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Californian Nolan Bushnell created a game called Pong in 1971. The following year –  with $250 of his own money and a matching investment from partner Ted Dabney –  Bushnell created Pong’s parent company.

He called it Atari, a term used in the Japanese strategy game GO to politely warn an opponent that he is about to be conquered.  Within a year, Atari sold 8,500 Pong machines.

The company also unleashed a new kind of corporate culture, one that was a haven for laid-back geeks. Engineers worked long hours, spurred on by piped-in rock music. They held two and three-day brainstorming sessions, fuelled by ample quantities of beer and pot.

They gathered in “think tanks,” the company’s hot tubs. Many were, in Bushnell’s words, “interested in high technology for games rather than bombs.”

One manager almost wasn’t hired because he had years of experience at IBM. One who was hired – Atari’s 40th employee – was Steve Jobs, who, with Steve Wozniak, went on to found Apple Computer. In fact, the two used parts “borrowed” from Atari to build their first Apple prototype

Soon, however, competitors caught up. In no time 20 different ping-pong games were on the market. By 1974 Atari was teetering on the brink of bankruptcy. It saved itself by rolling out Home Pong, a version of the game that could be played on TVs.


Even though a lot of people had no idea how it worked – more than one person asked Bushnell how “the people at the TV station know what to do when I turn the knob for the game” – they shelled out $99 to have one.

By 1976 Atari was back in trouble. A new, inexpensive silicon chip revolutionised the game industry, and the number of companies in the business soared to 70. Pong became all but obsolete.

Atari, desperate for cash to finance the first programmable home video game, was bought by Warner Communications for an astounding $28 million.

Bushnell stayed on as chairman of the board for two years, but as a self-described “bizarre manager” he was a bad fit.

He left Atari a rich man, but had to watch as the company, through its Atari VCS (Video Computer System) 2600 home console, became the fastest-growing firm in American history.

Even with its display of shockingly rudimentary graphics, Atari was light-years ahead of the competition, opening up a brave new world of cathode rays . . .

First released in the UK in 1977, the Atari VCS 2600 (pictured at right), with its wood grain console, plastic paddles, and stubby rubber joysticks had become a fixture in the living room of every middle-class home by mid-1978.

The range of games was a bit basic – Tennis, Outlaw, Breakout and Space War – and they came on chunky cartridges (pictured below) as big as a modern Game Boy.

But they were hugely addictive, and mums and dads soon realised they just had to get used to life without television as children lay transfixed in front of a screen full of slow-moving blocks.

For a time, the word “Atari” was synonymous with video games. Nobody said, “you guys wanna go over to Steve’s and play video games?”. No, it was always, “You wanna go play Atari?”.

It wasn’t the first home video game system (the Odyssey predated it by five full years), but the Atari Video Computer System was the cultural turning point.

As the 80s dawned, the video game industry continued to thrive, with Atari still leading the pack. When the company released a home version of Space Invaders, Atari 2600 sales hit their highest level to date. Atari’s Space Invaders cartridge earned the company over $100 million, and home video games had their new official king.


Within two years, more than 25 million consoles were sold, earning more than $5 billion (more than half of Warner Bros income at the time).

New accessories were added, from the keyboard control of Brain Games, Codebreaker and others to Indy 500’s driving control to assorted Trak-Balls, new joysticks, and cheating helps like the rapid-fire Blaster.

Ultimately, Atari couldn’t compete in the percolating personal computer market, and in 1983 the video game market crashed. Atari lost $538 million.

Atari’s first serious challenger was Mattel, who introduced a home video game system of its own called Intellivision, which included games such as baseball, poker and blackjack. It was more expensive than Atari but boasted better graphics.

Thanks to a group of disgruntled Atari employees and an upstart company called Activision, third-party game designers began adding new titles to the Atari VCS/2600 line-up in 1980. Imagic, Coleco, M-Network, Parker Brothers and several others contributed to a library that eventually included several hundred games.

Many were conversions of arcade smashes like Asteroids, Defender, Centipede, Missile Command, Frogger, Warlords, Dig Dug, Donkey Kong and others, but there were several original hits as well. Among them:

Adventure – A quest to find and recover a golden chalice, fighting dragons and avoiding a thieving bat along the way.

Haunted House – A pair of eyes searched a spooky lair for the pieces of a treasure. Ghosts, spiders, and other nasties attacked, and your tiny candle could blow out at any minute.

Kaboom! – A masked robber dropped bombs toward you. Catching them got harder and harder as the bombs dropped faster and faster.

Pitfall! – Pitfall Harry scampered through the jungle, hunting treasure and jumping over crocodiles, rolling logs, pits, scorpions and other threats (a sequel, Pitfall II: The Lost Caverns, expanded the adventure into one of the most elaborate games created for the 2600).

Raiders of the Lost Ark – A quest based on the 1981 movie of the same name, as Indy tried to locate and recover the Ark of the Covenant.

Superman – The Man of Steel flew around Metropolis, trying to round up Lex Luthor’s gang and put back together the bridge they sabotaged.

Video Olympics – 50 variations on the Pong formula, from Quadrapong to Foozpong to Soccer, Volleyball, Handball and Basketball.

Yar’s Revenge – Your heroic insect chewed away a shield, then fired a missile at the exposed enemy.

The console’s biggest cartridge success was no big surprise. Namco’s Pac-Man had become a worldwide sensation in 1980, and Atari naturally wanted a home version. The 2600 game arrived with great fanfare in 1982, and based on name recognition alone, it quickly became the best-selling title in the VCS/2600’s history.

But even those who bought the game and played it faithfully until the wee hours of the morning recognised that it didn’t really quite exactly look like the arcade. A later release of Ms. Pac-Man offered a more faithful version, but even so, ColecoVision was starting to look better and better.


Regardless, 2600 Pac-Man was an unqualified smash – the fact that you could play Pac-Man at home was all we needed to hear.

The 2600 continued to score big through 1982 and 1983, but ironically, it was about to become a victim of its own success.

Third-party cartridges flooded the market, hoping to cash in on the video game craze. Many were both rushed and rough, and interest in the machine waned.

Atari was already hurting from disappointing sales of its E.T. game after spending an astronomical amount for the license, and when gamers suddenly switched over from home game systems to home computers (used, of course, to play games), the entire video game market crashed.

Atari’s video game division was sold in 1984, including the 2600, its short-lived graphical improvement the 5200, and the unreleased 7800. With the success of the Nintendo Entertainment System in the mid-80s, the 7800 was finally released, and a handful of new 2600 games continued to be produced.

The 2600 finally ended its production run in 1991, after a 14-year career – the longest of any home video game system to date.

Nolan Bushnell has been on his own roller coaster ride. After Atari he started Chuck E. Cheese Pizza Time Theater, a string of pizza parlour/video arcades featuring large talking animals. It soared with close to 300 outlets and $150 million in sales, and crashed, declaring Chapter 11 bankruptcy, and was then sold off in 1985.

Since then Bushnell has created 18 other companies — selling everything from talking teddy bears to automobile navigation systems – and seen his fortune shrink a bit – he once owned two Lear jets, four mansions, a fleet of luxury cars and a huge yacht called Pong.