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Atari History: The Story of the Gaming Pioneers

by: Finn Orfano ; edited by: Elizabeth Wistrom ; updated: 4/17/2012 • Leave a comment

Back in 1973, Nolan Bushnell and a business partner formed a company that would go on to help shape the early days of the video game industry. That company was Atari, and this is a brief look back at their history.

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    In this day and age, video games are a multi-million dollar industry that is popular amongst a large percentage of the population, regardless of age, race or gender. Roughly 30 some years ago, however, the hobby was still in its formative stages. In October 1997, the release of the Atari VCS game console (later renamed the Atari 2600) launched. During that first year they sold just a modest 250,000 units, the seeds were sown and over the next several years, the popularity and profitability of the 2600 skyrocketed, making it the first true home gaming console success story. So how did this then virtually unknown company effectively help establish a new entertainment medium?

    In 1972, Syzygy Engineering was founded by Nolan Bushnell and Ted Dabney, though the name was later changed to Atari (a term used in the game board game "Go") due to a conflict with another corporation's trademark. In November 1972, they created a coin-operated game based on table tennis. The game was known as Pong, and a home console version similar in nature to today's plug-and-play units followed shortly thereafter. While Pong was not the first video game, it was the first to achieve any semblance of real commercial success. That trend would repeat itself with the 2600, which was actually beaten to the market by the Fairchild Channel F machine, would enjoy far greater success than its competitor would.

    Before the release of the 2600, though, Bushnell would incur financial difficulties and be forced to sell the company to Warner Communications. His company had been working on a computer chip designed for a cartridge-based home gaming console since 1973, and it was the financial backing of the new owners that eventually made the unit's release a reality. As mentioned above, the system, which launched with a price tag of just under $200, struggled at first, but eventually the concept of playing a variety of games at home caught on with people. By 1979, the Atari 2600 was the hottest Christmas item on the planet, and by 1980 the company was making a reported $2 billion in profits.

    Sadly, what goes up must come down, and while the Atari 2600 would be the choice platform for such classics as Space Invaders, Missile Command, Pitfall, Asteroids and many others, it would also eventually become home to some of the worst video games of all time. A large reason for this that the consumer demand for new and interesting products was high, and there was increasing pressure on development teams to produce high quality merchandise. Creative teams were unsatisfied with working conditions, pay and the lack of recognition they received for their efforts.

    Conditions worsened, and the result was the infamous video game crash of 1983. There were several factors involved in the economic collapse of the industry at the time, but for purposes of this article, we'll be looking at two titles in particular, Pac-Man and E.T. The Extra Terrestrial. At the time of its release on the Atari 2600, Pac-Man was one of the most popular arcade games on the planet, so naturally the company wanted to make a home version for their gaming console. Unfortunately, the 2600 version of Pac-Man was a complete disaster and was virtually unplayable. Meanwhile, E.T., while a guilty pleasure of this author as a child, was a critical and commercial flop, largely due to the short turn-around time between the acquisition of the license (July 1982) and the desired release date (Christmas 1982). Atari wound up losing over $500 million in 1983.

    Shortly thereafter, Atari's divisions were sold off separately to other firms, with Namco purchasing the gaming division in 1985. Ownership of the company would then go on to change hands several more times in the years ahead. Doing business as Tengen, it would publish games for the Nintendo Entertainment System in the late 1980s. In 1993, Time Warner purchased controlling interest in the former Atari Games, and would later re-dub it Time Warner Interactive. Hasbro would own the rights for a while, and eventually they would land in the hands of Infogrames. The Atari brand name would return full-time in 2003, and these days the publisher handles several popular titles, including the Dragon Ball Z series of games, Indigo Prophecy, Neverwinter Nights and Thrillville. It has been a long, strange trip for the company founded by Nolan Bushnell, but now they are back where they belong, as major players in the world of video games.