Bushnell opted to have Atari settle out of court with Magnavox by June 1976, agreeing to pay $ 1,500,000 in eight installments for
12879-535: The end of the home-computer price war, one of the causes of the crash. The crash in 1983 had the largest impact in the United States. It rippled through all sectors of the global video game market worldwide, though sales of video games still remained strong in Japan, Europe, and Canada from the beleaguered American companies. It took several years for the U.S. industry to recover. The estimated US$ 42 billion worldwide market in 1982, including arcade, console, and computer games, dropped to US$ 14 billion by 1985. There
13038-402: The exclusive distributor of Atari's games in Japan. Bushnell has claimed that deals arranged by Gordon saved Atari. Gordon further suggested that Atari merge Kee Games into Atari in September 1974, just ahead of the release of Tank in November 1974. Tank was a success in the arcade, and Atari was able to reestablish its financial stability by the end of the year. In the merger, Joe Keenan
13197-535: The expected demand. Distributors expected Atari's games to do well and ordered in large volumes, placing more orders than expected given Atari's past failures to meet demand. By the middle of 1982, a new home console marketplace had appeared, which one distributor called "a totally different business". In addition to Mattel, Coleco had introduced the Colecovision , which shipped in August 1982 with an arcade conversion of
13356-567: The expertise or talent to create quality games. Titles such as the Kaboom! -like Lost Luggage , rock band tie-in Journey Escape , and plate-spinning game Dishaster , were examples of games made in the hopes of taking advantage of the video-game boom, but later proved unsuccessful with retailers and potential customers. The flood of new games was released into a limited competitive space. According to Activision's Jim Levy, they had projected that
13515-401: The field to a cottage industry of third-party software developers. Writeable storage media allowed players to save games in progress, a useful feature for increasingly complex games which was not available on the consoles of the era. In 1982, a price war that began between Commodore and Texas Instruments led to home computers becoming as inexpensive as video-game consoles; after Commodore cut
13674-424: The film, which was programmed by Howard Scott Warshaw over a period of five weeks to be able to produce the game for the 1982 holiday seasons. Raiders and E.T. were released in November and December 1982, respectively. As distributors had already cancelled orders, these and other games started to stockpile in Atari's warehouses without any sellers. Neither game sold as much as Atari had expected; notably, E.T.
13833-515: The financial risk of selling all units ordered. Nintendo limited most third-party publishers to only five games per year on its systems (some companies tried to get around this by creating additional company labels like Konami 's Ultra Games label). Nintendo ultimately dropped this rule by 1993, after the release of the successor Super Nintendo Entertainment System . Nintendo's strong-armed oversight of Famicom cartridge manufacturing led to both legitimate and bootleg unlicensed cartridges to be made in
13992-451: The first IBM Personal Computer with a $ 1,565 base price (equivalent to $ 5,245 in 2023), while Sinclair Research introduced its low-end ZX81 microcomputer for £ 70 (equivalent to £339 in 2023). By 1982, new desktop computer designs were commonly providing better color graphics and sound than game consoles and personal computer sales were booming. The TI-99/4A and the Atari 400 were both at $ 349 (equivalent to $ 1,102 in 2023),
14151-515: The first programmable home console that used cartridges to play different games. Following Warner's acquisition, they provided $ 120 million into Stella's development, allowing Atari to complete the console by early 1977. Its announcement on June 4, 1977, may have been delayed until after June 1, 1977, to wait out the terms of the Magnavox settlement from the earlier Pong patent lawsuit so they would not have to disclose information on it. The Atari VCS
14310-464: The floppy disk rights to the game, while the Adam version was cartridge-based. Negotiations became protracted after Kassar's departure in mid-1983, and with any deal unlikely to be realized before year-end sales, Nintendo dropped out. Instead, Nintendo worked through their Nintendo of America subsidiary to release the system on their own in 1985. In 1983, the company set up a partnership with MCA Videogames,
14469-425: The full national release early the following year. Following 1986, the industry began recovering, and by 1988, annual sales in the industry exceeded $ 2.3 billion, with 70% of the market dominated by Nintendo. In 1986, Nintendo president Hiroshi Yamauchi noted that "Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games". In response, Nintendo limited
