E.T. a game for the Atari 2600 video game console

E.T.... Get lost!

The Great Video Game Crash - End Game

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Entire Industry, 1983-1984

Image of the show floor from the 1983 Winter Consumer Electronics Show (CES)

The Winter CES show floor, January 1983, Las Vegas

High Hopes

Through 1982, things look pretty rosy for the video game industry, with over 10,000 video game arcades in business by the end of the year. Home games have expanded as well,  as cartridges move into mainstream retail venues like large music and video cassette retailers. Together, arcade and home videogames form a $7-billion dollar industry. For the year, sales in home video games alone across the board rise from 950 million dollars the previous year to $3.2 billion. 15 million consoles have been sold in the US overall, along with 65 million cartridges. 25% of American homes have at least one system. By midway through the next year, there will have been over 12 million 2600‘s alone sold by Atari. They are the clear leader in 1982, starting the year with a 70 percent share of the video game market. They are also a company that employs almost 10,000 people, around 7,000 of whom work in a sprawling system of buildings around Silicon Valley in California. There are over 200 games available their system, with new batches hitting the market every week. Owned by Warner Communications, Atari makes about 5 times the revenue of Warner’s film division and accounts for over 60 percent of the mother corporation’s profits. As for the other major players in the market, a million Intellivision’s are sold by Mattel in 1982,  and 1.5M ColecoVision sales for Coleco.

Also a leader in advertising dollars, Atari has spent $28.5 million on TV ads for the first nine months of 1982; they spent only $21.1 million throughout the entire year previous. By the end of the year, Advertising Age estimates that Atari will have spent $75 million on ads, or triple the amount it spent the year previous. Main competitor Mattel spends $21.1 million advertising its Intellivision, trying to retain its 18% – 20% share of the market. Total network time taken for video game advertising is estimated to reach $100 million for 1982-1983. 1984 even sees Atari named as the official sponsor of home computers, arcade and home video games for the Olympic Summer Games, held in Los Angeles. This entails computers and games for participants in the Olympic Village, an arcade set up at the ABC International Broadcast Center for use by the 1000’s of media personnel, and direct sponsorship of the U.S. Women’s Volleyball team. Atari also contracts with official Olympic broadcaster ABC to air 75 commercials across the Winter and Summer games, ensuring the company has huge exposure during the festivities.

1982 Summer CES featuring Atari 2600 video game console

Attendees of the 1982 Summer CES line up to play games on the Atari 2600 console

What’s not so publicly known is that Atari has already begun stumbling on the playing field. By the end of 1983, it and the rest of the industry was steadily unraveling. By the end of 1984 things come to a crashing halt, with every major videogame system up to that point either being sold to independents or discontinued altogether. Buyers for retail outlets who went all-in on video games find themselves out on the street, and distributors are left stuck with warehouses full of unwanted cartridges. Faced with a cut of income by the end of 1983 by anywhere from a third to 50% compared to the boom years, arcade game distributors and manufacturers who had thrown money around on wild expansion of fixed-cost expenses like huge new warehouses and manufacturing plants are now paying the piper… or not paying their debtors. An industry that had practically sprung up overnight to dominate the entertainment sector misses the rings and falls flat on its face.

Atari arcade games, 1983 AOE

Atari booth at the March 1983 Arcade Operators Expo, Chicago


Atari, comprising 2/3 of the industry, bears the brunt of the shakeout. The first sign of trouble comes with the 2600 version of Pac-Man, programmed by 25 year-old Tod Frye and released in late March of 1982. Frye is an odd choice to be assigned the work of translating the flagship arcade game of the time: he is a high-school drop-out and former homeless, panhandling, drug-dealing hippy, whose previous claim to fame at Atari is being the programmer of the Atari 400/800 port of Asteroids. That, and the “sprinkler lobotomy” – the time he was into the habit of moving around the Atari building without touching the floor by propping himself up on the walls with his legs and shimmying along…. and smashed his head against a ceiling sprinkler, requiring a bloody trip to the hospital and several stitches in his scalp.  Thanks to the words “Pac-Man” on the box, along with a $15 million advertising blitz, Frye’s translation sports an amazing one million cartridge advance order from retailers and goes on to become the biggest-selling Atari cartridge ever. Warner Communications, when reporting income of its consumer products division for the first quarter of 1982, assigns much of a 180% rise in operating revenues to Atari and the home version of Pac-Man. It becomes rapidly apparent upon release, however, that the quality of the game is awful, bearing only a very passing resemblance to the coin-op.

JUMP: History of the arcade version of Pac-Man

The graphics in the VCS port are horribly blocky, with the title-character a malformed circle with a bad case of lockjaw; his mouth opens and closes at a painfully slow rate, with the movement more like a mashing than the gobbling of the frantically-paced arcade version. Moving sluggishly around a maze that bears no resemblance to the layout of the coin-op game, the player gums thick dashes called “video wafers” to death instead of dots. The uni-coloured ghosts are a vision of massive flicker, almost invisible as they move around the maze, their eyes rotating meaninglessly. When one of the flashing square “power pills” is swallowed by Pac-Man, the ghosts turn a purple-ish shade of colour indicating their vulnerability to consumption, although the flickering makes it hard to tell the change has occurred or when it ends. The various-shaped prizes that Pac-Man can gobble up for points in the arcade game are represented here by a two-tone coloured block called a “vitamin” that never changes in appearance. The only redeeming aspect of the game would be plenty of different game variations, but there are only eight, simply changing the speed at which the Pac-Man and the the ghosts move. As for sound, there is a grating three-note starting sound, the incessant clang-clang-clang as the Pac gums the rectangle “dots” to death, and the flat-as-a-pancake death sound.

Tod Frye, creator of Atari Pac-Man for the 2600 video game console

Pac-Man perpetrator Tod Frye at development console, undated photo

It is painfully apparent that the game is a rushed job, pushed out in order to recoup the money paid by Atari to Namco for the Pac-Man license. You can’t lay total blame at the feed of game programmer Frye, though: he is ensconced in a room by himself to code for the short four-month deadline, and is further constrained by an edict from Atari to use the cheaper 4K cartridges for his game as opposed to the larger 8K memory of products like Asteroids.  Thus, his resultant game is heralded as a technical achievement by fellow programmers. Despite the limited memory, upon release home Pac-Man is a big hit, eventually hitting nine million cartridges sold. With a 10 cent royalty on every copy sold, his sales-based bonus results in a paycheque approaching a million dollars, which he cockily staples to his office door…after cashing it, of course. Better versions of Pac-Man are eventually released for other platforms like Atari’s own 400/800 computers and the 5200 Supersystem, as well as other manufacturers’ game platforms like the Commodore 64. Atari is eventually redeemed with the vastly improved Ms. Pac-Man on 2600, appropriately released on Valentine’s Day of 1983.

Accompanying the game’s release is a massive backlash from critics and users alike, users who have had a cold splash of reality thrown in their face about just how obsolete the VCS has now become.

The original, however, is an undeniable creative stumble by Atari, and no other game better demonstrates how overwhelmed the 2600 is graphically by emerging systems than Frye’s Pac-Man. Accompanying the game’s release is a massive backlash from critics and users alike, users who have had a cold splash of reality thrown in their face about just how obsolete the VCS has now become. There is a massive amount of returns of the cartridge back to stores by disappointed players, which gives pause to retailers when it comes time to place other game orders from Atari. Games like the mystical SwordQuest series, developed by Frye and accompanied by a contest to give away jewelled treasures worth thousands… and ended unceremoniously when the video game industry goes belly up. Also ending is Frye’s fortune, pissed away within three years via extravagant spending and an equally extravagant tax bill. He would later go on to make games for Midway and 3DO.

Ray’s Revenge

Of course, not every game released by the company of this era is an undercooked turkey, as shown by the marvelous Yars’ Revenge, released in May of 1982. The game is originally conceived as a port of Cinematronics’ hit vector arcade game Star Castle until the licensing deal falls through. The designer of Atari’s version is Howard Scott Warshaw, creator of some of the more complicated 2600 games, including Raiders of the Lost Ark as well as The A-Team, a game which itself had started out being called called Saboteur until the graphics are altered and the name of the hit early 80’s Mr. T vehicle is slapped on the cartridge. Warshaw juggles the play mechanics of the now-license-less Star Castle port around a bit, and Yars’ Revenge becomes one of the most original and involving games in the 2600 library. The title character’s name is taken from Atari president Ray Kassar, to show his triumph over the failed license deal.

To herald the release of Yar, as well as promote 2600 games Asteroids and Star Raiders, Atari commissions an impressive two-minute commercial, titled The Fly, featuring state-of-the-art CGI by Robert Abel and Associates, who also do CGI work on the groundbreaking Disney film Tronreleased the same year as the commercial. Made to run in theatres over the summer of 1982, the ad features actor Rod Davidson sitting in an office chair with his back to the audience, posing as an Atari game designer brainstorming ideas, which manifest themselves as computerized images zooming and swirling around him. Designer-director Clark Anderson and co-director and technical expert John Hughes of Abel first design the commercial as an animatic on an Evans and Sutherland Picture System II computer graphics terminal, the animatic being a B&W wireframe version that is the equivalent of the pencil test in traditional animation. The wireframe design is then filled in with tightly-packed smaller lines, and filters are used between the output video screen and the 35mm camera recording it on film to add colour fill to the images. Actor Davidson is filmed in front of a blue screen, acting against the animatic hidden on a video screen in front of him. Computerized lighting cues expose the actor to the various lighting effects synced to the colourful video game elements; there are 80 different lighting events over the two-minute commercial. Live action, CGI and other VFX elements are then matted together, to make an ad that startles moviegoers in 1982.


Atari’s next big fumble is E.T.: The Extra-Terrestrial. Warner chairman Steve Ross negotiates a 23 million dollar deal with his friend Steven Spielberg, MCA, Inc. and Amblin Entertainment for the exclusive worldwide coin-op and home game rights to the film, the sum to be paid three years after E.T.-based games are shipped to stores, with a release date pegged at November of 1982. With the E.T. movie by Spielberg at the time the highest-grossing ever made, it demonstrates a special kind of chutzpah when giving a preview of the game’s development to Spielberg and a cadre of movie execs at the 2600 game development lab at Atari, designer Howard Scott Warshaw starts off with this bold prediction: “This is the game that will make the movie famous!” The company announces publicly that Spielberg is directly involved in the game’s development, with Atari Consumer Division vice-president of marketing Ron Stringari stating that the movie director meets with the game’s designer about its development on a weekly basis.  Spielberg himself tells the press that he’s helping to make E.T. “the first emotionally oriented video game ever produced.” It’s hard to figure out just when Warshaw would be able to find the time to consult with Spielberg, as the game designer has accepted a breakneck six-week deadline to have the 2600 E.T. game out for the holiday season of 1982.

Howard Scott Warshaw, creator of the notorious Atari E.T. video game

The person responsible: Howard Scott Warshaw, designer of E.T. for Atari, circa early 80s

With all Spielberg’s talk of “emotional” video games, when Warshaw presents his basic design to the director, Spielberg suggests he make the adaptation a Pac-Man-type maze game, lumping it together with a myriad of such clones clogging the shelves of retailers. Warshaw’s ultimate design utilizes a treasure hunt motif: guide the little long-necked alien around the woods and fields of Elliott’s suburban digs, looking for the pieces of the jury-rigged radio E.T. can use to “phone home” and get off this rock. Said pieces found at the bottom of holes. Lots of holes. My God, it’s full of holes!

Warshaw’s efforts eventually net him a $200,000 payment, but it is torture for gamers to play, featuring frustrating control over the lost alien, an action-adventure strewn across multiple screens dubiously linked together along with endlessly confusing gameplay. Ostensibly placed to help gamers are invisible hotzones on the various screens, which when entered by E.T. will cause an icon to appear at the top, its power activated with a press of the joystick fire button: warp to the next screen, force the chasing FBI spook or evil scientist back to their bases, reveal a piece of the radio in a hole (if any…. pieces, that is. There are ALWAYS holes), call Elliott to swap Reeses Pieces to boost E.T.’s health bar, etc. Oh yeah, that reminds me…. all this while keeping an eye on the alien’s life bar, which depletes as he runs around, levitates out of holes (THE HOLES!), struggles when he’s captured by the chasing G-Men, et al.

Expecting a windfall of sales, Atari manufactures around five million E.T. cartridges, but only one million are eventually purchased. In dollar figures, $98 million in cartridges are shipped by Atari right before Thanksgiving…a week and half later they ship none. Wary retailers have scaled back their orders on the game, and many are still left with unsold product as they struggle to move E.T. off the shelves after this initial Thanksgiving rush of retail orders, even as Atari heavily flogs the game with a $5 million ad campaign, through November and December. This includes a 10-city promotional tour. To try and help move the product, a lavish TV commercial for the video game is produced by Spielberg, who also handpicks its director. Even utilizing the cinematographer and camera operator from the film doesn’t help the 30-second and 60-second versions of the ad dig E.T. the video game out of its hole. Even Michael Moone, president of Atari’s consumer division, would admit, rather understatedly, “The cartridge did not live up to our expectations.” Bob Abbate, president of the Sounds Alive chain of music stores of Connecticut, would put the industry’s attitude about the game’s release more succinctly: “E.T. is a bomb”.

