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Atari, Inc.

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Atari, Inc.
IndustryVideo game industry
FateRenamed Atari Games after selling its non-arcade games assets to Jack Tramiel, and its telephone brand Ataritel to Mitsubishi
SuccessorAtari Corporation, Atari Games, Nintendo of America Research & Development (Los Angeles)
FoundedJune 27, 1972; 47 years ago (1972-06-27)
FoundersNolan Bushnell
Ted Dabney
DefunctJuly 1, 1984; 35 years ago (1984-07-01)
HeadquartersSunnyvale, California, United States
New York City, New York, United States
Atari 2600
Atari 8-bit family
Atari 5200
ParentWarner Communications (1976–1984)


In 1966, Nolan Bushnell saw Spacewar! for the first time at the University of Utah.[2] By 1968, Bushnell had become an employee of Ampex in San Francisco, and worked alongside Ted Dabney. The two found they had shared interests, including the game Go, Bushnell shared with Dabney his gaming-pizza parlor idea, and had taken him to the computer lab at Stanford Artificial Intelligence Laboratory to see the games on those systems.[3] 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.[3]

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 orbiting UFOs. Nutting helped to manufacture the fiberglass cabinet. While they were developing this, they took on duties under Nutting to repair pinball machines. Computer Space did not fare well commercially when it was placed in Nutting's customary market, bars; Nutting reported they had produced 2,300 units but only had sold 750.[3] 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.[4] They decided to start a separate venture initially called the Syzygy Game Company, each putting in US$250 of their own funds to support it.[3] They subsequently made sure that Nutting used "Syzygy Engineering" labels on each Computer Space game sold to reflect their work in the game.[3][5]

The original Pong upright cabinet

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 was not involved.[3] The two quit Nutting and established offices for Syzygy in Sunnyvale; at that point not taking a salary yet since they had no products.[3] Bally then offered them a US$4,000 a month for six months to design a new video game and a new pinball machine.[3] With those funds, they hired Al Alcorn as their first design engineer. Initially wanting to start Syzygy off with a driving game, Bushnell had concerns that it might be too complicated for the young Alcorn's first game.[4] 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,[6][7][8] which would go on to be named Pong. Bushnell had Alcorn use Dabney's video circuit concepts to help develop 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.[3] In anticipation, Bushnell and Dabney went to incorporate the firm, but found that Syzygy (an astronomical term) already existed in California. Bushnell wrote down several words from Go, eventually choosing atari, a term 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.[3] Atari was incorporated in the state of California on June 27, 1972.[9]

Bushnell and Dabney offered to license Pong to Bally, but the company had no idea what to do with the game, and did not immediately take the license. Instead, Bushnell and Dabney opted to create a test unit themselves and see how it was received at a local establishment.[3] By August 1972, the first Pong was completed. It consisted of 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.[10] The Andy Capp test was extremely successful, so the company created twelve more test units, ten which were distributed across other local bars.[3] They found that 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.[3] 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 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.[3]

After talks to release Pong through Nutting and several other companies broke down, Bushnell and Dabney decided to release Pong on their own,[4] and Atari, Inc. was established as a coin-op design and production company.

Around 1973, Dabney felt he was being put to the side by Bushnell; Bushnell had left him out of several high-level meetings, assigned him to overseeing the manufacturing process but not the design work, and Dabney discovered Bushnell had patented his video circuit concept without him as an inventor. In March 1973, Dabney formally left Atari, selling his portion of the company for US$250,000.[11][12][13] While Dabney would continue to work for Bushnell on other ventures, including Bushnell's Pizza Time Theater, the predecessor to Chuck E. Cheese's, he had a falling out with Bushnell and ultimately left the video game industry. Dabney's contributions towards Atari's founding generally forgotten until 2009, when he gave an in-depth interview with Edge on his role.[3]



In 1974, despite Atari's success domestically it was struggling to sell games overseas. In a 2018 interview Alcorn described the situation as "an utter disaster beyond recognition".[15] In the same interview, 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.

