Player 1 Stage 2: Atari Rising

In the footsteps of pioneers William Higinbotham, Steve Russell and Ralph Baer, Nolan Bushnell is about to create an entire entertainment industry, which in a few short years will eclipse even the 80 year old movie business.

Videogaming's Killer App: PONG

Nolan Bushnell is stuck with a rather large flop on his hands with Computer Space, but at least the futuristic fibreglass cabinet is a hit...the game shows up as a prop near the beginning of the seminal cheesy 1973 SF movie Soylent Green, as a gift given to Joseph Cotten's female "furniture", the mistress character played by co-star Leigh Taylor Young. Despite the inability of his first product to catch on with the public, Nutting Associates asks Bushnell to take a shot at developing another game. He is unable to reach an equitable agreement with managment, however, and Bushnell leaves to create his own company with partner Ted Dabney. Their intention is to design the games and then have a large game company actually produce them. The initial venture capital is $250 from Bushnell and $250 from Dabney, their profits from Computer Space. They christen the new company with the uncomfortable label Syzygy, an term from astronomy meaning the Earth, Moon and Sun in perfect alignment. "Designed by Syzygy" actually appeared on labels on Computer Space. But history thanks the hippies running a candle-making commune that has already registered the name. So Bushnell picks a name from Go, a Japanese game he is fond of playing. Atari is the equivalent of "check" in the game, and that is the name they pick. The company is officially established on June 27, 1972, by a 27 year old Bushnell. The first product is to be a driving game, and Al Alcorn, the engineer Ampex had hired to replace Bushnell, is brought in to build it. But Bushnell changes his mind and decides that they should first break newcomer Alcorn in with a simplistic tennis game, where the player controls a paddle knocking a ball back and forth across the screen. He prods Alcorn along by telling him the company already has a contract with General Electric to distribute it. There is no such contract. Though Bushnell wants impossible-for-the-day sound effects like a roaring crowd, Alcorn pulls beeps and blips that are already present in the circuitry for the sound...and when Alcorn describes the noise of the ball hitting the paddles, he inadvertently names the game...PONG. The electronic guts are entirely solid-state and hardwired...no ROMs or microprocessors are present. This baby is made to do one thing and one thing only. Play PONG. After much agonizing about the speed of the ball and how fast the spin-dial control moves the paddles, a prototype is made. The instructions for the world's second arcade videogame are legendarily simple: "AVOID MISSING BALL FOR HIGH SCORE". The machine is seen as a stepping stone...Bushnell plans to quickly leave PONG behind and build a "real", more complex game. He goes on a trip to Chicago to try and sell pinball giant Bally on the PONG concept. In one of history's great corporate blunders, they blow him off, totally misreading the potential of videogames. Undeterred, Bushnell decide to test the waters by installing the prototype in a local Sunnyvale watering hole called Andy Capps. Later that evening Alcorn gets an irate call from the bartender telling him that the game is broken and to "get the fucking thing out of here". When he arrives at the bar to examine it, he discovers that the machine doesn't work because it's jammed with too many quarters. Bushnell thus decides Atari will build PONG itself. He rents an abandoned roller skating rink, hires some locals, and by late 1972 is cranking out big, blue and yellow PONG cabinets. The game is a smash, pulling in $100 a week in quarters, $75 more than what Bushnell had predicted. Atari sells 8,500 machines in one year, at a time when 2,000 pinball games is considered a successful run. The PONG cabinets have a production cost of 500 dollars per unit and a sales price of $1,200 each. The game Bushnell considered a quickie knock-off will carry his company for the next two years. 1973 sees the start of a trend that will dog the industry forever more...a flood of imitations of a hit game. Literally dozens of PONG clones hit the market...makers include Nutting Associates, Bushnell's old employer. Some of the variations on the theme include:

This rush of competition rattles Dabney, who sells his half of the company to Bushnell. But Atari is the clear market leader, pulling in $3.2 million for that year. Stronger competition comes with rival Kee Games, headed by Joe Keenan. Several key Atari employees defect to Kee, and in 1974 the company releases Tank, designed by Scott Bristow. Gameplay consists of two tanks facing off in a maze, while trying to avoid land mines scattered about. The game breaks new technical ground by incorporating ROM chips to hold graphics memory, enabling it to display more complicated detail on-screen than the simple blocks of PONG. Tank becomes the biggest hit of 1974, and it is revealed that Kee is a secret subsidiary of Atari, set up to circumvent a holdover from the pinball era where distributors demanded exclusive rights to a company's games. The enormous success of Tank kills all that, as every distributor wants to get their hands on it. Kee and Atari 'merge' back into one company, with Joe Keenan as president of Atari. The company goes on to follow up Tank with three sequels, including 1977's UltraTank, which allows players to battle the computer. There is also Tank 8, allowing eight players to stand around the unit and compete against each other. Other games manufactured by Atari under the Kee label are:

In 1974 Atari employees Bob Brown and Harold Lee propose a home version of PONG, able to be hooked up to any TV set. Lee, Brown and Alcorn produce the system, giving it the codename Darlene and starting a long Atari engineering department tradition of naming systems after female co-workers. However, retailers are skittish over the short life of Magnavox's TV-based Odyssey game and the system languishes in the Atari labs. In 1975 they cut a deal with Tom Quinn, head purchaser for the sporting goods department at national retailer Sears, to sell the system under the Sears Tele-Games label. The order is for 150,000 units. Bushnell has nowhere near the facilities to produce that many in the time Sears wants them, so he taps venture capitalist Don Valentine for a $10 million line-of-credit to expand. ByChristmas, Atari's US$100 home PONG console becomes Sears biggest selling item, with reports of people waiting outside stores for hours to get one. And once again dozens of manufacturers swarm out of the woodwork, this time with myriad versions of home PONG games. Almost all of these machines are based on the new "PONG-on-a-chip" circuit developed by General Instruments, but the rush on these chips is so intense that only Coleco receives their shipment in time for the 1976 Christmas season. The release of its Telstar video table tennis unit, retailing for half as much as Atari's console, increases the company's overall sales by 65 percent. By 1975 Atari is making 40 million dollars annually, drawing attention from huge media conglomerate Warner Communications. In 1976, under pressure from Valentine, Nolan Bushnell sells Atari to Warner for $28 million, with Joe Keenan as President and Bushnell pocketing $16 million and the title of CEO. With this new infusion of capital, Atari starts development on a project that will revolutionize the way people play games. It will soon launch the videogame industry into the mainstream and make the name Atari as ubiquitous as Coke and Kleenex. The project's code name: Stella.

 

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Acknowledgements - Some images and information came from the following sources, in no particular order:

(Inert links are kept for historical purposes)  

MetroActive News and Issues | Nolan Bushnell - www.metroactive.com/papers/metro/09.16.99/cover/bushnell2-9937.html
Atari Gaming Headquarters - www.atarihq.com/
DP Royal Archives - Hollywood/Video Games pt 5 - digitpress.com/archives/arc00041.htm
The Arcade Flyer Archive - www.arcadeflyers.com/?page=home
The Giant List of Classic Game Programmers - www.dadgum.com/giantlist/list.html
Phoenix: The Fall and Rise of Videogames, by Leonard Herman - www.rolentapress.com
Game Over: Press Start to Continue, by David Sheff and Andy Eddy - http://tinyurl.com/2uldmb
Videotopia - Arcade Games - www.videotopia.com
Game industry News - Gameindustry.com
OLD COMPUTERS.COM Museum ~ Coleco Telstar - www.old-computers.com/museum/computer.asp?c=665&st=3
GameArchive - http://www.gamearchive.com
The Revolutionaries: Nolan Bushnell - www.thetech.org/revolutionaries/bushnell/i_a.html
Discovery Online, You Shoulda Been There -- Pong - www.discovery.com/stories/history/toys/PONG/birthday1.html
Electric Escape - The Atari Timeline by Robert A. Jung - www.digiserve.com/eescape/atari/Atari-Timeline.html#1972

 

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