These marquee game releases expose another problem aspect of the video game industry that has surfaced: it has become overly hit-driven. The vast majority of sales for games, sometimes up to 80%, come from current hits that are heavily promoted with expensive ad campaigns, while the growing back catalog languishes. Having been complacent in the boom years when nearly every new video game quickly sold out, when the surmised “hits” stumble upon release, grumblings from distributors and retailers now begin about formal return policies for surplus product from video game companies, a process known in the industry as “stock balancing”. Most of these buy-back agreements equate to “buy two games, return one”. Now facing blowback from distributors and retailers angry after years of, at best, indifference and at worst, abuse from Atari, the company is left with a large inventory of unsold or returned cartridges as E.T. becomes one of the greatest video game flops in history, creating a noticeable drag on company sales figures. An E.T. coin-op game, as well as a computer version, are slated for release, although only the computer product makes it to stores: A similar yet different version of the console game, E.T. Phone Home! is released in early 1983 by Atari for its 8-bit computer systems. Along with improved graphics comes a role reversal, with Elliott on the run looking for the scattered phone parts across four screens, while E.T. hides at home offering telepathic clues to their locations. The game also benefits from a group approach to its development, with game designers, graphic artists, sound engineers and programmers teaming up to produce it. Although E.T. never flies over into the arcade video game space, he does have a deleterious effect over there too: the unprecedented success the movie enjoys in theatres over 1982 (and beyond) draws kids out of the arcades and creates a noticeable drag on coin-op profits. 

Dump trucks at Alamogordo landfill, loaded with Atari E.T. and other video game cartridges and other equipment

A procession of dump trucks, ready to lay part of video game history to rest in Alamogordo, NM, 1983

The Big Dump

With unsold inventory piling up, under cover of night sometime in September, 1983 a convoy of 14 – 20 dump trucks lines up at Atari’s El Paso, TX. manufacturing plant, previously rendered defunct with its operations off-loaded to factories in Puerto Rico, as well as Taiwan and other points in the Far East. There the trucks are loaded with millions of unsold Pac-Man, E.T., and other surplus cartridges such as fellow movie adaptation flop Raiders of the Lost Ark, released in November of 1982. Also designed by Warshaw, the obtuse gameplay of Raiders makes the game mechanics of E.T. seem clear and concise.  Joining these unwanted games are various hardware prototypes and limited production runs littering what now serves mostly as an Atari inventory storehouse. The filled trucks are driven north to the Alamogordo municipal landfill in New Mexico, home of another big bomb; nearby is the site of the 1945 Trinity test, the first explosion of a nuclear device. The contents of the trucks are dumped, run over with a bulldozer and covered with a layer of concrete, in order to deter looters… although adventurous kids plunder the site after the activity and find playable cartridges. Atari later insists the sudden burial was done to dispose of “defective” inventory. Considered a kind of urban myth by some over the years, including E.T. designer Howard Scott Warshaw himself, the Atari landfill burial is confirmed by a crew filming the documentary Atari: Game Over in 2014, uncovering tens of thousands of cartridges of E.T., Raiders, and other flotsam and jetsam that Atari wanted to disappear.  If only the company could have buried the lack of confidence the missed sales figures of games like E.T. fosters in shareholders, retailers and consumers alike as easily. They’re not the only culprit, however, as both Mattel and Coleco overproduce cartridges in a market becoming less and less able to support them.

the terrible ET game for the Atari 2600

E.T. game, crashing fast. Dec. 1983

Shovelling Dirt Into the Grave

Even though successful third-party game makers Activision and Imagic produce some of the better games for the 2600 in its later years, when these game-making upstarts first appeared on the scene Atari saw their grip sliding on the control of the software library for their system, and they start legal tussles with the two companies. Atari eventually loses its case in court, opening the floodgates for third-party manufacturers of games for their systems. Soon everybody and their dog has a game out, and while this does expand the machine’s library of cartridges, little concern is given to their quality. The vast majority of them are simplistic knock-offs of arcade game concepts: maze games in the Pac-Man vein, or platform games a la Donkey Kong. There are 50 companies publishing games for the 2600 in 1983, outfits such as 20th Century Fox, Avalon Hill, CommaVid, MCA, Froggo, ZiMAG, VentureVision, Milton Bradley, Telesys, Sega, Spectravision and Tigervision. To put some of these accomplices to the murder of the early 80’s video game industry up into a lineup for closer identification:

  • If you are an aficionado of B-grade schlock movies, you might recognize the name Charles Band. By 1983 he has an impressive resume built up as a film producer and director, including such classic fare as Laserblast, Tourist Trap and Parasite. It is with this pedigree that Band wades into the unsuspecting video game industry in 1983, founding Wizard Games. Game production is contracted out to a development studio started by former programmers at Games by Apollo, which had declared Chapter XI bankruptcy on Nov. 12, 1982. Wizard licenses two notorious horror movies for their first video game products for the 2600: Halloween and The Texas Chainsaw Massacre. It’s true that the violence contained within the resultant games is blockily abstract, but blocky abstract violence is all the public has at the time in video games, so after whole weeks of development time the games are released and the obligatory controversy generated. With most stores unwilling to stock the games, and those that do keeping them behind the counter on a request-only basis, sales figures are understandably low. Unfortunately, Wizard’s plans for a game based on softcore porn movie Flesh Gordon never hardens up.

Ad for Xonox, a home video game maker for the Atari 2600

Xonox ad, 1983

  • Game maker Xonox is a division of K-tel, infamous TV sellers of “50 Original Hits” music compilations. Their idea of innovation in the video game space is to sell Double Ender cartridges for the 2600. With a suggested price to retailers of around $42, Double Enders have two separate 8K games accessible via edge connectors on each end. Early entries for these dual games include Spike’s Peak/Ghost Manor and Hercules vs. the Titans/Chuck Norris Superkicks. The most clever bit of this whole exercise? The palindrome company name, readable any way their cartridges are inserted. Any way you look at it, K-tel is eventually turned upside down by its heels and shaken for loose change by creditors, when it posts a fiscal year loss of $33.8 million and files for Chapter 11 bankruptcy protection in late-1984.
  • CBS, distributors of the ColecoVision outside of North America, enters the videogame publishing biz via a four-year partnership deal with Bally Mfg. Corp, creating CBS Video Games. This gives CBS rights to available Bally/Midway arcade games for adaptation to home consoles and computers. The cartridges are produced and marketed by Gabriel Industries, the toy arm of CBS, headed by Benjamin Ordover. Adaptations of Gorf and Wizard of Wor are two of the bigger hits from this partnership, both developed by Dave Nutting Associates, makers of one of the first arcade video games. With a name change to CBS Electronics, the company develops 2600 cartridges with the RAM Plus Power Chip installed inside, adding 16K of memory. This allows games with advanced 3D graphics for the system like Tunnel Runner, as well as the first-person combat flight simulator Wings, a game within weeks of being released when CBS suddenly pulls the plug on their video game division in late 1983. CBS Software is also formed, releasing games primarily for the Atari 8-bit computers, via a licensing agreement with K-Byte Software.

Wings, a home video game for the Atari 2600 game console

Wings, an unreleased, advanced flight simulator for the Atari 2600, CBS 1983

  • Another media conglomerate, 20th Century Fox, throws their hat into the crowded ring with their video game arm, Fox Video Games. The initial plan for this venture is that Atari programmers Tod Frye and Howard Scott Warshaw, creators of some of the company’s best-selling games, would leave Atari and form this division for Fox. This, before Frye threatens Atari management with the prospect and the company nearly instantaneously starts handing out large cheques and installing a more generous bonus system, satisfying its biggest game development performers. Headed by former Mattel Electronics Sales and Marketing Senior VP Frank O’Connell, Fox Video Games cranks out 20-some carts into the market. Tagged as Games of the Century, a few are licensed from computer software game company Sirius Software, and Fox also reaches into their own film library for titles like Fantastic Voyage,  the Barry Bostwick SF extravaganza Mega Force, and teen sex-romp Porky’s. It is the latter game, based on the hit screwball teen-sex comedy film, that O’Connell publicly predicts will become “the most successful video and personal computer game in 1983.” While planned for a plethora of video game systems and home computers, Porky’s only ambles onto the 2600 and Atari’s 800 computer. Predictably, Fox also cranks out a game based on the 1979 smash hit SF-horror movie Alien. This tie-in is facilitated by Fox brass taking what amounts to merely a programming experiment to see if a Pac-Man clone can be created on the 2600 without all the flicker of Atari’s lamented version, and then insisting that the little figure running around this maze be shown holding a rectangle that could, with a healthy spray of imagination, be considered a flamethrower. Voila! An Alien game is born from its slimy egg-sack! Fox’s biggest stretch might be a game based on the film M*A*S*H, where chief surgeon Hawkeye Pierce actually flies helicopters around rescuing injured soldiers and skydiving medics. At least he does get a bit of surgery in between flights, Ferret Face!. Sirius had actually first been contracted to do the M*A*S*H game for Fox, but for whatever reason the company decides to eschew the Sirus submission and go with their own version. With M*A*S*H star Alan Alda already pitching for Atari computers, Jamie Farr, Cpl. Max Klinger himself, does KP duty selling this one. Mega Force, M*A*S*H and Alien are all programmed under contract to Fox by Doug Neubauer, who probably had more fame as the creator of the excellent Star Raiders for the Atari 400/800 computers.  Frank O’Connell regals members of the press at the 1983 Summer CES with sales numbers of M*A*S*H game cartridges of over 500,000 units, with a possibility of them hitting a million. However, the initial price of the MASH cartridge for the 2600 eventually goes under the knife in 1983, from $29.99 down to $14.95. Announcing the price slashing, O’Connell paints it as a good thing for the industry, proclaiming that moves like this will clear out surplus inventory to make room for new games that gamemakers would somehow be able to charge higher prices for. He also expects the enormous software glut to be cleared out within two months. This is a highly optimistic forecast, especially considering the gold-rushing Fox itself is perpetrating on the video game market via their seemingly reckless diving into their media property pool:  video game adaptations of Fox works as far flung as the Kenny Rogers vehicle (literally) Six Pack, SF classic The Day the Earth Stood Still, female empowerment tale 9 to 5 and the Lee Majors-starring TV show The Fall Guy are some floated by the company. Even a game based on the Robert Redford/Paul Newman classic western Butch Cassidy and the Sundance Kid is threatened by Fox, but mercifully never emerges out into the light of day. Fox does wins the award for best video game title ever: The Earth Dies Screaming. Another thing that dies screaming is the partnership of Fox and Sirius: the latter files a 20 million dollar lawsuit against Fox in the later part of 1983, containing forty counts of breach-of-contract, fraud and lack of good faith charges.

    Doug Neubauer, video game creator

    Doug Neubauer, creator of games for 20th Century Fox’s game unit.

JUMP: A closer look at the M*A*S*H video game, during TDE’s Oscar Week

Marvel founder Stan Lee plays Spider-Man on the Atari 2600, accompanied by the Green Goblin and Spider-Man, 1983

Stan Lee and creations, playing Parker Brothers’ Spider-Man for the 2600, 1983

  • Board game giant Parker Brothers., having rolled the dice on electronic games such as Merlin in the late 70’s, make their move into the video game market via a series of lucrative licenses. While their releases are made for the Atari 2600, Parker Brothers had originally approached Mattel in 1981, offering to make games for the Intellivision if the company would forward technical specs for the machine to speed game design. Mattel passes on the proposal, so Parker Brothers jumps into the rapidly crowding Atari pool. Their strategy for an early boost in the market is aggressive licensing, including a valuable deal with Lucasfilm to make console games based on the Star Wars franchise. Their first game, released in June of 1982, is based on the second Star Wars film The Empire Strikes Back. For their second game, Parker Bros. produces an adaptation of the hit arcade game Frogger. Together, both of these initial 2600 games sell over three million cartridges, helping the company pull in $115 million in sales for 1982. Empire alone accounts for over thirty millions dollars of that figure. Parker Brothers would later release Star Wars: Jedi Arena, and titles such as Return of the Jedi: Death Star Battle. The mouthful-of-a-title Star Wars: Return of the Jedi: Ewok Adventure is put in the development pipeline but never released. In 1983 the company is responsible for the highly promoted and anticipated Spider-Man, featuring Marvel’s iconic web-slinging superhero, for the Atari 2600. Parker Brothers also makes the largest bid yet for an arcade game license, paying Nintendo $2 million for the rights to the hit Popeye, plus a promise of $4 in royalties for every cartridge they sell. They also put out product based on Strawberry ShortcakeG.I. Joe and James Bond.  Backed by a $30 million ad campaign, Parker Brothers has a slate of 16 new video games, for various platforms, scheduled for release through 1983. One is another big licence for the company, Lord of the Rings, which is near completion for the 2600 and set for release this year, with a planned version for the Intellivision as well. Given a subtitle of Journey to Rivendell, the project is then unceremoniously cancelled late in 1983.