14628-480: The future. During the holiday season of 1985 Hiroshi Yamauchi decided to go to New York small markets about putting their products in their stores. Minoru Arakawa offered a money back guarantee from Nintendo that they would pay back for any stock that was left unsold. In total Nintendo sold 50,000 units, about half of the units they shipped to the US. The U.S. video game crash had two long-lasting results. The first result
14787-438: The game but formally needed to get out of their contract with Bally. Bushnell told Bally that they could offer to make another game for them, but only if they rejected Pong ; Bally agreed, letting Atari off the hook for the pinball machine design as well. After talks to release Pong through Nutting and several other companies broke down, Bushnell and Dabney decided to release Pong on their own, and Atari, Inc. transformed into
14946-510: The game would be a sure-fire hit in the same manner as Space Invaders . However, the game exceeded the hardware capabilities of the VCS. While Tod Frye was able to get a version of Pac-Man on the VCS within the system's limitations, the resulting game was critically panned for many technical issues such as excessive flickering of the on-screen characters. Pac-Man was released in March 1982, with Atari running several promotions to increase sales. It sold over seven million units and ultimately
15105-515: The game, believing it would be a first prototype, but Alcorn's success impressed both Bushnell and Dabney, leading them to believe they had a major success on hand and prepared to offer the game to Bally as part of the contract. Meanwhile, Bushnell and Dabney had gone to incorporate the firm, but found that Syzygy (an astronomical term) already existed in California. Bushnell enjoyed the strategy board game Go , and in considering various terms from
15264-425: The game, such as their Super Missile Attack board that modified Atari's Missile Command . Atari initially filed suit to stop GCC's products but as they learned more about their products, recognized that GCC had talented engineers, as one of their other products, a modification board for Pac-Man was sold back to Midway and eventually became the basis of Ms. Pac-Man . Atari settled with GCC out of court and brought
15423-495: The game, they chose to name the company atari , a Japanese term 当たり that in the context of the game means a state where a stone or group of stones is imminently in danger of being taken by one's opponent (equivalent to the concept of check in chess ). Other terms Bushnell had offer included sente (when a Go player has the initiative; Bushnell would use this term years later to name another company of his ) and hane (a Go move to go around an opponent's pieces). Atari
15582-566: The games on those systems. They jointly developed the concept of using a standalone computer system with a monitor and attaching a coin slot to it to play games on. To create the game, Bushnell and Dabney decided to start a partnership called Syzygy Engineering in 1971, each putting in US$ 250 of their own funds to support it. They had also asked fellow Ampex employee Larry Bryan to participate, and while he had been on board with their ideas, he backed out when asked to contribute financially to starting
15741-404: The home computer was a fad, just another hula hoop". Computer Games published its last issue in late 1984. In 1988, Computer Gaming World founder Russell Sipe noted that "the arcade game crash of 1984 took down the majority of the computer game magazines with it." He stated that, by "the winter of 1984, only a few computer game magazines remained," and by mid-1985, Computer Gaming World "was
15900-421: The home console and could not simply release games for the VCS indefinitely like a music business. In a November 1978 meeting with Warner Communications, Bushnell said to Gerard that they had produced far too many VCS units to be sold that season and Atari's consumer division would suffer a major loss. However, Kassar's marketing plan, alongside the influence of the arcade hit Space Invaders from Taito , led to
16059-449: The industry crash were not felt until 1985. Despite Atari's claim of 1 million in worldwide sales of its 2600 game system that year, recovery was slow. The sales of home video games had dropped from $ 3.2 billion in 1982 to $ 100 million in 1985. Analysts doubted the long-term viability of the video game industry, and, according to Electronic Arts ' Trip Hawkins , it had been very difficult to convince retailers to carry video games due to
16218-451: The industry, leading to the 1983 crash that devastated the U.S. video game market. Warner Communications sold the home console and computer division of Atari to Jack Tramiel in July 1984, who then renamed his company Atari Corporation . Atari, Inc. was renamed Atari Games, Inc. after the sale. In 1985, Warner formed a new corporation jointly with Namco, AT Games, Inc. , which acquired the coin-operated assets of Atari Games, Inc. AT Games
16377-437: The industry. In 1980, Namco produced the arcade game Pac-Man , and it reached the United States market by the end of the year. Pac-Man soon became a nationwide success, surpassing the popularity of Asteroids and creating a wave of "Pac-Mania". Atari was able to secure an exclusive deal with Namco to be able to convert Pac-Man to home arcade systems, starting with the Atari VCS version. Atari's management believed that
