PONG, a simple arcade game, two paddles knocking a square blip back and forth over a dotted line representing a net

PONG screen

PONG and Atari - The Entrepreneur Builds An Industry

Atari 1972

Videogaming’s Killer App

Nolan Bushnell misses the ball with his Computer Space, the flaccid-selling coin-op video game he makes for Nutting Associates in 1971. At least the futuristic fiberglass cabinet design is a hit though, as 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.

A montage of stills from the science fiction film Soylent Green, featuring a cameo by coin-op video game Computer Space

Stills from the movie Soylent Green featuring Computer Space 

JUMP: The making of Computer Space

Despite the inability of his first product to really 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 management, 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 plan to christen the new company with the uncomfortable label Syzygy, an term from astronomy meaning cosmic bodies in perfect alignment, such as the Sun, Earth and Moon. Computer Space had sported the label “Designed by Syzygy”. But history thanks the hippies running a candle-making commune that has already registered the name. Unable to purchase the rights to the name from the current Syzygy, over beer and a game of the Japanese game of stones called Go, they scour terms from the game as possible company names. Thus, Bushnell presents a list of three terms from Go to the California Secretary of State, the state corporation regulatory body, as potential company names, in this order: “Sente”, meaning to move first, “Atari” which is the equivalent of “check” in the game Chess, meaning you’re about to take an opponent’s piece, and “Hane”, to bend around an opponent’s stone with your own pieces. Sente is also already registered, but Atari is free so that is the name that goes through. The company is officially established on June 27, 1972, by a 27-year-old Bushnell.

“Avoid Missing Ball For High Score”

The first product is to be a driving game, and 25-year old Al Alcorn, the engineer Ampex had hired to replace Bushnell, is lured over from the company to join Atari and build it. Deciding instead to break Alcorn in with what in Bushnell’s mind is a throwaway experiment, he asks him to build a simplistic Ping-Pong game, where players control paddles knocking a ball back and forth across the screen. Bushnell prods Alcorn along by telling him the company already has a contract with General Electric to distribute a home version of the game, although there is no such agreement. Though Bushnell’s design demands 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. Bushnell makes sure you only need one hand to do it, so bar patrons can hold their beer in the other. After much agonizing about various minutia such as the speed of the ball and how fast the spin-dial control moves the paddles, a prototype system is constructed by Alcorn.


The instructions for the world’s next arcade videogame are legendarily simple: “AVOID MISSING BALL FOR HIGH SCORE”. Everybody in the lab has so much fun playing the game that it is decided to try and market it, although it 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 shop the system to pinball giants Bally and Midway. Meanwhile, Atari has installed the PONG prototype in a local Sunnyvale, California watering hole called Andy Capp’s Tavern. Alcorn soon 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, Alcorn discovers that the machine doesn’t work because the coin mechanism has been filled with so many quarters that it is overflowing and shorting out the machine. It’s determined that Atari could have a genre-defining hit on their hands, but Bushnell is in a bind: both Chicago companies have expressed interest in the game concept. To avoid burning bridges, Bushnell creates a fiction: he tells Bally that Midway has passed on PONG, and he used Bally’s subsequent withdrawl from the deal to quash Midway’s interest. In 1979 Andy Capp’s, the location for the first PONG beta test, becomes a comedy club called Rooster T. Feathers, where a sign on the wall will proudly trumpet its role in video game history, although they wrongly label PONG as the “very first” video arcade game.


A Smash

With the evidence of the game’s success overflowing from the prototype’s coin bucket, Bushnell thus decides Atari will build PONG itself. He rents a 25,000-square foot, abandoned roller skating rink in Santa Clara, California and hires a few dozen locals. By late 1972 Atari is cranking out big blue and yellow PONG cabinets. The game is a smash, pulling in $300 a week in quarters, where pinball machines at the time average $40. 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. With success comes the need for some company branding, so freelance artist George Opperman is commissioned to create a new logo. Meant to represent a stylized “A” for Atari, his design also plays on the idea of two video game players facing off, with the PONG net between them. The design becomes known as the Atari “Fuji”, due to it evoking Japan’s famous Mt. Fuji. Opperman later heads up Atari’s Graphic Design group.