  • Quaker Oats, known more for breakfast cereals than high-technology, enters the market via its acquisition of game maker U.S. Games, Inc., later changing its name to Vidtec. The company quickly builds a library of titles by contracting out to game development company James Wickstead Design Associates, of which Garry Kitchen is an employee. There he makes the shooter Space Jockey, probably U.S. Games’ most popular title out of a bunch of other fairly forgettable games. One U.S. Games release, put out in February of 1983, is initially titled Treasures of the Deep while under development at Wickstead, and then renamed Guardians of Treasure by U.S. Games. It is subsequently saddled with the mouthful of a title Name This Game and Win $10,000. It is designed by Ron Dubren and tied to a contest asking people to submit their own title for the game. U.S. Games goes out of business before the contest’s April 30th, 1983 deadline. Garry Kitchen eventually leaves U.S. Game’s  JWDA developer partner to join his brother Dan at the greener climes of Activision. Apropos, a popular game from U.S. Games is Eggomania, the action of which closely emulates Activision’s hit game Kaboom!
  • Taking a run at matching the crassness of Fox’s pillaging of their TV and film properties. Sega’s sister company Paramount Pictures (both reside under the wide umbrella of Gulf + Western) announce a desire to leverage their video game relations in promoting their media library. While games based on the Nick Nolte/Eddie Murphy cop comedy 48 hrs., hilarious parody film Airplane! or SF classic War of the Worlds might seem a bit suspect, Sega really rattles teeth threatening to make a video game based on the Dustin Hoffman/Laurence Olivier thriller Marathon Man. One could only imagine the company making a running sports game and slapping the movie title upon it. And of course, you know…. there’s always Star Trek.
Ron Dubren, designer of Name This Game, a home video game by U.S. Games, 1983

Ron Dubren, designer of Name This Game, 1983

Journey Escape, a home video game for the Atari 2600 by Data Age

Journey punches into the home video game market, and Data Age ends up with a black eye, 1982

Don’t Stop Believing

Food products such as Purina dog food, Coca-Cola and Kool-Aid are all also being hawked by shoddy video game tie-ins. In a combination of two time-honoured teen-age time-wasters, rock & roll and video games, America’s #1 rock band at the time, Journey, struts onto the video game stage with Journey Escape in 1982. It is designed by J. Ray Dettling, also the creator of Frankenstein’s Monster and Bermuda Triangle for Data Age. About the toughest part of the job for Dettling with the Journey game is squeezing in all of the rock band’s iconography into a 2600 cart, especially after spending a lot of the cartridge’s 4K memory opening the game with the spectacle of the group’s famous scarab Escape vehicle breaking through the cosmic egg a la the famous cover image for their multi-platinum rock album Escape. Versions for the Intellivision and ColecoVision are also promised to soon take the stage, along with promises of future games possibly starring The Rolling Stones, Styx and Fleetwood Mac. But with Journey Escape the first actual game based on a Rock ‘n Roll band, it also is the first home game that reverses the common adaptation trend and moves from the original VCS cartridge by Data Age into a coin-op version by Bally/Midway the next year. A collection of five game stages, the arcade version of Journey Escape does contain at least one saving grace: digitized images of each band member’s head on the characters, facilitated by a process created by Ralph Baer, creator of the first home video game system, the Magnavox Odyssey. Unfortunately for Data Age, the company ships 400,000 copies of the home game to retailers amid a flurry of promotions and advertising, but only 25,000 actually sell. Due to a stock balancing policy the company has agreed to that every unsold copy of the game can be returned, the rest get sent back and Data Age, on the hook to buy back the unsold games as well as facing high licensing fees from the Journey people, succumbs to Chapter 11 bankruptcy in mid-1983.

Custer’s Worst Stand

Slipping a bit in its policy of always being on the vanguard of every new media technology, the porn industry enters the fray later in the Atari 2600 lifecycle with Mystique’s Custer’s Revenge, the first adult-only game for the system, in November of 1982. It features a perpetually aroused General Custer trying to rape an Indian maiden tied to a stake. Helpful instructions for the game, in addition to pointers on “Foreplay” and “Scoring”, offer this advice to gaming parents: “If the kids catch you and should ask, tell them Custer and the maiden are just dancing.” Atari spokespeople frantically attempt to distance the company from such games, although this doesn’t prevent organizations such as Women Organized Against Rape from picketing Atari headquarters. The Mystique brand is owned by American Multiple Industries, who’s previously most controversial products have been plastic containers for video and audio cassettes. With the company run by Stuart Keston, the Mystique label is produced in collaboration with Caballero Control Corporation, a big producer of porno video tapes. Al Bloom, CCC VP, has some bold sales projections, stating that 500,000 Mystique cartridges will be in stores nationwide by November, and 1.5 million by January 1983… and starting in the new year 750,000 games will be produced monthly. While these supposed cartridges are to be exclusive to the already drenched Atari 2600 market, AMI threatens that Intellivision versions are in the planning state.

In October of 1982. Keston is in New York City promoting Custer, as well as other titillating Mystique titles Bachelor Party and Beat ’em and Eat ’em at the Hilton during the National Music, Sound & Video Convention. His group is there to help drum up sales for his company’s first three wares, which have cost it something like $1.2 million in production and marketing expenditures. Hoping to head off this promotion at the pass are 150 protestors from groups such as Women Against Pornography, the National Organization of Women and American indigenous peoples groups, showing their displeasure by picketing outside the hotel, holding signs with messages such as “AMI Makes a Game of Rape” and “Custer’s Revenge Says Rape Is Fun”. The designer of the game, Joel Miller, begs to differ with the protestors, saying at the showing in New York, “He’s [Custer] seducing her, but she’s a willing participant.” Several lawsuits over the game pop up: American Multiple Industries sue Suffolk County, N.Y., and Suffolk County Legislator Philip Nolan for $11 million, citing a violation of First Amendment rights over the county’s resolution labelling video games portraying criminal acts as a public danger. AMI would eventually drop its suit against Nolan and the Suffolk County Legislature in February of 1983, in the face of the threat of having to pay the legal expenses of the Legislature if the action fails in court. Keston also threatens to appeal a ruling by Canadian customs officials to ban the import of Custer’s Revenge on December 1, after having previously approved it for sale in the country on  October 18. AMI/Mystique itself is sued by Atari in federal district court in Los Angeles, over wrongful association, citing the use of the video game giant’s name on packaging for the game. Atari states that they are receiving complaints from customers who think that the company is responsible for making the adult wares, and are even threatening to toss out their Atari products. Porn rag Hustler puts their hand in, recommending in a March, 1983 headline for an article covering the Mystique games that readers should “Grab Your Joystick”. By they end of the piece, Hustler advises gamers that, “For $49.95 a pop, it’s comforting to know that even if you can’t beat the game, you can always beat off.” Even though most retailers keep Custer’s Revenge, along with other AMI adult games like Bachelor Party and Beat ’em and Eat ’em under the counter and require purchasers to directly request them, initial figure reports from AMI state that the games sell 100,000 copies before their production climaxes on January 1st, 1983.

Protestors against x-rated video game Custer's Revenge, for the Atari 2600 video game console

Protestors picket the NYC convention where Custer’s Revenge is being promoted, 1982

Dirty Games, Done Dirt Cheap

On January 10, 1983, it is announced that Mystique’s dubious IP has been transferred to a company called Game Source, owned by a cabal of movers and shakers in the adult video distribution market. Also announced at the time is the discontinuation of the controversial Custer’s Revenge, after the now-adjusted sales numbers for the game are given, at 75,000 units. Game Source distributes their line of salacious games on double-ended cartridges like Xonox, under the label Playaround. They promptly juggle things around in the dropped Custer, such as put in an arm movement on the native captive to make her seem more acceptive of Custer’s advances, and repackage the game as Westward Ho. This they mate with another riff on the theme, titled General Retreat. For this Custer re-release, Playaround pulls out of the North American game market tainted by the game’s notoriety and sells the two joined pleasures in Europe. In NA the games they market via this 2-game, 1-cartridge format are: Bachelor Party/Gigolo, Beat ‘Em & Eat ‘Em/Lady in Wading, Philly Flasher/Cathouse BluesBachelorette Party/Burning Desire and Jungle Fever/Knight on the Town. Half of the games featured on these double-ended cartridges equate to pretty much identical play as original Mystique games, with the gender roles swapped in an attempt to render any controversy flaccid.

Cheap video game cartridges, from video game makers Atari and Mattel.

They’re practically giving them away! Cheap games, in a 1984 newspaper ad.

There are about 100 different games released for multiple home console systems by a plethora of game companies between September and Christmas season of 1982. With surplus inventory of all this product eventually piling up into the millions, prices begin to slide. Over 40% of cartridges sold in 1983 are deemed as “cutout” items by retailers, priced at bargain basements rates of around $5 – $8, and some throw cartridges into discount dump bins in their stores for as low as a dollar a cart. While in 1982 the cost to manufacture a cartridge is about $6 and retails on average for $34, Atari finds their main source of income drastically reduced through the year as they are forced to lower prices, and thereby make huge cuts into their margins on even their bigger titles to distributors in order to compete. The cost to launch a successful video game hit in 1983 is pegged by experts to be a minimum of $2,000,000-3,000,000 per game, which equates to sales having to be between 400,000 to 1,000,000 units to make up that money. It’s hard to see this kind of money being spent and made as Atari rivals such as Mattel and Coleco both also have to slash the prices of their systems and games in order to deal with the ever-increasing videogame glut.

Same Old Same Old

Combined with this over saturation is growing consumer indifference fostered by the lack of substantial improvements in product lines. Atari, the de facto market leader in home video games, has left behind its daring, engineering past with founder Nolan Bushnell’s departure in 1978. It has instead adopted a marketing focus favoured by the suits like Ray Kassar, used to the relatively unchanging casual fashions of Burlington Industries. He is content to sell what Atari already has as opposed to continued innovation. This attitude is perhaps most glaringly apparent at the start of 1983, with Atari slating $100 million in advertising dollars for the year. This is more than the company spent the previous year in making video games. The company lets nine years pass after the release of the VCS before introducing the first real technological update to their system line-up with the 7800, and they fill the gap in between with redesigns of the venerable 2600, which admittedly does have a larger game base than all of the other major systems combined. This culminates in the 2600jr., a super-compact redesign that sells for a paltry $50. As a lackluster sequel to the 2600, technologically just an Atari 8-bit computer repackaged as a video game console, the 5200 fails to set the market on fire in 1982.

Mattel themselves are unable to come up with a suitable next-gen replacement for the Intellivision, opting instead to release the Intellivision II, offering no new technology over the old Master Component. With rebates, the “new” system’s price is also drastically reduced, retailing for $50 on average. With the prices of their consoles and games slashed, the big three have trouble financing their attempts at snagging a piece of the home computer market, and their various computer projects drain already dwindling profits.

Bill talks about Law of the West, one of many compelling titles that came out on computers

The Home Computer Bytes

The third member of the deadly troika that lays the videogame industry low is the home computer boom in full swing by 1984, fueled by lowering prices and a growing library of engaging new computer games. More than $2.3 billion worth of computer software is sold this year. The Apple II is well-established as a gaming platform in the early 80’s, and Atari themselves are in the computer game with their 400/800 8-bit line, but Commodore head Jack Tramiel’s kept promise of a line of under $300 computers creates an explosion of sales as people wonder why they should spend that much on the latest videogame when they can have a functional computer for the same price. The Commodore VIC-20 is the first colour computer to break the $300 price barrier, and at its prime hits 9000 units produced daily. Its successor, the 64, enjoys unmatched success with 22 million units sold. By 1984, Commodore is selling 300,000 computers a month, and there are 4 million Commodore computers in use around the world. Many people, including me, sell their current videogame system (in my case, the ColecoVision) and move to a computer, turning their backs to consoles for decades. Time magazine heralds the arrival of the computer as a popular consumer device by changing their annual Man of the Year award to Machine of the Year and giving it to The Computer, in a cover story dated Jan. 3, 1983.

Commodore VIC-20 home computer

The Commodore VIC-20, released in 1981, first computer to sell over 1 million units

The Commodore 54 home computer

The paradigm-shifiting Commodore 64 home computer

Atari Stumbles

All this combines to deal a death-blow to the video game industry. The high-profile home game failures by Atari, both conceptually and financially, along with a slumping coin-op division, causes Atari owners Warner Communications to shock market analysts on Wednesday, December 8, 1982, by reporting “disappointing” fourth-quarter earnings for their video game division. Earnings will not reach what they did in their fourth quarter of the previous year, which had been $75.84 million. In terms of a direct hit to investors, Warners shares for the quarter post earnings of about 60 cents per share, down from $1.17 the same quarter the previous year… and again, far below the previously projected earnings of between $1.60 to $2 per share, an estimate that angry Wall Street analysts say Atari was confirming privately right up to the morning of the damning earnings report. Trying to keep the sound of popping rivets from the torn hull of the Titanic from scaring people, editor Steve Bloom would use the editorial pages of his Video Games magazine to spin the troubles at Atari as “blown totally out of proportion”. However, Warner’s net income has shrunk 56% compared to the same quarter the previous year, after years of explosive, triple-digit growth for Atari, whose market share in video games has dropped to 56 percent. Net income in the Warners consumer electronics division, of which Atari is by far the largest part, is down to only $1.2 million, compared to $136.5 million the previous year. This is a disastrous 99% drop in money coming in. On Thursday, December 9, the NYSE halts trading on Warner stock for most of the day, responding to heavy trading. When the dust settles, the company’s stock price has plummeted from $51 7/8 to $34 1/2 in one day, costing $1.3 billion in market valuation. The Dow Jones industrial average loses nearly 10 points as a whole after the Warner announcement. Fears of a looming video game shakeout, which had been forecasted on and off through 1982, seem to have finally been proven right.