16536-407: The initial games were developed by Atari, drawing from programmers from the VCS line. Sales into early 1980 were poor and there was little to distinguish the computer line from the current console products. In March 1980, the company released Star Raiders , a space combat game developed by Doug Neubauer based on Star Trek game that had been popular on mainframe computers. Star Raiders became
16695-439: The investor announcement and were engaged with insider trading . The Securities and Exchange Commission (SEC) investigated Kassar's sale and in September 1983, fined Kassar about $ 81,000 . Kassar signed a consent agreement neither admitting nor denying the charges. Atari's financial troubles continued into the first quarter of 1983, with an operating loss of $ 45.6 million compared to an operating profit of $ 100 million in
16854-493: The machinery, while learning how it worked and developing his understanding of how the game business operates. In 1968, Bushnell graduated, became an employee of Ampex in San Francisco and worked alongside Ted Dabney . The two found they had shared interests and became friends. Bushnell shared with Dabney his gaming-pizza parlor idea, and had taken him to the computer lab at Stanford Artificial Intelligence Laboratory to see
17013-410: The machines were averaging around US$ 400 a week each; in several cases, when bar owners reported that the machines were malfunctioning, Alcorn found that it was due to the coin collector had been overflowing with quarters, shorting out the coin slot mechanism. They reported these numbers to Bally, who still had not decided on taking the license. Bushnell and Dabney realized that they needed to expand on
17172-589: The market than in the 8/16-bit era. Replacing the security chips in most modern consoles are specially encoded optical discs that cannot be copied by most users and can only be read by a particular console under normal circumstances. Accolade achieved a technical victory in one court case against Sega , challenging this control, even though it ultimately yielded and signed the Sega licensing agreement. Several publishers, notably Tengen (Atari Games), Color Dreams , and Camerica , challenged Nintendo's control system during
17331-727: The market to challenge Nintendo's success in the United States, NEC's TurboGrafx-16 and the Sega Genesis , both released in the U.S. in 1989. While the TurboGrafx underwhelmed in the market, the Genesis' release set the stage for a major rivalry between Sega and Nintendo in the early 1990s in the United States video game market. A second, highly visible result of the crash was the advancement of measures to control third-party development of software. Using secrecy to combat industrial espionage had failed to stop rival companies from reverse engineering
17490-635: The middle of the year because of weak demand even as prices remained low, causing shortages as sales suddenly rose during the Christmas season; only the Commodore 64 was widely available, with an estimated more than 500,000 computers sold during Christmas. The 99/4A was such a disaster for TI, that the company's stock immediately rose by 25% after the company discontinued it and exited the home-computer market in late 1983. JCPenney announced in December 1983 that it would soon no longer sell home computers, because of
17649-486: The more successful third-party companies like Activision due to poorly informed consumers being drawn by price to purchase the bargain titles rather than quality. By June 1983, the market for the more expensive games had shrunk dramatically and was replaced by a new market of rushed-to-market, low-budget games. Crane said that "those awful games flooded the market at huge discounts, and ruined the video game business". A massive industry shakeout resulted. Magnavox abandoned
17808-532: The name Atari Corporation , and they directed their efforts into developing their new personal computer line, the Atari ST , over the console business. Lack of confidence in the video game sector caused many retailers to stop selling video game consoles or reduced their stock significantly, reserving floor or shelf space for other products. Retailers established to exclusively sell video games folded, which impacted sales of personal computer games. The full effects of
17967-506: The number of titles that third-party developers could release for their system each year, and promoted its " Seal of Quality ", which it allowed to be used on games and peripherals by publishers that met Nintendo's quality standards. The end of the crash allowed Commodore to raise the price of the C64 for the first time upon the June 1986 introduction of the Commodore 64c—a Commodore 64 redesigned for lower cost of manufacture—which Compute! cited as
18126-437: The only 4-color computer game magazine left." With the release of so many new games in 1982 that flooded the market, most stores had insufficient space to carry new games and consoles. As stores tried to return the surplus games to the new publishers, the publishers had neither new products nor cash to issue refunds to the retailers. Many publishers, including Games by Apollo and U.S. Games , quickly folded. Unable to return
