Have You Played Atari Today?
Atari’s infamous entry in the programmable home video game system race begins in 1975. The first Stella prototype is developed this year by Steve Mayer and Ron Milner, of the Atari consulting firm Cyan Engineering. Cyan is part of the company’s far-out Grass Valley, CA think tank, located northeast of Sacramento. A further prototype of the programmable system is then created by Cyan employee Joe DeCuir, with Jay Miner (who later designs the ground-breaking Amiga computer) further refining the Stella chip at Atari’s Los Gatos plant. The finished casing measures 23.5″ by 13.45″, constructed of plastic with a simulated wood grain panel on the front to help the machine fit in next to family TV console sets. Two banks of three silver toggle switches perch near the top of the device, controlling power, B&W or colour display, difficulty levels for each player, game select to navigate through the various modes offered by some games and a reset switch to restart an inserted game. Named the Video Computer System (VCS), it barely arrives in stores in time for the 1977 Christmas season. It comes with the pack-in cartridge Combat, designed by programmer Larry Kaplan, along with DeCuir and Larry Wagner. Under the initial design of the console, Combat had been planned to be integrated right into the ROMs of the machine as a built-in game. The included cartridge combines two early Atari arcade games, Tank by the Kee Games subsidiary, as well as Atari’s Jet Fighter, released to the arcades in 1975. A dedicated home version of Tank, the name of which vacillates between just Tank and Tank II, is also announced by Atari for release in 1977. The console comes with two joysticks, rounder variations of the controllers that will eventually ship with the VCS, with a single fire button and a flared tip. These sticks can be placed into two holders in the Tank II unit, allowing one player to control the left and right treads of the tank separately. In two-player mode, the sticks can be taken out for each player. Tank II is quietly canceled by Atari after the release of the VCS and its Combat game. With the VCS setup, there are two rheostat paddle controllers included as well, to facilitate comfortable play of the various PONG-type games to be sold for the console.
Pushing Bushnell Out
Running a 1.19 MHz 8-bit Motorola 6507 microprocessor, the VCS retails for $249.95. Initially, the designers of the system figure that it would only be playing tank battle games and PONG-esque titles, so the allocated ROM memory for the programs is 2K. It is eventually decided to bump that to 4K, even though no game at the time uses more than 1K and there is little hope that any program would ever need as much as 4K. Upon release, nine cartridges are introduced along with the system. While there is very little markup on the machines due to the high price of the components, the carts cost very little to produce and sell for around $40 each. Sound is sent through the speakers of the television hooked up to the device, allowing users to hear the action as loud or as soft as they like.
For two years the VCS struggles to find a niche in the marketplace, and Atari profits drop precipitously, substantially dragging down parent company Warner Communication’s stock price. There are major production problems, including defective chips and cases, and the easy-going Zen attitude of Atari co-founder and CEO Nolan Bushnell, who describes himself as “a bizarre manager”, starts to wear out his welcome even with Warner head Steve Ross, himself a chairman noted for having a laissez-faire management style. Things get so bad for the VCS that Bushnell dramatically stands up during an Atari/Warner budget meeting and suggests that the console has its price slashed and be discontinued by the company. It remains in Atari’s catalog, but under pressure from above, it is Bushnell who exits the company in 1978, with a multimillion dollar package, but with strings attached. A 5-year “no-competition” clause is cited by Atari for a later lawsuit launched against Bushnell and Sente Technologies, a video game company he starts in early 1983. Atari and Bushnell eventually reach an agreement in the fall of that year, with his former company gaining the consumer rights to any arcade games released by Sente.
After Bushnell’s exit, the work atmosphere changes perceptively as new head Ray “The Czar” Kassar cracks down on the relaxed attitude towards dress and work hours that the ‘hippies’ at Atari had previously enjoyed. Following a $120 million infusion of cash from Warner, in 1978 Atari produces 800,000 VCS units. The VCS is selling; Atari moves over a million units between 1977-1979. Still, that’s only on the cusp of the kind of mass-market penetration Atari is looking for to be a real success. Belying his allegiance to marketing over technical innovation, Kassar quickly halts funds for R&D and pours $6 million into an advertising campaign to help move VCS consoles off the shelves. As a whole, 1979 sees about 1-1.5 million U.S. homes with some kind of game console. These systems require games, so somewhere between 3-4 million cartridges are sold for them this year.