Retail buyers and distributors, believing they are finally seeing the bubble burst after years of such predictions, run fleeing like rats abandoning a sinking ship.

Soon comes the inevitable rounds of bloodletting, with Perry Odak being relieved of all duties as head of the home video game division at Atari immediately after the Oct. 8 announcement. On Feb 22, 1983, the company drops the axe on 1,700 Atari employees in the first round of mass layoffs, representing a quarter of its California-based workforce. The larger part of the these jobs are moved offshore to Hong Kong, Taiwan and Puerto Rico facilities in a bid to lower costs. Production is also stepped up at Atari’s El Paso factory, taking advantage of the lower taxes and lower wages of Texas. The suddenness of these layoffs is largely unexpected by the employees involved, who claim Atari had assured them their positions were safe until at least 1985. In August of 1983, a lawsuit is brought against the company by 537 former employees affected, claiming they were given no advanced notice of Atari’s plans. A settlement reached on June 3, 1986 has Atari paying out more than $600,000 in owed back pay, or $1,182.92 paid to each employee, equalling four weeks’ salary. While welcome, the monetary payment is well underneath the initial request of $13 million in damages paid to the employees.  Atari, however, is also on the hook for $390,000 paid out in legal fees.

A shareholder letter issued by Steve Ross puts the blame for Atari’s financial woes on “excess retail inventories of game cartridges and an increasingly competitive marketplace”. Even with the cut in overhead, development costs of new gaming and computer hardware are mounting and Atari’s market share in the video game industry is down to 40%, half of what it was in their heyday. The company attempts to re-stake its claim on the market by instituting an exclusive model for sales of Atari software in early 1983, something that would force distributors to only carry their product. This, of course, spurs lawsuits from third-party software companies like Parker Brothers. Warners and Atari continue to slide, with an operating loss of $45.6 million in the first quarter of 1983 reported by Atari, and by the second quarter mark a hit to their books of $310 million. The company ultimately loses $532.6 million in the fiscal year 1983, bleeding out $2 million daily. Sales have dropped from $1.41 billion to $753.6 million. The coin-op video game field, also facing game oversaturation and an increasing reliance on hit games to make its money, takes a hit as well. Of the about 1,220,000 arcade games installed, average reported losses for small street locations amount to $616 per game, and in arcade locations it’s figured that losses per game on average equal $80. 

Atari XL computer ad, featuring Alan Alda

Alan Alda shills the Atari 600XL and 800XL computers, 1984

In a desperate turn towards their home computer line, at the 1983 Summer CES in Chicago, Atari announces a 5-year deal to hire M*A*S*H star Alan Alda as computer spokesman. Atari has a user as well as a spokesman in Alda; he keeps an Atari 800XL computer at home, and another in his office to keep track of scheduling, as well as for editing scripts. He also dabbles in programming, having created a home psycho-analysis program called Hi Doc within days of getting his computer upgrade. Along with a reported value of the celebrity endorsement deal at $10 million, Alda has an unusual arrangement where he has 100% approval of anything he says or is attributed to saying in any of the ads. His editorial power goes so far as to changing the subject of an ad about a college student with an Atari computer serving as the perfect “roommate” from a male to a female, to make the ad less sexist. Comprised of at least 11 ad spots, the campaign is to run for 5 years.

Axe Continues to Fall at Atari

In spite of continuing sales of its computers, Warner’s consumer electronics division posts an operating loss for 1983 of $536.8 million. Once the biggest revenue generator for its mother company, Atari is now its biggest money loser. Only a total paring of 3,000 Atari employees by the end of the year can staunch the flow for Warner, who post a modest profit at the end of fiscal 1983. in 1984, reports surface that Atari is courting N.V. Philips, owners of the Magnavox brand and the 2600 competitor Odyssey², to purchase a stake in the company of maybe up to 50%, if Atari can reduce its expenses enough. Philips themselves state that their venture with Atari only extends to a possible melding of their laserdisc technology with some kind of new Atari console. By May of the year, negotiations have broken off and any collaboration dismissed.

Amid this industry downturn is an insider trading scandal plaguing Atari, dealing with blocks of thousands of company stocks sold by Warner’s head Steve Ross, along with 5,000 sold by CEO Ray Kassar just 23 minutes before the disastrous earnings announcement, along with various amounts by other Atari executives. The SEC would charge Kassar with insider trading, with him later signing a decree that has him paying back $81,875 of the approximately $260,000 he made in the trade. In the face of this turmoil, it is announced by Warner Communications on Thursday, July 7, 1983 that Ray Kassar is stepping down as Atari Chairman and CEO. His replacement is named as 41-year-old James J. Morgan, coming off a 20-year stint at Philip Morris where his most recent position had been executive VP of marketing. While at the company he had managed the Parliament, Virginia Slims and Marlboro cigarette brands. Morgan admits during a phone interview with the L.A. Times that he had only heard of the opening two weeks previous to the public announcement, and that the negotiations took only four days, without him ever setting foot in Atari HQ in Sunnyvale. Taking the reins of the beleaguered video game company on September 6, Morgan has a contract with Atari for a highly optimistic length of 7 years.

As CEO, Morgan announces his goal to reduce overhead to a quarter of what it was the previous year and slices through middle management by chopping another 250 people, and razes the R&D department with dismissals like R&D director Chris Crawford. Alan Kay, Atari’s vaunted chief scientist, amid cuts to his staff and a change of priorities to short term efforts over the long view of technology, leaves the company in April of 1984 for the more verdant pastures at Apple. Morgan also immediately shuts down the XL computer line, including scrapping the 1400XL and 1450XLD home computers previously announced at the 1983 summer CES in Chicago. Both were to feature built-in BASIC, modems and speech capability, and the “D” in the 1450XLD stood for the built-in double-sided double-density 5.25″ floppy drive. Morgan also ashcans plans for an adapter to allow Atari’s computers to run the popular CP/M operating system, as well as the 1600XL, a computer system compatible with MS-DOS. The successful 600XL and 800XL computers are eventually allowed to continue to roll off the assembly line, although with a price tag boost of $199 for the 600XL and $249 for the 800XL, which places them around $50 more than Commodore’s fast-selling VIC-20 and C64 lines. The pause in production of Atari’s computers also causes a 40% drop in supply of the popular 800XL over the critical 1983 Christmas season. Still,  Alan Alda continues to shill Atari computer product, but the one aspect of the computer Alda will never talk about is the hardware under the hood: Morgan wants to sell the experience of actually doing things with the computer, and not the processing power it might have. According to Morgan, former cigarette salesperson: “The CPU is the least important element in the computer.”

Brochure featuring the 1400XL and 1450XLD home computers by Atari

Atari CES brochure, announcing the ultimately cancelled 1400XL and 1450XLD computers, 1983

On the video game front, Morgan postpones the imminent wide release of the 7800 ProSystem video game console, all in an effort to reassess and retool the company’s product lines. He is also bullish on the continued popularity of the 2600, although many market analysts peg the active user-base of the old campaigner as down to 50% by 1984. Its sequel, the 5200 SuperSystem, has failed to take a similar market share. Morgan attempts to refocus Atari, including a push into the educational market via its Atari Learning Systems division with products such as the AtariLab Starter Set with Temperature/Light Module, priced at $89.95. This computerized science kit offers kids 4 -12 years-old over 100 experiments to engage in. Morgan also curtails rampant spending, and plans on consolidating Atari’s 52 different work sites around the San Jose area into one $60 million, 400,000 square ft. location there, in order to encourage better communication between division heads. Morgan also insists that that Atari not show any new product that these different divisions have come up with to the public if said product is not ready to ship. The Atari CEO also has a tough row to hoe in mending the relationship between Atari and its distributors and developers of Atari hardware and software… reported to include intimidation tactics and threatening behaviour by the company. In the face of this antagonism with software dealers, Atari releases some of their biggest hits for competing computer and video game systems under the label Atarisoft in Spring of 1984. Games for the Apple II, VIC-20, Intellivision and other systems include Dig-Dug, Donkey Kong, Robotron and more.

Amid the turmoil of Morgan’s taking of the reins and mass product line shufflings,  Warner Communications has to deal with a hostile takeover bid by Australian newspaper mogul Rupert Murdoch. This is fended off by Warner with a partnership with Chris-Craft Industries. While getting in bed with a long-time American watercraft manufacturer might seem like a non-sequitur, Chris-Craft also owns several TV stations across the U.S. This would put Murdoch afoul of FCC regulations requiring that no company can own both a regional TV station and newspaper outlet.

Jack Tramiel – Meet the New Boss at Atari

Warner suffers a staggering net loss for the second quarter ending June 30, to the tune of $437.6 million. CEO Steve Ross later states that this is largely due to the operating losses of Atari. Despite Morgan’s efforts to reorganize and refocus, and a paring of employees from 9,800 down to 3,500, Warner surprises Atari executives by splitting up and selling off the company in pieces. Having stepped down as head of Commodore, Jack Tramiel hears about Warners’ intention to divest itself of Atari in May of 1984, and enters into talks with chief Steve Ross in NYC. Tramiel’s son Gary concludes the deal at 3am on July 9, 1984, with Jack Tramiel travelling by private jet to Sunnyvale and driving up to the front doors of the company in a two-tone Rolls-Royce for 8:30am. He and a cadre of investors have picked up the once-great video game giant by assuming the company’s $240 million debt, a value greatly under Atari’s peak revenue intake just two years previous of $2 billion. Still, it is just shy of 10x the amount that Warner originally paid Nolan Bushnell for Atari in 1976, with Warner retaining possession of the coin-op division of the company, labelled Atari Games. The deal also gives Tramiel the option to purchase up to a million Warner shares at $22 per share, and conversely Warner the option to purchase stock in Atari. Rearing his ugly head, E.T. rises into view again in the later part of 1984, when MCA sues Warner Communications for defaulting on its licensing agreement for the Spielberg movie, claiming Warner owes at least $17 million on the deal, with $14 million now due in full since the movie license was wrongfully included in the sale of Atari to Tramiel. MCA further contends that it is owed an additional $1.5 million for rights granted Atari for The Last Starfighter, $200,000 for The A-Team , which Atari used to brand a 2600 game originally titled Saboteur, and $1,500,000 for game rights to the upcoming Dune film by Universal.

Jack quickly installs his own sons as top executives at the new Atari: Gary Tramiel is to collect the millions in unpaid debt to Atari, Sam Tramiel is made  president and Leonard Tramiel made head of software. The company limps through the industry turmoil under the power of its 16-bit ST home computer line, but the company payroll is cut from 1200 down to a bare bones 400 people, with a paring of about 95% of staff from each department. This includes the near-elimination of Atari’s customer service department, with the company acknowledging that its interfacing with users will be “very slow”. Tramiel eventually releases the 7800 ProSystem console in 1986, which had been given a limited release under Morgan two years earlier before being frozen for evaluation by the new CEO. Tramiel also retools the 2600 into the minuscule 2600Jr., retailing for a mere $50. At the 1987 Summer CES in Chicago, Atari introduces an attempt to repackage their 8-bit computer line into the Atari XE Game System, or XEGS. Essentially a repurposed 65XE 8-bit computer, the console apes the then-burgeoning Nintendo Entertainment System by including a light-gun zapper along with a joystick and also features a detachable computer keyboard. By 1988, Atari starts offering a $50 rebate on the XE to try and move units.

The XEGS, a video game console and computer hybrid by Atari, 1987

1987 brochure shot of the Atari XEGS, with keyboard and joystick

The first quarter of 1988 does see a bit of a comeback for Atari, with sales increasing 199%, up to $277 million compared to $92 million the same quarter the previous year. However, in 1996, in the face of sagging sales for its 64-bit Jaguar gaming system, Tramiel merges Atari Corp. with hard-drive manufacturer JTS Corporation, who are looking to obtain Atari’s American Stock Exchange listing and become a publicly traded company. In early 1998 JTS sell what’s left of the Atari division to giant toy company Hasbro for $5 million in cash. Atari’s contribution to the home game scene lives on under the Hasbro umbrella, and the mother company wastes no time in exploiting the deep well of ground-breaking Atari classic titles, including a drastic 1999 remake of the game that started the whole industry, called Pong: The Next Level. If you continue to follow the bouncing dot of acquisitions of Atari: Infogrames, a French developer and publisher of video games picks up the Atari rights when it purchases Hasbro for $100 million in 2001, and in a full-circle changes their name to Atari in 2003. By 2005, after a series of high-profile aquisitions, Atari Inc. has lost over $700 million. With a new team in place, composed of Jim Wilson put in as president in 2008 and CEO Jeff Lapin in 2009, the company pivots to the mobile free-to-play game market, and manage to slash losses. Even so, in a now-familiar scenario, Atari files for Chapter 11 bankruptcy protection in 2013. The company then embarks on a meandering restructuring program that tends to leave observers incredulous, based mainly in the production of mobile games, online gambling via Atari Casino, REAL gambling via a hotel/casino in Vegas and other “event” hotels around the U.S. featuring large gaming arcades, and even a venture into cryptocurrency with the Atari Token, based on the Ethereum blockchain. 

