Atari, Inc. 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 . 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
Ted Dabney about ten years before deciding to leave the industry. Dabney had married, and later divorced, Joan Wahrmund, with whom he had two daughters. He later married Carolyn Dabney. After leaving the computer industry, Dabney and Carolyn managed a grocery store and later a deli in Crescent Mills, California. Around 2006, they moved from California to a property he owned near Okanogan National Forest in Washington. The Dabneys later returned to California, taking up residence in Clearlake, a city north of San Francisco. Their house was completely destroyed in the Clayton Fire in August 2016. A GoFundMe account was set up