By 1980, there are 36 cartridges available for the VCS, including a simplified version of soccer featuring three players a side, plus goalies. After signing Brazilian football superstar Pele in 1980 to a five-year contract as spokesman, Atari quickly changes the name of the game from Soccer to Pele’s Soccer, resulting in one of the earliest celebrity athlete video game endorsements. But the company is about to make a move that will truly blow the lid off the home videogame industry. In 1980 Atari becomes the first home videogame company to license an arcade game. It is Warner executive Manny Gerard who realizes the enormous home potential for arcade hit Space Invaders, originally made by Japanese game maker Taito and then licensed for North American release by Midway. He persuades Kassar to enter into an agreement with Taito for exclusive non-coin-operated, personal computer and handheld electronic game licenses for Space Invaders, and the home video game version becomes the killer app for the VCS; people rush out and buy the system just to play the game. There are 112 different variations on gameplay available, including invisible aliens, moving bunkers and simultaneous two-player action. Selling over a million cartridges in its first year, the arcade adaptation rakes in over $100 million for Atari, as well as moving tonnes of VCS’s to people who want to play the game. Game designer Rick Maurer, however, only earns his $11, 000 salary that year, and eventually moves to the Atari arcade division and their more favourable bonus program. Atari’s attitude towards its game creators is that they should remain anonymous and that the games are identified as a corporate creation rather than the effort of individual employees. In a response to that, Warren Robinett hides his name within his VCS game Adventure, a graphical version of Will Crowther and Don Woods’ text adventure Colossal Cave, aka Adventure. This is widely recognized as the first hidden “Easter Egg” within a video game, although it does attract the ire of upper management.
Over the next two years, the Atari VCS completely dominates the home videogame market, its only rival of any significance being Mattel’s Intellivision unit. Profits for the company jump from $6 million in 1979 to $145 million in 1981, on sales of over $1 billion. Bucking industry convention, the idea of keeping toy promotion only to the end-of-year Holiday season is thrown out the window; Atari begins pushing the VCS and all of its games throughout the year, including a $75 million ad campaign through 1982. The company also spends $334,000 for a commercial spot during Super Bowl XVI. Combined with $25 million in cooperative ad dollars spent by Atari dealers, Atari figures this makes them the biggest spender in advertising for a single brand in America. This year also sees Atari provide full sponsorship of a prime-time science education series of TV specials produced by two alumni from the PBS series Nova, Graham Chedd and John Angier. Titled Discover: The World of Science, it is produced in association with science magazine Discover, and airs on around 75 stations across the U.S, covering more than 80% of American homes. Hosting duties for the show are carried out by Peter Graves, of Mission: Impossible and Airplane: The Movie fame. Atari co-produces some episodes at a cost of $1 million each which promote computer use and literacy, a nice bit of synergy with the company’s 8-bit home computer line. After the video game market evaporates in 1983-1984, the science series finds a home at PBS.
The VCS monopolizes family use of the television set to such an extent that TV pundits start referring to the “Big Four” networks: CBS, ABC, NBC, and Atari. Over the course of its production run, over 200 games are produced for the VCS/2600 by 40 manufacturers. Approximately 120 million cartridges are sold, and there are 55 different compatible videogame systems eventually released world-wide. Atari, the company that had shrunk Warner Communication’s market share during the early days of the VCS is now responsible for half of the mother corporation’s profits, with revenues for Warner in 1981 alone amounting to $1.23 billion.
Trouble In the Ranks
After the VCS has launched, Atari director of consumer engineering Kerry Crosson has a discussion with President Joe Keenan and newly installed CEO Ray Kassar. The idea is to provide an incentive bonus plan for his department, responsible for creating console hardware and designing games for it. It is agreed that a pool of profits will be set aside for bonuses; 50 cents for every system that sells, and 10 cents for every cartridge. When spring rolls around the next year, with VCS units having moved off the shelf during launch and games to go with them, Crosson inquires as to the state of the bonus pool. He gets a point-blank “What bonus plan?” from upper management, and is told that any agreement for one must have been a case of misunderstanding by Crosson and his department. Thus, Crosson must go back to consumer engineering and inform the department that no bonuses are forthcoming. This announcement causes a massive revolt in the department, forcing consumer engineering VP John Ellis to offer incentive deals under the table to those whom management deems key personnel. Atari game designer David Crane sees his salary rise from $18,000 to $25,000 during this period, but the broken promise from management over the evaporating bonus pool leaves a bad taste in his mouth.