The Atari Hotel in Las Vegas

Artist rendition of the planned Atari Hotel in Vegas, to open in 2022

Game Over

As goes Atari in the great videogame shakeout of 1983-84, so goes the rest of the industry. Retail buyers and distributors, believing they are finally seeing the bubble burst after years of such predictions, run fleeing like rats abandoning a sinking ship. 1982 sees Mattel stock shedding 40% of its value when it reports losses of 195 million dollars, with the company eventually losing a total of $361 million due to their electronics division. After discontinuing the Intellivision early in 1984 Mattel Electronics is sold for the paltry sum of $20 million. Coleco themselves are in hot water with a slide of nine points on the NYSE after the Atari announcement, eventually posting a loss of $258.6 million in 1984. This is mainly due to the tremendous flop made by their ADAM computer line. This and their ColecoVision line are dropped in 1985, and Coleco itself succumbs to Chapter 11 in 1988.

Kiosk for Intellivision, a home video game console by Mattel

A monument to a different time, 1981

I’ll give a personal anecdote here about the jarring nature of being a gamer during this time of upheaval. Some of the most vivid images that still rattle around in my memory are of going up to the 7th floor Toyland toy department at the Eaton’s department store in the Eaton Centre in Toronto and wandering into the video game section during Christmas season 1982. They didn’t have a big kiosk like the one for the Intellivision posted above, but instead monitors hung over the counter and video games like the 2600, ColecoVision and yes, the Intellivision sat on the glass to be played. A Vectrex was available on the round table behind. Video games were EVERYWHERE, and it was a total Shangri la. This is a good memory, but what sticks out in my mind maybe even more is doing the exact same thing the next year, heading on up to the 7th floor over Christmas, running into the same area…. and it was absolutely BARREN of video games. Not one. Wires hung down from removed monitor spaces. White spots on the wall stared back blankly from where bright game company logos had hung before. I couldn’t have had a more stark display of what had happened to the video game industry than that one moment of looking around at nothing at all.

For a quick timeline in dollars: in 1982 Atari claimed profits of $323.3 million on sales of $2 billion. The next year, it posted a loss of $538.6 million on $1.1 billion in sales. In the first quarter of 1984, they lost $34.9 million on $153.8 million in sales. Even so, in the face of all this financial chaos in the industry, there is still a demand registered by consumers for video games. It might be at discount prices, but the public still purchases cartridges in large quantities from overstocked inventories. But after the market crash of 83-84, the corporate love-affair with video games vanishes, and no North American company will touch the things with a ten metre joystick.

In Kyoto, Japan, however, a little 100-year-old playing card company has plans to hit the reset button.  logo_stop

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

Page 1 – High Hopes
State of the Video Game Industry Through 1982
Stecklow, Steve. “Game Report: Finding the Best Buy among Five Top Systems.” Chicago Tribune 06 Nov. 1983: 30-32. Newspapers.com. Web. 16 Sept. 2020. And while it’s doubtful that you still can be the first-on-your-block to buy a videogame system – more than 15 million have been sold in this country to date…
Harmetz, Aljean. “Video Games Marching Forward.” Shreveport Journal (New York Times Reprint) 6 Oct. 1982: 3D. Newspapers.com. Web. 15 Sept. 2020. Now, arcade and home video games form a $7-billion-a-year industry. ;In recognition of such changes, record stores across the country are now supplementing their disk sales with video games. ;Advertising Age estimates that Atari…will spend $75 million in advertising by Christmas, more than triple the money it spent last year. ;Up to now, about 70 percent of all video-game modules sold have been Atari’s 2600 VCS. Mattel’s Intellivision Master Component accounts for another 18 percent to 20 percent.
MicrofilmIssueGenerator, comp. “Games, Cartridges Hottest Items at CES.” Mart July 1982: 49-55. Internet Archive. 11 Aug. 2021. Web. 26 Aug. 2021. Image of attendees of the 1982 Summer CES playing the Atari 2600
Associate-manuel-dennis. “Record Losses For Video Game Operators Posted During 1982.” Cash Box, 19 Mar. 1983, p. 42. Internet Archive, Accessed 19 Sept. 2019. It is estimated that by 1986 fully 25% of the approximate 10,000 video game arcades in business at the end of 1982 will have closed their doors…; Mr. Kirby’s analysis reveals that there are approximately 1,220,000 coin-op video games right now on location… the industry average for street locations reveals a loss of $616 per piece of equipment and about an $80.00 loss for each arcade piece.
Uston, Ken. “A Report From the First Video Games Conference.” Creative Computing Sept. 1983: 232-46. Creative Computing Magazine (September 1983) Volume 09 Number 09. Internet Archive. Web. 26 Feb. 2016. [From summary of Activision president Jim Levy’s speech] 1982…Fifteen million hardware units and 65 million software units were sold.
Videogaming Illustrated, “Focus On: Sturm Und Drang”, by E.C. Meade with contributions from Jim Clark, Martin Levitan, Dale Rupert and Samuel Lawrence, pgs. 19-25, Jul 1983. “There are in excess of twelve million 2600s in homes across the nation…” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 17 2015.
“A Squeeze in Video Games.” The New York Times 7 Dec. 1982: n. pag. The New York Times. Web. 21 July 2017. Atari, the No.1 advertiser, spent $28.5 million…. George Schweitzer…esitmated total network time purchased at $100 million for the 1982-1983 season.
Associate-manuel-dennis, comp. “Coin-Op Biz Seeks Solutions For Industry Woes in 1984.” Cash Box 5 Mar. 1983: 10+. Internet Archive. Web. 28 Jan. 1984. “The industry is operating on a third to 50 percent of the income it was operating on two years ago,” said Betti [Peter, video game distributor] ;…during the so-called “boom” years people built up “fixed overheads” or costs that could not be removed or cut once the industry started to contract.
Antic, “It’s Official! Atari joins the U.S. Olympic Team” by David F. Barry, pgs. 13-14, Feb 1984 The Sydney Morning Herald (NY Times News Service), “Atari video games take plunge into concrete”, pg. 7, Oct. 3, 1983
“AOE ’83.” Electronic Fun with Computers & Games July 1983: 28. Web. 19 Dec. 2020. Image of Atari booth at 1983 AOE
Page 1 – Pac-Mess
The Dramatically Inferior Atari Pac-Man Home Version
Schenectady Gazette (AP), “Smile! Pac-Man Moving Into Millions of Homes”, pg. 30, Mar. 17, 1982
Time, “Pac-Man Finally Meets His Match” by Alexander L. Taylor III, Dec 20, 1982
“Atari.” The Video Game Update , January 1983, p. 6.
…MS. PACMAN will ship nationally on Valentine’s Day, Feb 14.

Gardner, Ralph, Jr. “High School Dropout Made a Million Bucks.” Corpus Christi Times 19 July 1984: 1D+. Newspapers.com. Web. 11 Oct. 2021. B&W image of Tod Frye at development console, undated.
WallyWonka. Atari 2600 Pac-Man box. Digital image. Emumovies. Web. 10 Sept. 2021.
WallyWonka. Atari 2600 Ms.Pac-Man box. Digital image. Emumovies. Web. 10 Sept. 2021.

Gardner, Ralph, Jr. (excerpted from his book ‘Young, Gifted & Rich”) “The Incredible Shrinking Pac-Man.” Red Deer Advocate 25 May 1984: 1C. Newspapers.com. Web. 11 Oct. 2021. The question refers to Tod Frye, the 26-year-old high school dropout and former hippie panhandler who transformed one of the most popular of all arcade games into a home video cassette that sold several million copies and earned him almost #1 million in royalties. ;Tod was literally walking the walls one afternoon – he discovered a way to wedge his body between two walls of a narrow hallway and to shimmy along it… until he smashed into a ceiling sprinkler. Tod got a free ride in an ambulance and several stitches. ;SwordQuest, the four-cartridge video game that Tod invented and is currently programming…
Gardner, Ralph, Jr. “He’s Atari’s Pac-Guy.” Times-Advocate [Escondido, California] 1 July 1984: B6+. Newspapers.com. Web. 11 Oct. 2021. B&W image of Tod Frye playing Atari Pac-Man, 1984
Schrage, Michael. “Video Game Creators Go from Big Bucks to Broke.” Honolulu Star-Bulletin (Washington Post News Wire) 29 Dec. 1985: G5. Newspapers.com. Web. 11 Oct. 2021. Valley legend has it that the Pac Man cartridge turned Frye – then 25 – into a millionaire. ;Today, little remains. He bought some land in New Mexicao – but had to sell when the industry collapsed. “I bought an Alfa Romero Spider convertible,” he said, “but I got rid of it.” ;His major regret? “A lack of very conservative tax planning,” he said. “Uncle Sam took a good chunk of it away.”

