After the surprise announcement on Friday, January 13, 1984, that Jack Tramiel is stepping down as the President and CEO of Commodore, he and a cadre of investors acquire the ailing consumer division of Atari in a cashless deal that has the group assuming the company’s $240 million debt, with Tramiel taking the reins of the newly renamed Atari Corp. as CEO on July 2, his son Sam Tramiel landing as Atari president. The next day Atari presents its new CEO, holding a press conference at the 1984 Summer CES in Chicago and billing it as “The Day the Future Began”.  The future of Atari’s coin-op division is that it is spun off the next year to Atari’s old arcade game partners at Namco America, and is renamed Atari Games, Corp…. makers of such arcade games as Gauntlet (1985), 720° (1986),  and Cyberball & Cyberball 2072 (1988-1989), among many others. On the consumer side, Tramiel remodels the 2600 into the even smaller $50 2600jr in 1985. Production of the Atari 2600 ends in 1991; its 14-year run marks it as the longest lasting home video game system in history.

Nolan Bushnell: King Pong Rebounds

Rewinding back to 1976, Atari co-founder Nolan Bushnell is getting tired of the day-to-day operations at the company, and his constant run-ins with the suits at mother corp. Warner are wearing him down. He finds his interest drawn to a new project within the company, to develop a national chain of pizza parlours/arcades that intends to be a more family-friendly place to play video games than seedy bars or bowling alleys. He convinces Atari to set up a new department called the Restaurant Operating Division, headed by Gene Landrum. On May 16,  1977, they open a 5,000 sq. ft. prototype restaurant at the Town and Country Village in San Jose, the grand opening of which is attended by local dignitaries, including San Jose Mayor Janet Gray Hayes. Getting as close as Bushnell ever will to realizing his youthful dreams of becoming a Disney Imagineer, the restaurant concept includes a cast of animatronic characters playing in a musical band for the customers. Over 30 video games and other mechanical attractions surround the dining area in an enclosed environment to keep sound at a sane level. Controls are also in place to ensure only restaurant patrons are playing the games. Bringing in his former Atari partner into the venture, Bushnell has Ted Dabney design a system to let patrons know when their food is ready.

 

Atari is wary of expanding the restaurant experiment further, so Bushnell purchases the Chuck E. Cheese’s Pizza Time Theatre concept from Warners for $500,000 in June of 1977, and after he leaves the company the following year, Bushnell furthers expansion of PTT, with Joe Keenan joining him soon after. After a successful IPO at $15 a share, share prices rise to over $27 per share by April of 1982. Restaurant franchises are offered at a buy-in of $20,000 at the start, with a set of the animatronic characters, with maintenance and programming training thrown in, costing prospective operators $40,000. By late 1981, there are over 100 Chuck E. Cheese restaurants going, both corporate-run and franchised.

As stated previously, Atari launches a lawsuit against Bushnell over his formation of Sente, claiming that he has breached the spirit of his non-compete agreement by vociferously promoting and securing funding for his new venture before the clause’s 5-year deadline, as well as for his purchasing of Videa, Inc., a video game development outfit made up of former Atari powerhouse game designers Ed Rotberg, Roger Hector and Howard Delman. The lawsuit seeks an injunction to prevent Bushnell from competing in the marketplace for at least a further year, as well as any profits realized over the contract breach. Undeterred, Bushnell presses ahead when his non-compete clause from his departure from Atari in 1978 officially expires and he forms new video game company Sente Technologies in 1983 under the Pizza Time Theatre umbrella. The launch of the new venture is heralded in a press party with typical Bushnell showmanship, including Bushnell himself emerging from wrappings made to look like a shipped arcade cabinet, along with a brass band, elephants, snakes, camels and monkeys. Like his former company, the name of his new gaming venture comes from the game Go, this time the term meaning to make the first move. Plans for the new company include arcade games called SAC or Sente Arcade Computer, which would allow operators to change their offerings with just a swap of a cartridge and some decal changes on the cabinet. To satisfy Atari’s lawsuit, he enters into a contract giving his former company exclusive home video game first-look rights to any coin-op made by Sente or Pizza Time Theatre, starting on Oct.1 1983.

On January 31 of 1984, Nolan Bushnell steps down as chairman of Pizza Time Theatre, while retaining 1.2 million shares of the company, or 19% of available notes. Bushnell moves to a chairmanship position at Sente, and Joe Keenan steps up as chairman of the restaurant chain the next month. Sente manages to roll the roller-ball controlled Snake Pit into arcades, allowing gamers to assume the role of hero Outback Jack, using a joystick and roller-ball controller in a bid to whip deadly snakes to death through 13 waves. After the game’s release, Pizza Time Theatre declares Chapter 11 bankruptcy, triggered by a bank creditor’s demand for the company to immediately pay a $50 million note. As part of the process, an announcement is made in May,1984 that Sente is being sold to Bally/Midway for $3.9 million, a price somewhat lower than what Bushnell had sold his first video game company for 8 years previous.

The game company manages to release a couple dozen other conventional arcade games, such as Hat Trick, Chicken Shift, Snacks’N Jaxon and Stocker. Sente introduces the 2nd generation SAC system, SAC II that same year. Hoping to energize the sagging arcade market by combining video games with motion control technology, SAC II puts gamers in a moving cockpit driven by hydraulic actuators to create a sense of actual flight in the first game for the system, Shrike Avenger, announced in 1984 but not released until 1986. One of the first games to charge $1.00 a play, with powerful actuators causing the motion it was also known to have flipped over and nearly injured a rider. Riding on the coattails of smash laser game arcade hit Dragon’s Lair, the planned model III SAC games are to be laserdisc machines. Pizza Time Theatre ends up going bankrupt in 1984, done in by the crashing videogame market and mounting debts via overzealous expansion and acquisitions. Bushnell’s company is then picked up by competitor Showbiz Pizza Place, and the two entities eventually merge into the modern Chuck E. Cheese franchise.

1993 ad for the modern Chuck E. Cheese’s franchise, after merger with Show Biz Pizza