18285-513: The original burial clarified that only about 728,000 cartridges had been buried in 1982, backed by estimates made during the excavation, and disproving the scale of the urban legend. Atari's burial remains an iconic representation of the 1983 video game crash. By the end of 1983, Atari had over US$ 536 million in losses, leading to Warner Communication to sell Atari's consumer products division in July 1984 to Jack Tramiel , who had recently departed Commodore International. Tramiel's new company took
18444-585: The popular Donkey Kong as a pack-in game and add-ons that could play Atari 2600 games. Further, Activision, Imagic, and other third-party game developers like Parker Brothers had started releasing Atari 2600 titles that rivaled Atari's own games, reducing Atari's market share of games to 40%. Distributors started to cancel the Atari orders they had placed the prior year, which Gerard said they were "blind-sided" by, having never faced this type of competition before. Additionally around October 1981, Atari looked to other licensed properties for games. They secured
18603-441: The president of Atari's electronic division, stated that the console market was too saturated as 30 million consoles were sold by 1982, out of the 35 million households with children between the ages of six and sixteen. Prior to 1979, there were no third-party developers , with console manufacturers like Atari publishing all the games for their respective platforms. This changed with the formation of Activision in 1979. Activision
18762-505: The programmers at Atari, and was known to have called them "spoiled brats" and "prima donnas" at times. The changes in management style led to rising tensions from the game developers at Atari who had been used to freedom in developing their titles. One example was Superman in 1979, one of the first movie tie-ins that had been sought by Warner to accompany the release of the 1978 film . Warner, through Kassar, had pressured Warren Robinett to convert his game-in-progress Adventure from
18921-486: The public really likes an idea, it is milked for all its worth, and numerous clones of a different color soon crowd the shelves. That is, until the public stops buying or something better comes along. Companies who believe that microcomputer games are the hula hoop of the 1980s only want to play Quick Profit." Bill Kunkel said in January 1983 that companies had "licensed everything that moves, walks, crawls, or tunnels beneath
19080-495: The rapid growth of the company. As an industry, the video game market reached about $ 1.7 billion in 1982 and was expected to reach $ 3 billion in 1984, rivalling revenues of the film industry, and making the video game industry an overall lucrative prospect. To try to remain competitive against Mattel's Intellivision, Atari requested all of its distributors to commit to orders for home console games in 1982 in October 1981, as to allow Atari to anticipate production numbers and meet
19239-399: The retail price of the C64 to $ 300 in June 1983, some stores began selling it for as little as $ 199. Dan Gutman , founder in 1982 of Video Games Player magazine in an article in 1987, recalled in 1983 that "People asked themselves, 'Why should I buy a video game system when I can buy a computer that will play games and do so much more?'" The Boston Phoenix stated in September 1983 about
19398-516: The rights for Raiders of the Lost Ark in late 1981 shortly after the release of the blockbuster film that was released earlier that year. Similarly, after the film E.T. the Extra-Terrestrial was released in June 1982, Warner chairman Steve Ross negotiated directly with Steven Spielberg to secure video game rights estimated to have cost Atari $ 20−25 million , to make a video game based on
19557-483: The same period, there was minimal trans-Atlantic ripple from American game production and trends. Partly as a distant knock-on effect of the crash and partly due to the continuing quality of homegrown computer and microcomputer games, consoles did not achieve a dominant position in some European markets until the early 1990s. In the United Kingdom , there was a short-lived home console market between 1980 and 1982, but
19716-413: The same quarter in 1982. Atari was still struggling with excess inventory of its Atari 2600 games, and the Atari 5200 had not been as successful as the 2600. The golden age of the arcade was waning, and the arcade division was failing to turn a profit. Further, Atari's venture into home computers was not as successful, as they were losing a price war with Commodore International . Atari had gained
19875-486: The stigma associated with video games at that time. The Atari VCS (renamed the Atari 2600 in late 1982) was not the first home system with swappable game cartridges , but by 1980 it was the most popular second-generation console by a wide margin. Launched in 1977 just ahead of the collapse of the market for home Pong console clones, the Atari VCS experienced modest sales for its first few years. In 1980, Atari's licensed version of Space Invaders from Taito became
