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
Computer Space Ted Dabney "Spacewar" at the Stanford laboratory, and the two agreed to work together to try and design a prototype of the game; Bushnell was more experienced with computers and digital engineering, while Dabney was more experienced with analog and hardware engineering, as he had been working on designing video processing and control circuits and power supplies. After agreeing on an initial idea, Bushnell and Dabney began trying to design a prototype based on a Data General Nova. Initially they were joined by Larry Bryan, a computer programmer who also worked at Ampex. Bushnell and Dabney put US$100 each into