Atari is born - 1972

Atari Inc. (1972–1984)

In 1973, Atari secretly created a competitor called Kee Games, led by Nolan's next door neighbor Joe Keenan, to sidestep pinball distributors' demands on exclusive distribution deals; both Atari and Kee were able to sell virtually the same game to different distributors, each receiving an "exclusive" deal. Joe Keenan's management of the subsidiary led to him being appointed president of Atari that same year.

In 1975, Atari Grass Valley, a subsidiary of Cyan Engineering, California, began developing a flexible console capable of playing four existing Atari games. The result was the Atari Video Computer System, or VCS (later renamed the Atari 2600). The starting price of $199 (equivalent to $894 in 2019) included a console, two joysticks, a pair of paddles, and a Combat game cartridge.

Bushnell knew he had another potential hit, but bringing the car to market would be extremely costly. Seeking outside investors, Bushnell sold Atari to Warner Communications in 1976 for approximately $28–32 million, using some of the money to buy the Folgers mansion.

Nolan had continued disagreements with Warner Management over the direction of the company, the end of the pinball, and most importantly, the idea of ​​the end of the 2600. In 1978, Kee Games was disbanded. In December of that year, Nolan Bushnell was fired after an argument with Manny Gerard. “We started fighting like cats and dogs. And then that fall, the roof was blown off. Warner claimed they fired me,” Bushnell recalls. “I said I was leaving. It was a mutual separation."

Development of the 2600's successor began immediately after its release. The original team estimated the life of the 2600 to be about three years; He then set about building the most powerful console in that period of time.

Halfway through development, the home computer revolution began, which led to the addition of the keyboard and the birth of the Atari 800 and its younger brother, the Atari 400. The new machines met with some success when they finally became available in large numbers in 1980. On this platform, Atari released its next generation game console, the Atari 5200, in 1982. It was unsuccessful due to incompatibility with the 2600 game library, few specialized games, and notoriously unreliable controllers. Porting arcade games to home systems with substandard hardware was difficult. The Atari 2600 ported version of Pac-Man omitted many of the original's visual features to make up for the lack of ROM space, and the hardware struggled when multiple ghosts appeared on the screen, creating a flickering effect.

Under the leadership of Warner and Atari President and CEO Raymond Kassar, the company achieved its greatest success, selling millions of 2600s and computers. At its peak, Atari accounted for a third of Warner's annual revenue and at the time was the fastest growing company in US history. However, the company ran into trouble in the early 1980s as interference from New York-based Warner management increasingly affected day-to-day operations. The home computer, game console, and arcade divisions operated independently and rarely collaborated. Faced with fierce competition and price wars in the game console and home computer markets, Atari was never able to repeat the success of the 2600.

These problems were followed by the video game crisis in 1983, which resulted in over $500 million in losses. Warner's share price dropped from $60 to $20, and the company began looking for a buyer for its troubled division. In 1983, Ray Kassar stepped down and the executives involved in the Famicom merger lost touch with the negotiations, eventually derailing the deal. Due to Atari's financial problems and the meteoric success of the Famicom in Japan after its release on July 16, 1983, Nintendo decided to remain independent.

Financial problems continued to mount, and Kassar's successor, James J. Morgan, had less than a year to resolve the company's problems. He began a massive restructuring of the company and in May 1984 worked with Warner Communications to create NATCO (an acronym for the New Atari Company). NATCO has further optimized the company's premises, staff and costs. Unknown to James Morgan and Atari senior management, Warner was in talks with Tramel Technology to buy Atari's consumer electronics and home computer divisions.

Negotiating until midnight on July 1, 1984, Jack Tramiel bought Atari. Warner sold Atari's home computer and game console divisions to Tramiel for $50 in cash and $240 million in debt and stock, giving Warner a 20% stake in Atari Corporation, which then used it to create a new company called Atari. Corporation. Warner kept the arcade division under the name Atari Games, but sold it to Namco in 1985. Warner also sold the Ataritel division to Mitsubishi.

Atari Corporation (1984–1996)

Under the ownership of Tramiel, Atari Corp. used the remaining inventory of game consoles to keep the company afloat while they completed development of the Atari ST 16/32-bit computer system. ("ST" stands for "sixteen/thirty-two", referring to the 16-bit machine bus and 32-bit processor core.) In April 1985, they released the first update to the line of 8-bit computers, the Atari 65XE, the Atari series XE. In June 1985, the Atari 130XE was released; Atari user groups received the first previews of the new Atari 520STs, and in September 1985, the new 32-bit Atari ST computers hit store shelves. In 1986, Atari released two Warner-led consoles, the Atari 2600jr and Atari 7800 (which had a limited release in 1984). Atari bounced back, earning a $25 million profit that year.

In 1987, Atari acquired the Federated Group for $67.3 million, gaining shelves in more than 60 stores in California, Arizona, Texas, and Kansas at a time when major American electronics stores were reluctant to sell Atari-branded computers and two-thirds of PC manufacturing Atari was sold in Europe. The federated group (non-federated department stores) was sold to Silo in 1989.

In 1989, Atari released the Atari Lynx, a portable console with color graphics, to great fanfare. Parts shortages prevented a nationwide release of the system by the 1989 Christmas season, but the Lynx lost market share to the Nintendo Game Boy, which, despite only having a black and white display, was cheaper, had better battery life, and much higher availability. Tramiel emphasized computers over game consoles, but Atari's proprietary computer architecture and operating system fell victim to the success of the Wintel platform, while the gaming market reemerged. In 1989, Atari Corp. sued Nintendo for $250 million, claiming it had an illegal monopoly. In the end, Atari lost the case when it was dismissed in 1992 by a U.S. District Court.

In 1993, Atari marketed its Jaguar as the only 64-bit interactive multimedia entertainment system available, but it sold poorly. It would be the last home console produced by Atari and the last to be released by the American manufacturer before Microsoft introduced the Xbox in 2001.

By 1996, a series of successful lawsuits had left Atari millions of dollars in the bank, but the collapse of the Lynx and Jaguar left Atari with no product to sell. Tramiel and his family also wanted to get out of the business. The result was a rapid change of ownership. In July 1996, Atari merged with JTS Inc., a short-lived hard drive manufacturer, to form JTS Corp.

Atari's role in the new company was largely one of Atari property owner and minor support, and as a result, the name largely disappeared from the market.

Bonus for patient readers

You can learn more about Atari and the history of computer games from the film The History of Computer Games from the Discovery Channel.