20034-461: The stigma carried by the fall of Atari until 1985. Two major events of 1985 helped to revitalize the video game industry. One factor came from increased sales of personal computers from Commodore and Tandy, which helped to maintain revenue for game developers like Activision and Electronic Arts, keeping the video game market alive. The other was the initial limited release of the Nintendo Entertainment System in North America in late 1985, followed by
20193-492: The success of the Cinematronics game Space Wars in 1977–78. Their first vector graphics game, Lunar Lander , was a modest success, but their second arcade title, Asteroids , was highly popular, displacing Space Invaders as the most popular game in the United States. Atari produced over 70,000 Asteroids cabinets, and made an estimated $ 150 million from sales. Asteroids along with Space Invaders helped to usher in
20352-517: The team's existing familiarity with the Atari VCS, other publishers had no such advantage. The rapid growth of the third-party game industry was easily illustrated by the number of vendors present at the semi-annual Consumer Electronics Show (CES). According to Crane, the number of third-party developers jumped from 3 to 30 between two consecutive events. At the Summer 1982 CES, there were 17 companies, including MCA Inc. , and Fox Video Games announcing
20511-428: The technology principles they had learned from arcade and home console games, using solid-state electronics over electro-mechanical components to make them easier to design and repair. The division released about ten different pinball units between 1977 and 1979. Many of the machines were considered to be innovative for their time but were difficult to produce and meet distributors' demand. The second new venture in 1977
20670-408: The time expressed doubts about the long-term viability of video game consoles and software. The North American video game console industry recovered a few years later, mostly due to the widespread success of Nintendo's Western branding for its Famicom console, the Nintendo Entertainment System (NES), released in October 1985. The NES was designed to avoid the missteps that caused the 1983 crash and
20829-408: The total cartridge market in 1982 would be around 60 million, anticipating Activision would be able to secure between 12% and 15% of that market for their production numbers. However, with at least 50 different companies in the new marketspace, and each having produced between one and two million cartridges, along with Atari's own estimated 60 million cartridges in 1982, there was over 200% production of
20988-538: The unsold games to defunct publishers, stores marked down the titles and placed them in discount bins and sale tables. Recently released games which initially sold for US$ 35 (equivalent to $ 99 in 2021) were in bins for $ 5 ($ 14 in 2021). The presence of third-party sales drew the market share that the console manufacturers had. Atari's share of the cartridge-game market fell from 75% in 1981 to less than 40% in 1982, which negatively affected their finances. The bargain sales of poor-quality titles further drew sales away from
21147-487: The venture had several roadblocks. In a 2018 interview Alcorn described the situation as "an utter disaster beyond recognition". Bushnell said "We didn't realize that Japan was a closed market, and so we were in violation of all kinds of rules and regulations of the Japanese, and they were starting to give us a real bad time." Gordon "fixed all that for us for a huge commission" according to Bushnell. Atari sold Atari Japan to Namco for $ 500,000 , through which Namco would be
21306-445: The video game business entirely. Imagic withdrew its IPO the day before its stock was to go public; the company later collapsed. Activision had to downsize across 1984 and 1985 due to loss of revenue, and to stay competitive and maintain financial security, began development of games for the personal computer. Within a few years, Activision no longer produced cartridge-based games and focused solely on personal computer games. Atari
21465-469: The video game industry was doing very well. Home consoles were growing in popularity in Japan while home computers were surging across Europe. United States sales fell from $ 3 billion to around $ 100 million in 1985. Despite the decline, new gaming companies started to make their way onto the scene such as Westwood Studios , Code Masters , and SquareSoft , which all started in 1985. All of these companies would go on to create numerous genre-defining titles in
21624-439: Was also a significant shift in the home video game market, away from consoles to personal computer software, between 1983 and 1985. 1984 is when some of the longer-term effects started to take a toll on the video game console. Companies like Magnavox had decided to pull out of the video game console industry. The general consensus was that video games were just a fad that came as quickly as they left. But outside of North America
