History of video games market in 1978 with the Odyssey, while toy company Mattel released the Intellivision in 1979, which featured graphics superior to any of its competitors. After both Atari and Fairchild made a strong showing in 1977, the market hit a difficult patch in 1978 when retailers resisted building inventory, believing that the newly emerging electronic handheld market would displace video games. Atari, for example, manufactured 800,000 systems, but proved unable to sell more than 500,000 to retail. This helped precipitate a crisis at the company that saw co-founder and chairman Nolan Bushnell and president Joe Keenan forced out by Atari's parent
Nolan Bushnell restaurant executive and focused on Catalyst Technologies. Through 1981 and 1982, Bushnell concentrated on PTT subsidiaries Sente Technologies and Kadabrascope. Sente was a reentry into the coin-operated game business. Arcade cabinets would have a proprietary system and a cartridge slot developed by Data East Corporation, so operators could refresh their games without having to buy whole new cabinets. Kadabrascope was an early attempt at computer assisted animation. In 1983 as the restaurants started to lose money, Sente, though profitable, was sold to Bally for $3.9 million and Kadabrascope was sold to Lucas which became the beginnings of what became Pixar.