The following year sees the start of a trend that will dog the industry forever more…a flood of imitations following in the wake of a hit game. Literally dozens of PONG clones hit the market…makers including Nutting Associates, Bushnell’s old employer.


Some of the variations on the PONG theme include:

Elopong – Taito, Hockey TV, Pong Tron, Pong Tron II  – SEGA, Paddle Ball – Williams, Pro Hockey – Taito, Super Soccer, Tennis Tourney, Paddle Battle – Allied Leisure, TV Football, TV Ping Pong, TV Tennis – Chicago Coin, TV Ping Pong – Amuntronics, TV Table Tennis – PMC, Winner, Winner IV – Midway, Table Tennis – Nutting Associates

Along with all the clones Atari makes themselves:

Dr. PONG, Pin PONG, PONG Cocktail,
PONG Doubles, Puppy PONG, Quadrapong,
Rebound, Spike, Super PONG

Even old-time billiards and bowling champ Brunswick gets in on the action with 1973’s Astrohockey. That same year Dabney sells his half of the company to Bushnell, rattled by all the new competition, most of whom have bigger cash reserves and larger presences in the entertainment sector. Atari, though, is the clear market leader, pulling in $3.2 million in video game sales for that year. Bushnell realizes that the only way to compete is to out-innovate the bigger players. Strong competition in this regard comes with rival Kee Games, headed by Joe Keenan. Several key Atari employees defect to Kee, including early Atari engineer Steve Bristow. In 1974 the company releases Tank, designed by 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 square blocks of PONG. Tank becomes the biggest hit of 1974, and it is revealed that Kee is actually a secret subsidiary of Atari, set up to circumvent a holdover from the pinball era where regional 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. The same year of the game’s release, Kee and Atari ‘merge’ back into one company, with Joe Keenan as president of Atari and Bushnell in charge of engineering. The company goes on to follow up Tank with three sequels, including 1978’s UltraTank, which allows players to battle the computer, if there isn’t another human tank driver handy. It also offers eight different options in game play to players, including different play fields, mines scattered about, bouncing or guided shells, as well as a “camouflage” mode where the tanks only appear when firing or when hit.  Eight is also the number of people who can play Tank 8 simultaneously, a game allowing eight players to stand around the unit with their own controls and battle against each other. Other games manufactured by Atari under the Kee label are:

Elimination – 1973, Formula K – 1974, Spike – 1974, Twin Racer – 1974,
Crossfire – 1975, Indy 800 – 1975, Tank II – 1975, Flyball – 1976,
Quiz Show – 1976, Sprint II – 1976, Drag Race – 1977,
Sprint 8 – 1977, Super Bug – 1977, Ultra Tank – 1978


PONG Bounces Home

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 lack of fire ignited by Magnavox’s TV-based Odyssey game, and 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. By Christmas, Atari’s $100 home PONG console becomes Sears biggest selling item, with reports of people waiting outside stores for hours to get one. And once again, manufacturers swarm out of the woodwork, this time with myriad versions of home PONG games. Around $250 million worth of PONG-type games for the TV are sold by various manufactures in 1975., with prices ranging from $60 to $120 depending on what game options are available, or whether the display is B&W or colour. The simple table-tennis game is expanded to include hockey, handball, multiplayer doubles tennis, skeet shooting with a light gun, among other offerings.