Ron Gordon was hired as International Marketing Director, and according to Bushnell "fixed all that for us for a huge commission".[15] Bushnell has claimed that deals arranged by Gordon saved Atari.[16]


As a subsidiary of Warner CommunicationsEdit

Bushnell knew he had another potential hit on his hands, but bringing the machine to market would be extremely expensive. In 1976 Bushnell sold Atari to Warner Communications for $28 million,[17] using part of the money to buy the Folgers Mansion. He departed from the division in 1979.

The Atari 400 was released in 1979




However, Atari ran into problems in the early 1980s. Its home computer, video game console, and arcade divisions operated independently of one another and rarely cooperated.[18] Having grown to exceed the arcade division's sales, the game division viewed computers as a threat,[19] but by 1983 the computer division was losing a price war with Commodore International.[20] The company had 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:[21]





These problems were followed by the video game crash of 1983, which caused losses that totaled more than $500 million. Warner's stock price slid from $60 to $20, and the company began searching for a buyer for Atari.[25] When Texas Instruments exited the home-computer market in November 1983 because of the price war with Commodore, many believed that Atari would be next.[21][20] Its Atarisoft games for rival computers sold well,[26] and a rumor stated that Atari planned to discontinue hardware and only sell software.[19]


Splitting of propertiesEdit



Atari was headquartered in Sunnyvale, California, United States, with a number of locations in Moffett Park were a number of buildings were used by Atari, Inc., the buildings that Atari once used were sold to different companies, or left abandoned.

List of hardware productsEdit

Atari Video Music

Arcade games developed by Atari, Inc.Edit

In mediaEdit

Atari ads are featured prominently in the cult movie Blade Runner and its sequel Blade Runner 2049.

See alsoEdit


  1. ^ "Atari". Giant Bomb. July 6, 2013. Retrieved October 2, 2017.
  2. ^ Isaacson, Walter (October 7, 2014). "The Birth of Pong". Slate. ISSN 1091-2339. Retrieved December 8, 2017.
  3. ^ a b c d e f g h i j k l m n o Herman, Leonard (April 2009). "The Untold Atari Story". Edge. Vol. 200. pp. 94–99.
  4. ^ a b c Pescovitz, David (June 12, 1999). "The adventures of King Pong". Salon. Archived from the original on March 7, 2008.
  5. ^ Vendel, Curt. "ATARI Coin-Op/Arcade Systems 1970 - 1974". Archived from the original on December 9, 2012. Retrieved May 18, 2008.
  8. ^ "Videogames Turn 40 Years Old". 1up. Archived from the original on May 22, 2016.
  11. ^ Berlin, Leslie (November 11, 2017). "The Inside Story of Pong and the Early Days of Atari". Wired. Retrieved May 26, 2018.
  12. ^ Goldberg, Marty; Vendel, Curt (2012). Atari Inc: Business is Fun. Sygyzy Press. pp. 93–96. ISBN 0985597402.
  13. ^ Bowles, Nellie (May 31, 2018). "Ted Dabney, a Founder of Atari and a Creator of Pong, Dies at 81". The New York Times. Retrieved June 1, 2018.
  14. ^ "Atari's Forgotten Arcade Classics". Rolling Stone. Retrieved December 8, 2017.
  15. ^ a b "Atari's Hard-Partying Origin Story: An Oral History".
  16. ^ "Marin investor bets on an impulse - SFGate".
  22. ^ "Five Million E.T. Pieces". Retrieved May 26, 2014.
  23. ^ Rosenberg, Ron (December 11, 1982). "Competitors Claim Role in Warner Setback". The Boston Globe. p. 1. Retrieved March 6, 2012.
  26. ^ Mace, Scott (April 9, 1984). "Atarisoft vs. Commodore". InfoWorld. p. 50. Retrieved February 4, 2015.
  27. ^ Teiser, Don (June 14, 1983). "Atari - Nintendo 1983 Deal - Interoffice Memo". Archived from the original on December 16, 2012. Retrieved November 23, 2006.

Further readingEdit


External linksEdit