Page 1 – Ray’s Revenge
Development of the game Yar’s Revenge
Videogaming Illustrated, “Eye On: Atari Finds the Lost Ark”, pgs. 10, 60-61, Aug, 1982. “This November, Atari will be releasing a new home videogame based on the hit motion picture Raiders of the Lost Ark.” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 14, 2015. 
“1983 Atari Coupon Calendar.” Edited by Savetz, 1983 Atari Coupon Calendar, Internet Archive, 14 June 2017, archive.org/details/1983AtariCouponCalendar. Closeup image of 2600 Yar’s Revenge artwork
Atari Age, “New Action Games!”, pg. 9, Vol. 1 Num. 1 (relaunch), May/Jun. 1982
Atari Age, “The Making of a High-Tech Ad”, by Michael Rozek, pgs. 20-22, Vol. 2 Num. 2, Jul./Aug. 1983
Rozek, Michael. “The Making of a High-Tech Ad.” Atari Age (Reprinted from Technology Illustrated, 1983) July & aug. 1983: 20-22. Print. Two of the Bel statters behind the Atari commercial were designer-director Clark Anderson and codirector and technical expert John Hughes. And we have the E&S (ebans and Sutherland) machine. Next the Abel team constructed an animatic… so the computer is instructed to display a thicket of tightly packed parallel lines that, at a distance, resembles a solid shape. “…we simply placed color filters between the video screen and our thirty-five-millimeter movie cameras. “It coordinated eighty lighting events in two minues.” For cues, the actor watched the animatic on a hidden video monitor.
Page 1 -Extra-Terrible
The Terrible E.T. Game from Atari
Billboard, “Movie, Video Giants Join Game Supremacy Battle”, by Jim McCullaugh, pg.4, 68, Jun 19 1982
Image of Steve Ross, as well as other information from New York magazine, “Steve Ross On the Spot” by Tony Schwartz, pgs. 22-32, Jan 24 1983
Hubner, John, and William F. Kistner, Jr. “Atari Made a Business Where None Had Been.” York Daily Record (Knight-Ridder News Wire) 07 Jan. 1984: 1E+. Newspapers.com. Web. 20 Oct. 2021. “Kassar called me one day and said he’d bought the rights to E.T. for $22 million,” a former Atari executive says.
Image of E.T. touching an Atari joystick was originally referenced from Atari Club Magazin (German), Issue #1 1983, eventual posted ad from Billboard, Oct 16 1982
“Business Briefs: Consumer.” Tallahassee Democrat 07 Nov. 1982: 1E. Newspapers.com. Web. 13 Oct. 2021. Atari plans to spend $5 million this month and in December on media advertising to promote its new E.T. video-game cartridge.
Crawford, Chris. “Old Fart Stories.” Chris Crawford on Game Design. Indianapolis, IN: New Riders, 2007. 438. Print. After the introductions, Howard began his presentation by declaring, This is the game that will make the movie famous.”
Starlog, “Log Entries: ‘ET’ Vid Games, D&D Film and That’s Not All”, pg. 16, Nov 1982
Electronic Fun with Computers and Games, “E.F.G. Times: Spielberg Helps Design New E.T. Game”, Jan 1983. “‘The two worked well together,’ said Atari’s Ron Stringari, ‘and Steven was over here every week to help on the game.'”. Retrieved from the Internet Archive, Electronic Fun with Computers and Games collection, Sep 8, 2015
Warshaw, Howard Scott. “The Principles of Game Design: What Was the Thinking behind the Infamous E.T.?” Comp. Itshub. Wireframe 26 Sept. 2019: 28-29. Internet Archive. 19 Mar. 2020. Web. 14 Oct. 2021. When I first presented my design to Steven Spielberg, he suggested I do a Pac-Man-like game.
Christopher, Kevin. “ET Phones Home for the Holidays.” Vidiot Mar. 1983: 41-43. Print. Spielberg actively helped make E.T. what he calls “the first emotionally oriented video game ever produced. …the E.T. commercial Atari has been blasting out at you…was produced by none other than Spielberg himself. He picked its director, and a cinematographer and camera operator involved in the original film have also been utilized.”
Sciretta, Peter. “Steven Spielberg’s Arcade Games Collection.” SlashFilm.com. SlashFilm, 25 Mar. 2015. Web. 15 Oct. 2021. Image of Steven Spielberg with Missile Command
Billboard, “Games Help Boost Thanksgiving Sales, by John Sippel, pgs. 1, 68, Dec 11 1982
“Will Atari Be Brought Back with Creativity?” The Daily Spectrum [Saint George, Utah (UPI News Wire)] 11 Oct. 1984: B4. Newspapers.com. Web. 22 Dec. 2020. Atari shipped $98 million worth of cartridges the week before Thanksgiving in 1982. A week and a half later, it shipped none.
Dumping Unsold E.T. Games in New Mexico Landfill
Image of dump truck procession at Alamogordo landfill, as well as other information, from Softline, “Infomania, In Memoriam”, pgs. 50-51, Nov/Dec 1983. “Last September 27, fourteen dump trucks moved in solemn procession to the Alamogordo municipal landfill, bearing surplus game cartridges and computer bric-a-brac.” Retrieved from the Internet Archive, Softline collection, Nov 2 2015.
Videogaming and Computergaming Illustrated, “Eye On: If You Can’t Bury the Competition…”, pg. 8-9, Dec 1983. “The games came from Atari’s El Paso plant, which has ceased the manufacturer of videogames.” “Atari says that, contrary to press accounts, the cartridges were defective…” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 18 2015.
The Deseret News, “Atari will lay off 380 at El Paso plant and shift assembly work to Far East”, UPI service, pg. B5, Sep 9 1983. “Atari Inc. will lay off 380 employees next week and shift its El Paso manufacturing and assembling operations to plants in Taiwan and elsewhere in the Far East, company officials said Thursday.” “[Bruce] Entin said some of the El Paso plant functions already had been transferred, with some manufacturing of video game cartridges being done in facilities in Puerto Rico.” Retrieved from Google News, Sep 18 2015. 
Billboard, “Dealers Await Formal Video Games Return Policy”, by Earl Paige, pgs. 1, 21, Jan 8 1983
Antic, “E.T. Game for Computers”, by Robert DeWitt, pgs. 20-21, July 1983
Ressner, Jeffrey. “Home Video Game Glut Forces Dealers To Be More Selective In Ordering.” Comp. Associate-manuel-dennis. Cash Box 5 Mar. 1983: 5+. Internet Archive. Web. 23 Sept. 2019. …most of the game manufacturers have instituted complex returns and stock balancing plans – almost all on a “buy two, return one” basis…
Harris, Kathryn. “Quickly Fading E.T. Fad Costly for Atari, Retailers.” Arizona Republic (Los Angeles Times News Wire) [Phoenix, Arizona] 22 Mar. 1983: C5. Newspapers.com. Web. 13 Oct. 2021. Michael Moon [sic], president of the Atari division that manufactures the game [E.T.], said that is an exaggeration, but he conceded, “The cartridge did not live up to our expectations.”
Hubner, John, and William F. Kistner, Jr. “Atari Made a Business Where None Had Been.” York Daily Record (Knight-Ridder News Wire) 07 Jan. 1984: 1E+. Newspapers.com. Web. 20 Oct. 2021. Late in September of this year, people around Alamogordo, N.M., were amazed when 20 trucks filled with Atari games, VCSs and home computers ended up in the local dump, where they were crushed by a bulldozer. Atari says they were defectives, but kids who scavenged the dump said the games were playable.
Page 2 – Shovelling Dirt Into the Grave
The Oversaturation of Bad Games in the Video Game Market
InfoWorld, “Horror films’ themes reappear in video games” by Tom Shea, pg. 67, Feb 28 1983
Billboard, “Vid Game Firm Apollo Files Chapter XI”, pg. 66, Dec 4 1982
“Howard Scott Warshaw: Once Upon Atari.” Video Game Collector Spring 2005: 16. Web. 28 Sept. 2021. Howard Scott Warshaw interview: Tod Frye (the programmer of Pac-Man) and me and a couple other people were going to go and form another new software venture, which I really wanted to do. ;That company was going to be 20th Century Fox Games. ;Tod went right to our manager and said “Hey, it’s costing too much to work here now. What are you gonna do?” ;…they [Atari management] started handing out $40,000 checks to a number of us. And that was when the real bonus plan hit.
Marktrade, comp. “Fox Lets Hot Porker Loose.” Electronic Entertainment Sept. 1983: 24-25. Internet Archive. 12 Dec. 2016. Web. 12 May 2021. Frank O’Connell, Fox executive, said Fox expects the new game “to be the most successful video and peronal [sic] computer game in 1983.
Ahl, David H., and Betsy Staples. “1983 Winter Consumer Electronics Show.” Comp. Unknown. Creative Computing Apr. 1983: 18-50. Internet Archive. 13 Mar. 2017. Web. 14 Sept. 2021. Colour image of Jamie Farr at podium, promoting M*A*S*H video game
Six For the 4077th. (1983, April). Electronic Fun with Computers & Games, 22. https://archive.org/details/Electronic_Fun_with_Computer_Games_Vol_01_No_06_1983-04_Fun_Games_Publishing_US/page/n21/mode/2up?q=Odyssey%C2%B3. Image of Jamie Farr with M*A*S*H box. Other info: Jamie Farr, who plays Klinger, is the official spokesman for the M*A*S*H game.
Knoedelseder, William K., Jr. “K-tel Files for Protection After Losing $33.8 Million.” The Los Angeles Times 09 Oct. 1984: CC Part IV. Print.
Video Games Player, “Lights! Camera! Action! Roll ’em!” by Tony Cohen, pgs. 18-23, Aug/Sep 1983. “A Western, such as 20th Century Fox’s Butch Cassidy and the Sundance Kid, is seemingly tailored for adaptation as a video shoot-’em-up. (Fox Video Games, of course, is doing it.)”. Retrieved from the Internet Archive, Video Games Player collection, Sep 11, 2015.
Wikipedia, “Name This Game”, referenced Jun 28 2014
The Sydney Morning Herald (NY Times News Service), “The terrible software wars are only just starting”, by Aljean Harmetz, pg. 8, Jan. 19, 1983
“US Games.” The Video Game Update , January 1983, p. 7.
The last game (formerly entitled GUARDIANS OF THE TREASURE) is UNTITLED! Scheduled to ship around February 1, a major contest is planned to Name The Cartridge!

Scott, Jason, comp. “CES.” Video Games Apr. 1983: 39. Internet Archive. May 2013. Web. 30 Dec. 2019. Photo of Eggomania ‘Weird Bird’ by Perry Greenberg
About.com, “Garry Kitchen – Cooking Up Video Game History”, by D.S. Cohen, retrieved Jul 28 2014
Lakeland Ledger (Knight News Service), “Solving the mystery maze of video games”, by Jonathan Takiff, pg. 2C, Dec. 9, 1982
Ressner, Jeffrey. “Atari Dismisses 1700, Production Relocated Abroad.” Comp. Associate-manuel-dennis. Cash Box 5 Mar. 1983: 10+. Internet Archive. Web. 23 Sept. 2019. Atari, Inc….announced last week that it is dismissing 1.700 employees from Northern California plants…[etc. etc.] ;He [Mitch Perliss, record store retailer]adds that his supplier, in tandem with Data Age, has given him complete return privileges on the new “Journey Escapes” cartridge… “If we don’t sell them, we can return them for the full price, with no dating required.”
“Tradetalk.” Softtalk Dec. 1983: 165-66. Softalk V4n04 Dec 1983. Internet Archive. Web. 25 Feb. 2016. Sirius Software has filed a $20 million suit against Fox Video Games….alleging breach of contract, fraud, and breach of covenant of good faith. The Day, New London Conn.(Knight-Ridder Newspapers), “Gobbling up the home video market”, by Joe Urschel, pg. C6, Mar. 6, 1982
Saunders, Glenn. “Stella at 20.” Glenn Saunders, 1997. Accessed 1998. Image of Doug Neubauer from 1997.
Image of Stan Lee playing Spider-Man with the Green Goblin and Spider-Man from Electronic Fun with Computers and Games, “E.F.G. Times: Spiderman Arrives from Parker”, Feb 1983. Retrieved from the Internet Archive, EFWCG collection, Sep 8, 2015.
Videogaming Illustrated, “Eye On: The Force is With Them”, pgs. 10, 60-61, Aug, 1982. “He [Richard Stearns, Director of Marketing at Parker Bros.] admits that Parker Brothers had gone to Intellivision in 1981, offering to make cartridges to complement their system, in exchange for technical information which would have helped get the games out last year. But Intellivision turned them down…” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sept 14, 2015.
Billboard, “Parker Brothers Releasing 16 New Game Cartridges”, pg. 8, Dec 11 1982
Hudson, Lou. “Video Play.” Fort Worth Star-Telegram 05 Feb. 1983: 53. Newspapers.com. Web. 23 Aug. 2021. Lord of the Rings, Strawberry Shortcake and Star Wars are expected in Intellivision versions later.
WallyWonka. “Atari 2600 3D Boxes Pack.” EmuMovies, 25 July 2018, emumovies.com/files/file/1487-atari-2600-3d-boxes-pack/. Box art for Lord of the Rings for the Atari 2600.
“Toy Fair 1982 Parker Brothers “the Best Is Yet to Come” Promotional Video.” YouTube. Ed. ScottithGames. 15 Apr. 2012. Web. 24 Aug. 2021. Parker Brothers Promotional Video for 1982 Toy Fair
Parker Brothers. Parker Brothers Video Games. Beverly, MA: Parker Brothers, 1983. Atari Catalog: Parker Brothers Video Games (1983) (Parker Brothers)(US)[a]. Internet Archive, 22 May 2013. Web. 23 Aug. 2021. Image of gameplay in Lord of the Rings
Videogaming Illustrated, “Eye On: Back at the Ranch”, pg. 10, Feb 1983. “Parker Brothers certainly has had a phenomenal start with The Empire Strikes Back videogame: released in June, it has achieved over thirty million dollars in retail sales.” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 14 2015.
Videogaming Illustrated, “Eyes On: Promises Promises”, pg. 7, Sep 1983. “From Parker Brothers, two new games based on George Lucas’ Return of the Jedi: Deathstar Battle and Ewok Adventure…” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 17 2015.
Image of Fox Video Games’ M*A*S*H tent at 1983 Winter CES from Billboard, “CES Photo News”, pg. 64, Jan 22 1983
Page 2 – Don’t Stop Believing
The Journey Rock & Roll Video Game
“Journey Escape – Data Age – Atari 2600.” AtariAge. N.p., n.d. Web. 12 Oct. 2019. <https://atariage.com/box_page.php?SoftwareLabelID=252>. Box art for Journey Escape home video game
Wiswell, Phil. “A Game to Beat the Band.” Comp. Scottithgames. Electronic Fun with Computers & Games July 1983: 83. Internet Archive. 28 May 2013. Web. 12 Oct. 2019. <https://archive.org/details/Electronic_Fun_with_Computer_Games_Vol_01_No_09_1983-07_Fun_Games_Publishing_US/page/n81>. Image of J. Ray Dettling in the outdoors with notepad, surrounded by electronic creations from Journey Escape. Image of Dettling with Frankenstein’s Monster graphics and Bermuda Triangle graphics, 1983
Blanchet, Michael, and Randi Hacker. “They’re Almost Here: A Monster-sized Preview of New Games.” Comp. Scotithgames. Electronic Fun with Computers & Games May 1983: 91. Internet Archive. 28 May 2013. Web. 25 Aug. 2021. According to Data Age, groups such as the Rolling Stones, Fleetwood Mac and Styx have already approached the firm with proposals for games. ;By June, Journey Escape will be issue in formats compatible with Intellivision and ColecoVision.
Softline, “Now Then: This Is a Computer Game…, CES” by Andrew Christie, pgs. 42-43, July/Aug 1983. “Data Age Video Games filed for chapter 11 bankruptcy, following Apollo and U.S. Games, after shipping four hundred thousand copies of its Journey/Escape cartridge…Twenty-five thousand copies were sold in stores, and the other three hundred seventy-five thousand were returned…” Retrieved from the Internet Archive, Softline collection, Nov 1 2015. 
WallyWonka. “Atari 2600 3D Boxes Pack.” EmuMovies, 25 July 2018, emumovies.com/files/file/1487-atari-2600-3d-boxes-pack/. Box art for Frankenstein’s Monster, Pigs in Space, Pepsi Invaders, Chase the Chuck Wagon, Snoopy and the Red Baron
Page 3 – Custer’s Worst Stand
Custer’s Last Stand and Other Porn Games for the Atari 2600
CriticalKate, comp. “X-Game Flap.” Weekly Television Digest 18 Oct. 1982. Internet Archive. 8 Aug. 2021. Web. 25 Aug. 2021. NOW, Women Against Rape and contingent of American Indians picketed opening of National Music SOund & Video Show at N.Y. Hilton last week to protest showing of 3 adult-only Atari-compatible videogames by Mystique, unit of American Multiple Industries.
Ressner, Jeffery. “Home Video Game Suppliers, Titles Continue to Proliferate.” Comp. Associate-manuel-dennis. Cash Box 4 Sept. 1982: 24. Internet Archive. 26 Sept. 2016. Web. 11 Oct. 2019. <https://archive.org/details/cashbox44unse_12/page/24>. Caballero Control Corporation, one of the leading manufacturers of X-rated videocassettes, has joined forces with American Multiple Industries and may market adult video game for the home market as early as fall… ;The first rollout of soft-core software…due in stores by November. CCC vice president Al Bloom predicted 500,000 cartridges will be in stores by November, with 1.5 million more by January. By early 1983 Bloom said 750,000 units will be produced monthly… ;Although the first games are exclusively for the Atari format, AMI spokespeople said Intellivision games are being planned…

Pollack, Andrew. “Video Games Still Growing.” Dayton Daily News (NY Times News Wire) 21 Nov. 1982: 11-12. Newspapers.com. Web. 27 July 2021. Its [American Multiple Industries] product demonstration in New York recently attracted protesters from the National Organization of Women, Women against Pornography and American Indian groups. Then the company was denounced and sued by Atari. ;Atari, in its suit, claims its business has been damaged because people associated with the X-rated games, not realizing they were developed by a separate company. “Several people have written to us that they are distressed that Atari would be doing this,” said Kenneth J. Nussbacher, an Atari attorney. “People have been telling us they are going to throw out our products.”
CriticalKate, comp. “Atari Files Suit Against Adult Theme Video Game.” The Sheboygan Press – AP News Wire 16 Oct. 1982. Internet Archive. 8 Aug. 2021. Web. 24 Aug. 2021. The game’s [Custer’s Revenge] creator, Joel Miller, denied in an interview in New York that Custer rapes the woman. “He’s seducing her, but she’s a willing participant.” he said. ;American Multiple, a year-old company, until recently only made plastic storage cases for video and audio cassettes.
“Custer’s Revenge Dies with Its Boots Off.” 80 Microcomputing, May 1982, p. 352. He [Stuart Kesten, AMI President] added American Multiple sold 100,000 of each game before halting their production January 1st.
…that lawsuit, filed in federal district court in Los Angeles, will probably be dropped.