21783-496: Was an American video game developer and home computer company founded in 1972 by Nolan Bushnell and Ted Dabney . Atari was a key player in the formation of the video arcade and video game industry . The company was founded in Sunnyvale, California , in the center of Silicon Valley , to develop arcade games , starting with Pong in 1972. As computer technology matured with low-cost integrated circuits , Atari ventured into
21942-415: Was attributed to several factors, including market saturation in the number of video game consoles and available games, many of which were of poor quality . Waning interest in console games in favor of personal computers also played a role. Home video game revenue peaked at around $ 3.2 billion in 1983, then fell to around $ 100 million by 1985 (a drop of almost 97 percent). The crash abruptly ended what
22101-590: Was based in Philadelphia . Created in 1982, Atari Age was given to Atari Club members as a perk for joining the club. Upon paying the US$ 1 club membership fee, the member would also receive a year's subscription to Atari Age . The magazine regularly featured content related to all things Atari. This included coverage of Atari-related news, coverage of Atari-related events, exclusive looks at new products from Atari, technical articles, exclusive offers to Atari Club members and
22260-400: Was brought on from Warner initially to help with marketing but eventually took on a larger role in the company, displacing Bushnell and Keenan, and instituting more formal employee policies for the company. Ahead of entering the home console market, Atari recognized they needed additional capital to support this market, and though they had acquired smaller investments through 1975, they needed
22419-475: Was critically panned and later became known as one of the worst games ever made , though it sold 2.6 million copies in 1982, in 1983 suffered massive returns making it a financial failure. In December 1982, Warner Communications announced that it was expecting significant decline in investor earnings of about 40% for the fourth quarter of the year mostly as a result of slower game cartridge sales from Atari. Warner still remained confident that overall it would see
22578-418: Was founded by four former Atari video game programmers who left the company because they felt that Atari's developers should receive the same recognition and accolades (specifically in the form of sales-based royalties and public-facing credits) as the actors, directors, and musicians working for other subsidiaries of Warner Communications (Atari's parent company at the time). Already being quite familiar with
22737-431: Was high-demand product that season, and established Atari with a viable home console division in addition to their arcade division. By 1976, Atari began releasing home Pong consoles, including Pong variants, under their own brand name. The success of home Pong drew a similar range of competitors to this market, including Coleco with their Telstar series of consoles. In 1975, Bushnell started an effort to produce
22896-468: Was hired in February 1978 as president of the Atari consumer division. Kassar helped to develop a commercialization strategy for these games through 1978, and oversaw the creation of a new marketing campaign featuring multiple celebrities unified under the slogan "Don't Watch TV Tonight, Play It", and bringing in celebrities to help advertise these games. Kassar also instituted programs to increase production of
23055-403: Was incorporated in the state of California on June 27, 1972. Bushnell and Dabney offered to license Pong to both Bally and its Midway subsidiary, but both companies rejected it because it required two players. Instead, Bushnell and Dabney opted to create a test unit themselves and see how it was received at a local establishment. By August 1972, the first Pong was completed. It consisted of
23214-414: Was incredible belittling and humiliation of people. We'll never do business with them again." Stating that "Atari has never made a dime in microcomputers", John J. Anderson wrote in early 1984, "Many of the people I spoke to at Atari between 1980 and 1983 had little or no idea what the products they were selling were all about, or who if anyone would care. In one case, we were fed mis- and disinformation on
23373-444: Was kept on as president of Atari while Bushnell stayed at CEO. Having avoided bankruptcy, Atari continued to expand on its arcade game offerings in 1975. The additional financial stability also allowed Atari to pursue new product ideas. One of these was the idea of a home version of Pong , a concept they had first considered as early as 1973. The cost of integrated circuits to support a home version had fallen enough to be suitable for
23532-422: Was not involved. The two quit Nutting and established offices for Syzygy in Santa Clara ; at that point not taking a salary yet since they had no products. Bally then offered them a US$ 4,000 a month for six months to design a new video game and a new pinball machine. With those funds, they hired Al Alcorn , a former co-worker at Ampex, as their first design engineer. Initially wanting to start Syzygy off with