PONG On A Chip

By 1976, the market has expanded from two companies involved in home video games to over 70, all making clones of Atari’s home game. This insane ballooning of the number of game manufacturers is facilitated by the new AY-3-8500 “PONG-On-A-Chip” LSI (Large-Scale Integration) microchip released by General Instrument Corp early in 1976. The single videogame integrated chip (IC) had been developed at the GI Glenrothes plant in Scotland in 1975, at the behest of Finnish TV manufacturer Salora Oy for use in a new TV design. As the popularity of GI’s game IC spread around Europe in a PAL TV version, work on a NTSC version for North American use was begun in Hicksville, NY.  The IC incorporates all of the circuitry needed for a videogame, including sound, and offers these games: tennis, soccer, squash and a one-player practice mode of handball, along with two rifle-shooting games. It also provides character generation for scoring, as well as externally selectable bat sizes and ball speed. Steep or shallow return angles can also be adjusted, and the choice of manual or automatic serving is also available. At a cost of $5 to $6 per chip, depending on volume pricing, the rush on this IC is so intense that only Coleco receives their full shipment order in time to mass manufacture a large enough supply of videogame units for sale over 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. Other game makers sell every console they can produce in 1976, helping to move about 3,390,000 units and creating estimated sales of $187 million dollars for the year. In 1977 General Instrument is producing between 1 to 1.2 million PONG ICs per month.  Later updates to the chip result in the faster AY-3-8606-1 “PONG” IC.

Warner Serves Up a Deal

In 1975 Atari pulls in 40 million dollars for the year, marking it as a hot high-tech company. In 1976 it draws the attention of Emanuel Gerard, a member of CEO Steve Ross’ inner-circle at huge media conglomerate Warner Communications. Gerard is part of a team, titled “Office of the President”, which is tasked by Ross to seek out possible acquisitions for Warner. With Atari making impressive revenues but run by a team of creatives lacking in big industry savvy, it seems a no-brainer to Gerard to pick it up. Atari has also come to the personal attention of Ross in 1976, via a trip to Disneyland in California. Unable to pull his family members away from a Tank 8 game in the arcade there, Ross quickly realizes the profit potential in electronic games. At Atari, Nolan Bushnell sees the glut of similar products flooding the market, and knows his company has to out-innovate in order to stay on top. He has created a new consumer products division within Atari, but to make the next big moves in the market he needs access to a vast amount of cash. The stock market of the mid-70’s is no place to try and raise cash for a small company, so  when conglomerate Warner comes calling with a deal, Bushnell jumps in it. On October 1, 1976, he signs the contract to sell Atari to Warner for $28 million, with Joe Keenan as President and Bushnell pocketing $16 million and the title of CEO. This new infusion of capital is applied to the development of a project inside Atari that will revolutionize the way people play games, and render the market the company itself had created for dedicated PONG games obsolete. It will soon launch the videogame industry into the mainstream and make the name Atari as ubiquitous as Coke and Kleenex. This project’s codename?  Stellalogo_stop


Sources (Click to view; inert links are kept for historical purposes)