CriticalKate, comp. Long Island Journal 20 Feb. 1983. Internet Archive. 8 Aug. 2021. Web. 22 Sept. 2021. A California video game manufacturer, American Multiple Industries, has dropped a Federal civil rights suit against the County Legislature for saying as much

in a resolution passed in November. ;Martin Ashare, senior assistant county attorney, said that the manufacturer may have decided to back off after the county applied to Federal Judge Mark Consantino to recover legal expenses incurred by the country from the manufacturer if the suit failed.
Image of Custer’s Revenge protester and other information from Video Games, “Blips: They Say It Ain’t Porno”, by Howard Mandel, photograph by Perry Greenberg, pgs. 13 – 14, Vol. 1 Num. 4, Jan 1983
Billboard, “‘Custer’ Game Is Subject Of Two Lawsuits”, pg. 8, Dec 11 1982
Reilly, Kristen. WAP, NOW, Native Americans Protest Racist/Sexually Violent Video Games. Comp. CriticalKate. Women Against Pornography, 1982. Print. Images of women protesting Mystique in New York City: Woman holding sign “Pornography’s Rape Theme…” and woman holding sign “Respect our Women….” Photos by Betty Lane.
Harmetz, Aljean. “Video Games Marching Forward.” Shreveport Journal (New York Times Reprint) 6 Oct. 1982: 3D. Newspapers.com. Web. 15 Sept. 2020. Cartridges that cost approximately $6 to make are selling for an average of $34.
MicrofilmIssueGenerator, comp. “Majors’ Home Vidgame Arms May Be Chewing Crumbs Left In Market Pie By Biz Veterans.” Variety [New York, N.Y.] 18 May 1983: 33-34. Internet Archive. 3 July 2021. Web. 21 Aug. 2021. Consensus in the industry is that the minimum launch budget for a nationally distributed vidgame must be at least $2-3,000,000 if the product is to have any chance. In order to cover all expenses, most company now say that they’re looking for games that sell 400,000-1,000,000 copies.
CriticalKate, comp. “Manufacturer Drops Adult Video Game.” Burlington Hawkeye (UPI News Wire) 12 Jan. 1983. Internet Archive. 8 Aug. 2021. Web. 21 Sept. 2021. We will be discontinuing Custer’s Revenge in our adult video game line,” said GameSource spokesman Ricahrd [sic] Miller. ;GameSource disclosed Monday it had taken over the North American rights for sales and distribution from American Multiple Industries for their line of adult video games.
Fetherston, Drew, and CriticalKate. “‘Custer’s Revenge’ Bits the Dust.” Newsday 18 Jan. 1983. Internet Archive. 8 Aug. 2021. Web. 22 Sept. 2021. AMI did manage to sell about 75,000 Custer cartridges, according to the spokesman, who declined to be identified.
Images of the Playaround 2in1 game boxes from AtariAge, retrieved Oct 11, 2019: https://atariage.com/system_items.php?SystemID=2600&itemTypeID=BOX
Associate-manuel-dennis, and Jeffrey Ressner. “Home Vid Game Firms Face Prospects of Shakeout in ’83.” Cash Box, 16 Apr. 1983, p. 16. Internet Archive, archive.org/details/cashbox44unse_43/page/16. …the move by Atari, Inc. to utilize a network of exclusive distributors for its product…; According to Show Industries’ Perliss, 80% of his company’s game software sales are current “hits,” while only 20% of sales come from catalog items.
Page 3 – Same Old Same Old
Lack of Innovation in “New” Video Game Systems
New York Magazine, “Can Atari Stay Ahead of the Game?” by Bernice Kanner, pgs.15-17, Aug 16, 1982
Images of the Atari booth at the Jan 1984 CES courtesy of Steven Szymanski
Page 3 – The Home Computer Bytes
The Boom in Sales for Personal Computers
Sirius Elettronica. Ecco L’incredible Commodore 64. Milan: Sirius Elettronica. Internet Archive. 1 Apr. 2020. Web. 24 Aug. 2021. Cover with Commodore 64 with colourful C64 logo
Radio-Electronics, “Technology – Innovation Consumer Products of 1983 – Games and computers”, by Danny Goodman, pg. 51, Sept 1983
MicroTimes, “Free Fall: The Thinker’s Computer Games” by Mary Eisenhart and Bennett Falk, pgs. 12-13, May 1984. Retrieved from the Internet Archive, MicroTimes newsletter collection
Page 3 – Atari Stumbles
Atari Posts Disappointing Earnings, Triggering the Crash
Billboard, “Atari Sales Hit Snag; Warner Stock Nosedives”, by Irv Lichtman, pg. 3, Dec 18 1982
Hammer, Alexander R. “Dow Loses 9.85 in Late Selloff.” The New York Times 9 Dec. 1982: n. pag. The New York Times. Web. 21 July 2017. Also contributing to the selloff was an announcement by Warner Communications, the maker of Atari video games, that its fourth-quarter earnings would be lower than the year before because of poor sales of its video cartridges and coin-operated games.
Pollack, Andrew. “Atari Fights Hard to Keep Market Share.” The Sydney Morning Herald (New York Times News Wire) 22 Dec. 1982: 7. Newspapers.com. Web. 20 May 2021. Warner’s earnings statement said the company expected December quarter earnings to be roughly 60 cents a share, compared with the $1.17 a share recorded in last year’s December quarter. Even more dramatically, the results will be only one third of the $1.60 to $2 expected at Atari by most Wall Street analysts who, now furious and embarrassed, say that the company privately confirmed such estimates up to the morning before the December 8 bombshell announcement.
Associate-manuel-dennis, comp. “WCI Reports Rise In 1st Qtr. Income.” Cash Box 12 June 1982: 12. Print. WCi’s consumer electronics division posted operating revenues of $420.9 million…for the first quarter of 1982, a substantial increase over operating revenue of 150.1 million…..during the comparable period in 1981. WCI attributed much of this growth to Atari and its home video version of Pac-Man.
Billboard, “WCI Posts Fourth Quarter Drop”, pg. 4, Feb 26 1983
Billboard, “Atari To Dismiss 1,700 workers”, pgs. 4, 68, Mar 5 1983
Videogaming Illustrated, “Eye On: Resignation”, pg. 10, Sep 1983. “In the first quarter of this year, Atari reported an operating loss of $45.6 million.” Retrieved from the Internet Archive, Videogaming Illustrated collection, Sep 18 2015.
“Atari Relieves Executive of Duties.” The New York Times. N.p., n.d. Web. 21 July 2017. Perry D. Odak, the president of the home video game division of Atari Inc., has been relieved of all his duties, the company announced yesterday.
Weinstein, Henry. “Atari Settles Landmark Lawsuit.” The Los Angeles Times 04 June 1986: J2. Newspapers.com. Web. 11 Aug. 2021. In a landmark lawsuit settlement, Atari, once the nations leading manufacturer of video games, has agreed to distribute more than $600,000 in back to about 500 former employee who lost their jobs in a massive layoff in 1983. The case stemmed from Atari’s announcement on Feb. 22, 1983 that it was firing 1,700 California employees and moving most of its manufacturing to Hong Kong and Taiwan to lower production costs. The 537 employees potentially affected by the settlement were all laid off that day. ;She [former Atari employee Maria Carson] and 536 other former Atari employees each are eligible to collect $1,182.92 – roughly the equivalent of four weeks’ back pay – under the settlement. ;On the contrary, the suit asserted, workers had been told that their jobs were secure until at least 1985. ;He [John True of the Employment Law Project] said that Atari will also pay out $390,000 in legal fees as part of the settlement. ;Atari Corp…noting that the plaintiffs had originally asked for $13 million in damages when they sued in August, 1983.
“Alda Calls Own Shots in TV Ads.” Statesman Journal (AP News Wire) [Salem, Oregon] 25 Sept. 1983: 7E. Newspapers.com. Web. 28 Dec. 2020. Alda has completed 11 commercials for airing in late September and October, said Ted Voss, Atari’s senior vice president for marketing and advertising. ; …Alda…was given a unique privilege: the right in his contract to approve the concept and script of each commercial. ;One of the commercials Alda does portrays an Atari computer as probably the best roommate a college student will ever have. “The original concept was that the student was a boy, said Voss. “He rewrote it to be non-sexist.” ;Alda… is here to stay: it runs for five years.
Uston, Ken. “Reflections on CES.” Creative Computing Sept. 1983: 224-31. Creative Computing Magazine (September 1983) Volume 09 Number 09. Internet Archive. Web. 25 Feb. 2016. At a “special” press conference, Atari announced that Alan Alda has been signed as Atari’s spokesperson for five years…I was told by the same reliable source…that it’s a $10 million deal.
McWilliams, Peter. “Personal Computers: High Tech Is Apple of Alda’s, Other Stars’ Eyes.” Arizona Daily Star (Universal Press Syndicate Wire) [Tucson, Arizona] 12 Oct. 1983: 4 – CE. Newspapers.com. Web. 17 Sept. 2020. Alan Alda has signed a five-year contract to be the “media spokesman” for Atari. ;Alda is getting a reported $10 million for his trek into high tech.
Coach, Ken, and Jason Scott. “Behind the Screens.” Family Computing Mar. 1984: 16. Internet Archive. 30 Aug. 2011. Web. 15 Feb. 2020. …Alda has worked out an unusual agreement whereby the star maintains 100 percent control over the commercials’ contents. ;Alda…has an 800XL at home and another in the office… ;Alda has tried his hand at programming, too. Within three days of being presented with his new computer, he had authored his first program, titled Hi Doc, which simulated a session with a psycho-analyst.
Time Magazine, “Video Game Go Crunch!”, by Charles P. Alexander, Monday Oct. 17, 1983
D’Ignazio, Fred, and Selby Bateman. “The Promise of Things to Come: Atari’s New Lease on Life.” Compute!, July 1984, pp. 44–48. Image of James Morgan in close-up wearing red tie. Other info: In his effort to reshape Atari, Morgan laid off an additional 250 employees last winter, including Chris Crawford, Atari’s highly regarded research-and-development director. Also, Atari’s chief scientist, Alan Kay, left the company in the spring to join Apple Computer as an Apple Fellow. ;”Also, he [Alan Alda, Atari Spokesperson] never sells RAM, ROM, or CPUs. The CPU is the least important element in the computer.”
Libes, Sol. “Bad Times in the Home Computer Biz.” Computers & Electronics, Feb. 1984, pp. 36–37.
…sales that dropped from $1.41 billion to $753.6 million.

Grevstad, Eric. “Second-quarter Results.” 80 Microcomputing, Nov. 1983, pp. 280–282. TI’s two partners in trouble were Mattel Electronics, which reported a $24 million second-quarter shortfall, and Warner Communication’s Atari, which dropped a whopping $310 million.