23691-471: Was one of Atari's last games based on transistor–transistor logic (TTL) discrete logic design before the company transitioned to microprocessors . It was engineered by Steve Wozniak based on Bushnell's concept of a single-player Pong , and using as few TTL chips as possible from an informal challenge given to Wozniak by Atari employee Steve Jobs . Breakout was successful, selling around 11,000 units, and Atari still struggled to meet demand. Atari exported
23850-591: Was one of only a handful of third-parties publishing games for the Atari VCS. By 1982, Activision's success emboldened numerous other competitors to penetrate the market. However, Activision's founder David Crane observed that several of these companies were supported by venture capitalists attempting to emulate the success of Activision. Without the experience and skill of Activision's team, these inexperienced competitors mostly created games of poor quality . Crane notably described these as "the worst games you can imagine". While Activision's success could be attributed to
24009-516: Was one of those companies most affected by the crash. As a company, its revenue dropped significantly due to dramatically lower sales and cost of returned stock. By mid-1983, the company had lost US$ 356 million , was forced to lay off 30% of its 10,000 employees, and moved all manufacturing to Hong Kong and Taiwan. Unsold Pac-Man , E.T. the Extra-Terrestrial , and other 1982 and 1983 games and consoles started to fill their warehouses. In September 1983, Atari discreetly buried much of this excess stock in
24168-406: Was rebranding the Atari VCS as the Atari 2600 to create a more consist product naming system. The Atari 5200 did not do well on the market as it lacked backward compatibility with Atari VCS/2600 cartridges, a feature offered by the Colecovision . The Atari 5200 only sold about one million units before it was discontinued in 1984. By the end of 1982, Atari had hired 4,000 additional employees for
24327-459: Was released in September 1977. Most of the launch titles for the console were games based on Atari's successful arcade games, such as Combat that incorporated elements of both Tank and Jet Fighter . The company made around 400,000 Atari VCS units for the 1977 holiday season, most which were sold but the company had lost around $ 25 million due to production problems that caused some units to be delivered late to retailers. In addition to
24486-515: Was retained as president. For Warner, the deal represented an opportunity to buoy their underperforming film and music business divisions. Along with Warner's purchase, Atari had established its new headquarters in the Moffett Park area in Sunnyvale, California . During Atari's negotiations with Warner, Fairchild Camera and Instrument announced the Fairchild Channel F . The Channel F was
24645-499: Was so severe that in September Coleco CEO Arnold Greenberg welcomed rumors of an IBM 'Peanut' home computer because although IBM was a competitor, it "is a company that knows how to make money". "I look back a year or two in the videogame field, or the home-computer field", Greenberg added, "how much better everyone was, when most people were making money, rather than very few". Companies reduced production in
24804-563: Was subsequently renamed Atari Games Corporation. Atari Games, Inc. was then renamed Atari Holdings, Inc. and remained a non-operating subsidiary of Warner Communications and its successor, Time Warner, before being merged back into the parent company in 1992. While studying at the University of Utah , electrical engineering student Nolan Bushnell had a part-time job at an amusement arcade , where he became familiar with arcade electro-mechanical games . He watched customers play and helped maintain
24963-449: Was that dominance in the home console market shifted from the United States to Japan. The crash did not directly affect the financial viability of the video game market in Japan, but it still came as a surprise there and created repercussions that changed that industry, and thus became known as the "Atari shock". Prior to the crash, Jonathan Greenberg of Forbes had predicted in early 1981 that Japanese companies would eventually dominate
25122-551: Was the best-selling VCS game, bringing in over $ 200 million . However, because of the poor technical implementation, Pac-Man caused consumers to become more cautious on rushing to purchase new games in the future, and tarnished Atari's image given that the company was trying to compete against low-quality third-party titles that were starting to flood the market. Atari discovered in 1981 that General Computer Corporation (GCC) had developed hardware that could be installed onto arcade games to give operators additional options to modify
25281-641: Was the first of the Pizza Time Theatre (later known as Chuck E. Cheese), based on the pizza arcade concept that Bushnell had from the start. At this stage, the concept also allowed Atari to bypass problems with getting their arcade games placed into arcades by effectively controlling the arcade itself, while also creating a family-friendly environment. The first restaurant/arcade launched in San Jose, California , in May 1977. Atari hired in more programmers after releasing
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