“Moments of Truth.” Next Generation, Nov. 1998, p. 112. He [Nolan Bushnell] told Alcorn that he had just signed a contract with General Electric to design a home electronic game based on ping-pong… This was a lie. So he [Bushnell] told another lie and played one side against the other…
Lauricella, Tom. “Flashbacks of the 1970s for Stock-Market Vets.” WSJ.com. Dow Jones Products, 18 Apr. 2009. Web. 29 Dec. 2015. …investors were dispirited, questioning whether it was really worth the risk to own stocks. “There was almost no interest in being in the stock market,” says Smith Barney’s Mr. Spooner, who started in the business around 1962. It felt like just about any stocks bought in 1972-73 “turned to dust” he says.
1978 image of Atari’s Graphic Design group from Atari Coin Connection, “Behind the Scenes: Atari’s Artists”, edited by Carol Kantor, pg. 2, June 1978. Retrieved from Pinball Pirate, Sep 15 2015.
Image of APF Pong game in the pages of the 1978 Christmas Montgomery Wards catalog from Wishbook’s Flickr photo stream
Digital Press, DP Library – www.digitpress.com/library/magazines/ MetroActive News and Issues | Nolan Bushnell – www.metroactive.com/papers/metro/09.16.99/cover/bushnell2-9937.htmlImage of Joe Keenan and Nolan Bushnell together, as well as other information, from Video Games, “Video Games Interview – Nolan Bushnell”, by Jerry Bowles, pgs. 16, 19 – 20, 78 – 79, Vol. 1 Num. 1, Aug 1982Image of AY-3-8606-1 IC pinouts from Radio-Electronics, “Build This – Wipeout Videogame”, by L. Steven Cheairs, pgs. 66-70, Sept 1980
Atari Gaming Headquarters – www.atarihq.com/
Ad for Visulex computerized Ping Pong kit from Byte, pg, 92, Nov 1975
Image of Al Alcorn at the 25th anniversary of the C64 from flickr, Vonguard photo streamAtari Age, “Game-Grams”, pg. 6, Vol. 1 Num. 2 (relaunch), Jul./Aug. 1982DP Royal Archives – Hollywood/Video Games pt 5 – digitpress.com/archives/arc00041.htmCHEGheads Blog, “By Any Other Name: The Origin of Atari”, by Shannon Symonds, May 16 2011The Arcade Flyer Archive – www.arcadeflyers.com/?page=homeRadio-Electronics, “Videogames – Videogame History”, by Jerry and Eric Eimbinder, pgs. 50 – 54, July 1982Videotopia – Arcade Games – www.videotopia.comSensei’s Library, “Japanese Go Terms”, Aug. 11 2013Atari Age, “Game-Grams”, pg. 6, Vol. 1 Num. 5, Jan./Feb. 1983Image of exterior of Rooster T. Feathers from their Facebook photo stream – www.facebook.com/RoosterTFeathers/photos_streamPhotos of Winner IV were taken at the Musée Mécanique antique coin-op museum, Pier 45, Fisherman’s Wharf, San FranciscoGame industry News – Gameindustry.comImage of Bob Brown from Video Games, “Future Shock Talk”, compiled by Bob Mecoy, photo by Victoria Rouse, pg. 38, Vol. 1 Num. 5, Feb 1983OLD COMPUTERS.COM Museum ~ Coleco Telstar – www.old-computers.com/museum/computer.asp?c=665&st=3Electronic Games, “A Decade of Programmable Video Games”, pg. 20 – 23, Mar. 1982Redlands Daily Facts (UPI), “Computerized ‘pinball’ may catch on”, by Richard Harnett, pg. A6, Feb. 28, 1973Hawkins, William J. “TV Games Turn Your Set into a Sports Arena.” Editorial. Popular Science Nov. 1976: 88-91. Google Books. Google. Web. 2 Nov. 2016. Manufacturers sold about $250-million worth of TV games last year… Prices range from $60 to $120, depending on the type of game…GameArchive – http://www.gamearchive.comThe Revolutionaries: Nolan Bushnell – www.thetech.org/revolutionaries/bushnell/i_a.htmlAtari/Syzygy “SA” logo from Atari Connection, “If Atari Isn’t a Japanese Company, Why Does It Have a Japanese Name?”, by Joel Miller, pg. 19, Summer 1981Image of Al Alcorn’s Syzygy business card taken at the Videogame History Museum display, CGE 2014 in Las VegasBrownie Harris’ image of Manny Gerard playing Asteroids, and other information from New York magazine, “Steve Ross On the Spot” by Tony Schwartz, pgs. 22-32, Jan 24 1983Discovery Online, You Shoulda Been There — Pong – www.discovery.com/stories/history/toys/PONG/birthday1.htmlElectric Escape – The Atari Timeline by Robert A. Jung – www.digiserve.com/eescape/atari/Atari-Timeline.html#1972Phoenix: The Fall and Rise of Videogames, by Leonard Herman – www.rolentapress.com

Referenced Books (Click to view)

Comments >>

    1. avatarWilliam

      Thanks. Pong pretty much started the whole industry, although Atari only made a fraction of all the Pong-type games that flooded the market in the wake of their success.

  1. avatarBill Caldwell

    I worked for Atari during all of this and left after Warner took over. Lots of good memories!!! i wish they would include and give credit to one of their important and creative engineers Doug Robinson aka Robinson, he was a very important part in the success of Atari!




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