Pulse Train: Selling with stars. (1983). 80 Microcomputing, pp.298-300.
Page 3 -Axe Continues to Fall at Atari
Change in Atari Leadership, Continued Earning Losses
Hubner, John, and William F. Kistner, Jr. “Atari Made a Business Where None Had Been.” York Daily Record (Knight-Ridder News Wire) 07 Jan. 1984: 1E+. Newspapers.com. Web. 20 Oct. 2021. Which makes it hard to understand why he [Ray Kassar] risked a Securities and Exhange Commission investigation by selling some 5,000 shares of Warner stock, for approximately $260,000, just 23 minutes before Warner announced its drastically reduced projected earnings las December. ;Kassar denied any impropriety, but signed a consent decree requiring him to “disgorge” $81, 875 in alleged profits.
Harris, Kathryn. “Kassar Resigns as Atari Chairman.” The Los Angeles Times 08 July 1983: 1 Pt. IV-2 Pt. IV. Newspapers.com. Web. 20 May 2021. Warner Communications Inc…..said Thursday that it has accepted the resignation of Atari’s longtime chairman and chief executive, Raymon Kassar, and has named a Philip Morris U.S.A. executive as his successor. ;James J. Morgan… assumes his new post on Sept. 6. ;In late December, Warner disclosed that Kassar sold 5,000 shares of Warner stock on Dec. 8, hours before Warner announced that problems at Atari would reduce estimated 1982 earnings by nearly $100 million. ;In a telephone interview, Morgan said that he was approached less than two weeks ago and that the deal was negotiated in just four days, without a trip to Atari’s Sunnyvale headquarters.
“N.V. Philips, Atari Eye Venture.” Chicago Tribune 12 Jan. 1984: Section 2-3. Newspapers.com. Web. 2 Jan. 2021. N.V. Philips… and Warner Communications Inc.’s troubled Atari Inc. subsidiary are discussing a joint venture to produce a new kind of video game. [Philips president Wisse Dekker] hinted the joint-venture video game might combine Philips’ laser videodisc technology with Warner’s home computer and video game expertise.
Sanger, David E. “Key Atari Scientist Switches to Apple.” The New York Times 3 May 1984: D5. Nytimes.com. Web. 4 May 2021. Alan Kay, the chief scientist at Atari Inc. and the key figure in Atari’s effort to regain prominence in the home computer market, resigned to take a top research post at Apple Computer Inc., Apple said yesterday. ;”When I left last month it was clear that they would be putting their efforts in the short term,” he said. ;Research and development funds, once plentiful at the company for Mr. Kay’s study of artificial intelligence and products for the 1990’s, have recently been diverted to short-term product development, he said, and his staff was cut.
Miranker, C.W. “Big Layoffs Begin Again at Atari.” The San Francisco Examiner 30 May 1984: C1. Newspapers.com. Web. 2 Jan. 2021. The layoffs came amid reports that N.V. Philips, the Dutch electronics and entertainment company, was negotiating to buy a stake in Atari, perhaps up to 50 percent. Sources said Philips was making its investment contingent on Atari “trimming down” the company.
Harriss, Kathryn. “Warner on Verge of Selling Atari Inc.” The Journal News (LA Times News Wire) [White Plains, New York] 14 July 1984: B4. Newspapers.com. Web. 2 Jan. 2021. For nearly a year, Warner explored the possibility of selling some portion of Atari to N.V. Philips… or forming a joint venture with philips in one or more of Atari’s businesses. Sources said the two companies made a serious effort to reach an agreement in mid-May, but were unable to arrive on terms.
Atari Coin Connection, “James J. Morgan Joins the ‘A’ Team”, edited by Laura Burgess, pg.1, Oct 1983. “Mr. Morgan comes to Atari after a 20-year career with Philip Morris U.S.A….” “He served in a series of marketing positions which culminated in 1978 with his appointment as Executive Vice President of Marketing. As of September 6, he succeeds Raymond E. Kassar…” Retrieved from Pinball Pirate, Atari Coin Connection archive, Sep 17 2015.
Mace, Scott. “Can Atari Bounce Back?” InfoWorld 27 Feb. 1984: 100. Print. Image of James Morgan with Atari wares. …the company can’t build its new 800XL computer fast enough. Morgan told analysts that Atari could have shipped 40% more computers to waiting retailers, if it had been able to produce them. The 600XL computer also sold well over the Christmas holidays. His [Morgan] first major decision…was not to show any product the company didn’t have ready for shipment. Morgan scuttled the 1400XL and put the 1450XLD on hold. He [Morgan] also scuttled a project that had been well received when announced at the June 1983 CES, a box that would have let Atari computers run the CP/M operating system. Before the show, the 1600XL, a new computer that would have run the popular MS-DOS operating system, was also scuttled. The recent price increase of the 800XL and the 600XL, to $249 and $199 respectively in most stores, puts the Atari models $50 above the hot-selling Commodore VIC 20 and Commodore 64.”Everyone else starts at 80% and works down to 50%” when giving the percentage of VCS machines in use. ;Evidence suggests that atari’s relationships with business associates, including distributors and software authors, are still brutish at times…. “There were so many screaming, shouting, threatening dialogues…”
Image of James Morgan, and other information from Antic, “Exclusive Antic Interview: James Morgan” by James Capparell, pgs. 38-43, Mar 1984
Image of the AtariLab from Compute!, “The Promise of Things to Come: Atari’s New Lease On Life” by Fred D’Ignazio and Selby Bateman”, pgs. 44-48, July 1984
MicrofilmIssueGenerator, comp. “Atari Consolidating.” Variety [New York, N.Y.] 14 Sept. 1983: 89. Internet Archive. 6 July 2021. Web. 21 Aug. 2021. Atari Inc. plans to consolidate its scattered operations in a $60,000,000, 400,000-square foot building here by 1985.
“Newsbytes: Atari: Atari Triples Sales.” The Computer Paper, Apr. 1988, p. 4.
Atari Corporation says sales increased by 199%…

Page 3: Jack Tramiel – Meet the New Boss at Atari
Atari Sold to Jack Tramiel
Holden, Peter. “WCI Reports 2nd Quarter Losses; Atari Sale Cited.” Comp. Associate-manuel-dennis. Cash Box 18 Aug. 1984: 5+. Internet Archive. Web. 22 Sept. 2019. Warner Communications Inc. (WCI) has announced a net loss of $437.6 million for the second quarter ended June 30… ;…through a written statement from WCI chairman and chief executive Steven J. Ross that the loss “was due largely to the operating losses at Atari.”
“Atari Lays off Middle Management Workers.” Statesman-Journal [Salem, Oregon] 31 May 1984: 14A. Newspapers.com. Web. 2 Jan. 2021. Computer game giant Atari, which lost more than $500 million last year, began laying off hundreds of middle management workers this week…. ;The layoffs cam amid reports that N.V. Philips, a Dutch electronics and entertainment company, was negotiating to buy a stake in Atari. ;After riding Pac-Man fever and the popularity of its 2600 VCS game console to profits of $323.3 million on sales of $2 billion in 1982…..Losses mounted to $538.6 million on sales of $1.1 billion during 1983. In the first quarter of this year, Atari reported a deficit of $34.9 million on sales of $153.8 million.
Demott, John S. “A New Pac-Man.” Time 16 July 1984. Print. Morgan had tried to save Atari, chiefly by slashing its worldwide work force from 9,800 to 3,500. ; Tramiel moved swiftly and ruthlessly after arriving at Atari’s headquarters in a two-tone rolls-Royce. ;Tramiel became aware that Atari was up for sale seven weeks ago and began talks with Warner Chairman Steven Ross. After arduous bargaining in Manhattan, Tramiel’s son Gary and Warner representatives closed their deal at 15:30 a.m. on Monday of last week. By that time, Tramiel was flying to California in a private jet and was at Atari headquarters by 8:30 a.m.
Associate-manuel-dennis, comp. “Atari Consumer Division Sold To Tramiel for $240 Million.” Cash Box 14 July 1984: 5. Internet Archive. 26 Sept. 2016. Web. 2 Oct. 2019. <https://archive.org/details/cashbox47unse_4/page/n3>. Warner Communications Inc. has sold its Atari subsidiary to Jack Tramiel, a former computer company executive, for $240 million in 10-year and 12-year notes. The sale, which took place Monday, July 2…; …relieves the company of a subsidiary which has been draining assets since its peak operating year in 1982 when Atari produced $2 billion in revenues.; Tramiel and his associates also received warrants to purchase one million shares of Warner…Warner also received a warrant to acquire shares in the new Atari…; …WCI’s consumer electronics division posted a $536.8 million operating loss in 1983.
Harris, Kathryn. “Fun and Games over for Atari.” The Age [Melbourne, Victoria, Australia] 10 July 1984: 38. Newspapers.com. Web. 1 Jan. 2021. Three days after Warner communications Inc. Unexpectedly sold its Atari home computer and home-video business… ;Now it is the biggest money-loser… ;Warner also gave Mr Tramiel warrants to buy 1 million shares of Warner stock at $US22 a share…
“Studio Sues for E.T. Payments.” Calgary Herald 03 Oct. 1984: C2. Newspapers.com. Web. 28 Dec. 2020. MCA Inc. filed has filed suit against Warner Communications Inc., accusing Warner of defaulting on obligations to pay for video-game and home-computer rights to E.T., The Extraterrestrial and three other film or TV properties. ;MCA… contents that Warner and four other parties owe the MCA unit at least $17 million. MCA contends that Warner not only fell behind in accounting and payments but also violated its licensing agreements when it included those rights in selling most of its Atari assets to computer executive Jack Tramiel in July. ;In its lawsuit, MCA said that it was promised a payment of $23 million three years after the first E.T. game shipment by Atari in November 1982. MCA attorneys content that the unpaid balance of $14 million is now due because Warner and Atari have breached their agreements. MCA also contends that it is owed $1.5 million for rights to The Last Starfighter, $200,000 for The A-Team and $1.25 million for rights associated with Dune, a movie to be released at Christmas.
Mace, Scott. “A New Atari Corp.” Infoworld 6 Aug. 1984: 51-53. Web. 18 Jan. 2021. Gary Tramiel is in charge of collecting unpaid debts, Sam Tramiel is president, and Leonard Tramiel now oversees software at Atari Corp.
InfoWorld, “Atari: From Starting Block to Auction Block”, by Giselle Bisson, pg. 52, Aug. 6, 1984
Image of Jack Tramiel showing off Atari 520ST computer at Computer Fair, Metro Convention Centre, Toronto Ontario from the Toronto Star, 1985. Photo by Keith Beaty
Scott, Jason, comp. “CES Summer Report.” Info Sept. 1987: 36. Internet Archive. 30 May 2013. Web. 28 Mar. 2020. …Atari was pushing their older games machines and even introduced a new game machine based on the XE computer.
“This Month in Videogame History.” Next Generation, July 1998, p. 26. Former layoff announces are made at Atari…most departments lose roughly 95% of their staff.
Camarda, Bill, ed. “Behind the Screens.” Comp. Jason Scott. Family Computing Nov. 1984: 10. Internet Archive. 30 Aug. 2011. Web. 5 Apr. 2020. Gone is much of Atari’s customer-service staff. The company says it’ll still provide service through its California headquarters, but during the transition it’ll be very slow.
YouTube – Once Upon Atari – www.youtube.com/watch?v=ylHHv4C1JnQ
1987 Atari XEGS brochure shot from the JohnClaudi Tumblr Page: http://johnclaudielectronics.tumblr.com/page/10 . Retrieved Aug 15, 2016
JTS dismiss v5.pdf(Legal document outlining suit against JTS as a result of its bankruptcy)
“News Bytes: And the Industry Continues to Get Smaller….” NextGen, Feb. 2001, p. 11. Infogrames will swallow Hasbro Interactive for the whopping price of $100 million.
Atari corporate logo, 2010. Digital image. 1000Logos. Web. 30 July 2021. Image of 2010 Atari logo

Fritz, Ben. “After Years of Chaos and Loss, Atari Tries Rebooting.” The Los Angeles Times 03 Aug. 2010: B1-B3. Newspapers.com. Web. 30 July 2021. Image of Atari President and CEO together, 2010
“RollerCoaster Tycoon Touch.” RollerCoaster Tycoon – The Ultimate Theme Park Sim. 02 Sept. 2017. Web. 30 July 2021. “Box” art for RollerCoaster Tycoon Touch
Page 3 – Game Over
The Rest of the Industry Follows Atari Down the Tubes
Tod Frye still and various information from documentary Stella at 20: Volume 2 –www.oocities.com/Hollywood/1698/cyberpunks/stellaat20_2.html(cached version)
Image of Tod Frye at the Portland Retro Gaming Expo (PRGE) by Joe Grand
Unannotated, Uncategorized or I Just Don’t Damn Remember!
Atari 2600 cartridges – www.steverd.com/what26/what26.htm by Steve Reed
High Score! The Illustrated History of Electronic Games – tinyurl.com/3bs6g3
Billboard, “Game Monitor: Coleco, Atari Going One-On-One in Expansion”, by Tim Baskerville, pgs. 21-22, Feb 26 1983
Racing the Beam: The Atari Video Computer System, by Nick Montfort and Ian Bogost, pg. 66, The MIT Press 2009
Electronic Games, “Q&A” by The Game Doctor, pg. 117, Jan 1984. Retrieved from the Internet Archive, Electronic Games magazine collection
Video Games, “Hyperspace”, by Steve Bloom, pg. 6, Vol. 1 Num. 6, Mar 1983
InfoWorld, “An unTimely award”, by David Needle, pg.38, Jan. 31, 1983
Atari Connection, “Home Computer News/ Atari Youth Advisory Board”, by Jim Carr, pgs. 17-18, Summer 1983

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Comments >>

  1. avatarMatthew

    Grabbing a handful of loose cartridge out of a 55 gallon drum and paying $10, thinking there might be one good game in the bunch. Never actually trying all of them, and missing the fact that two of them were really good games.

  2. avatarmm

    Console sales numbers are not quite right. If it’s total sales through mid 1982, 12M Atari and 1.5M coleco vision might be okay but Intellivisions should be about 2.5 million.

    There’s no evidence that any Atari 7800 were sold in 1984.

  3. avatarThomas

    Hello, I’m currently writing a paper on the topic of the Atari video game crash. I was wondering if you wouldn’t mind emailing me some of your sources/information regarding this topic? I definitely enjoy researching this idea, but there does not seem to be enough information online for me to write an effective paper.

    Thank you.

    1. avatarWilliam

      You can find all the sources at the bottom of the final page of the article, by clicking the Sources tab. Glad you find the site useful, and I wouldn’t mind reading your paper when it’s finished.

  4. avatarSawdust

    Enjoying reading your video game history. What is the “one special exception” mentioned in the shutdown of Atari game development?


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