The History of Atari: 1971-1977

Atari is the pioneer in the history of video games, yet its comprehensive history has never been compiled - until now. Gamasutra is delighted to present the first of Steve Fulton's canonical three-part history of the company, taking us from Computer Space to the VCS.

Mt. Fuji towers 3776 meters as Japan’s highest mountain. It’s a striking landmark, one that rises almost impossibly out of an unassuming plain to a pinnacle of ice-capped beauty. After its mammoth breadth is realized, it settles back down again into a valley as if it was never there. It was formed by a volcanic eruption about 10,000 years ago, and has since been worshipped as a sacred landmark by the Japanese. In the shadow of that mountain, the people of Japan have played a strategy game named Go for thousands of years.

Mount Fuji

Mount Fuji, taken by Asela Jayarathne

First created in China about 2000 B.C., Go is a compelling and subtle strategy game. It vies with Parcheesi as the world’s oldest game that still exists in its original form. Go is unique, in that there are literally trillions -- if not an infinite number -- of board combinations. So many, in fact, that it is theorized that no two Go games played have ever been, or will ever be the same. Yet the game looks so simple -- just a series of black and white stones placed on a 19x19 grid.

Some players have described the binary pattern of stones as a thing of beauty, with the game attaining a level of complexity at times so vast, the players put more emphasis the complex stone patterns to help them decide their next move, then on any sort of strategy.

It’s no small wonder that the simple beauty of a game like Go appealed to the college campus computer hackers of the 1960s. While chess was still very popular, its regimented opening moves and seemingly finite strategies were more in-tune with the “powers that be” than with new movements based on social change. Computer hackers were opening new doors to information that were only dreamed about a decade prior.

Go’s binary nature -- like that of a computer -- appealed greatly to these pioneering computer enthusiasts. It was a game of infinity, that could be explored and experimented upon, just like the computing machines the hackers coveted so much. However, the infuriating part of Go is that it’s almost impossible to master. For a group of people who wanted to explore every nook, cranny, and corner of a computer, the inability to “master”, this must have been both cathartic and frustrating.

Atari founder Nolan Bushnell was a Go player who learned the hacker ethic at the University of Utah. When Bushnell finally decided on the name for his pioneering video game company, he called it “Atari”. In Go terms this is like saying “watch the hell out, I’m just about to win the game”. A couple years later, Atari would adopt a curious looking logo -- a three-part, vertically split triangle, that looked a bit like an “A”, but more like a mountain.

This symbol would commonly be known as the “Fuji”, and it was under its shadow that an entire new industry was created. It was also under this shadow that the simple lessons of Go would affect the design of video games in their first decade. The “simple to learn, difficult to master” game design philosophy is the one that helped propel Atari’s games from mild parlor amusements into the psyche of an entire generation.

The Engineer Entertainer

Born in 1943 in Clearfield, Utah, the founder of the modern video games industry, Nolan Bushnell, always loved playing games.

“I can remember playing Monopoly and Clue with my neighborhood friends, chess incessantly. I played tournament chess. I played #2 board at Utah State University. I’ve always been a game player, period” i
-Nolan Bushnell

He also loved science. His world was upended in 3rd grade he was given a science assignment by his teacher Mrs. Cook.

“The spark was ignited when I was assigned to do the unit on electricity and got to play with the science box. I remember constantly making stuff as a kid that amazed my friends using electricity.” ii - Nolan Bushnell

With a love of play, and a love of science, an engineer entertainer was born.

Bushnell’s love of electricity led him to Utah State University where he studied for a BS degree in Electrical Engineering. While in the engineering department, Bushnell was exposed to a DEC PDP-1 computer, and Steve Russell’s game Spacewar! He fell in love with the quirky little one-on-one space battle game, and was fascinated by the impact it had on the other students, especially in how much free time the other students spent playing it.

At the same time, Bushnell was working his way through college by working at Lagoon Amusement Park in Farmington Utah. There, he worked the midway games like a master carnival barker.

“I think that working at the amusement park gave me a sense that I had a special knack for that. I was able to have a lot of people have fun and spend their money while doing it. Those were two good characteristics” iii
- Nolan Bushnell

Near the midway was a small arcade that featured mostly pinball machines. Bushnell envisioned the day that the pinball games would be replaced by machines playing games like Spacewar! He noted how much free time his classmates were spending on the game. He realized that if he could figure out a way to monetize that time, he could be very successful. However, after much pondering, it seemed impossible. A DEC PDP-1 computer cost $120,000, and there was no way someone could break even on a game that cost that much create.

"When you divide 25 cents into an $8 million computer, there ain't no way,"iv - Nolan Bushnell

He put the notion aside so he could start a career as an engineer. After graduation from Utah State as a “Distinguished Fellow” in 1968, Bushnell moved to California where he continued his graduate education at Stanford University. He wanted to work for Walt Disney, because he felt they were doing very interesting things with technology. Even though Bushnell thought of his endeavors as technical feats, he still felt the need to entertain people.

“I always considered myself an engineer. A guy who used technology to solve problems. I was fascinated with Disney who used technology to entertain people. I felt technology was truly magical.” v
- Nolan Bushnell

However, since, Disney did not hire engineers straight out of school, so he had to look elsewhere.

"When I graduated from college, my vision of the perfect job was to work in the research section of Disneyland. But they weren't hiring new engineering grads. " vi - Nolan Bushnell

Bushnell found a job at Ampex Corp, in the Silicon Valley and started working as computer graphics department research designer. He worked at Ampex for a couple years, where he met fellow engineers (and future Atari employees) Al Alcorn and Steve Bristow. However, Bushnell was never able to settle down as a line engineer. The need to entertain people kept biting at him. Soon after, he was introduced to a free-standing version of Spacewar! named Galaxy Game, designed by Bill Pitt, another Stanford graduate.

Galaxy Game was a full version of the DEC PDP version of Spacewar!, right down the mini-computer that was necessary to run it. While the technical feat of a free-standing Spacewar! game was impressive, the $40,000 cost associated with basing a game on mini-computer was not. Bushnell knew he could do better. His day dreams of electronic games replacing pinball machines from working at Lagoon were rekindled. He felt he could engineer a machine that could entertain people, and still make money at the same time.

Simplifying A Revolution

In the Spring of 1971, while still working for Ampex, Bushnell along with fellow engineer Ted Dabney, started crafting their own version of Spacewar! named Computer Space. They worked out of Bushnell’s daughter Britt’s bedroom, turning it into a computer lab in which they could engineer their masterpiece. All sort of ideas crossed their minds, including using a minicomputer like Galaxy Game, and using a series of terminals for a multiplayer experience, but these ideas were far too expensive for this bedroom outfit.

computer space Instead, it hit them one day to go in the opposite direction and simplify their design to cut costs as much as possible. The pair decided that they did not need thousands of dollars in hardware to make their dream come to life, instead choosing a much simpler solution. They crafted a working game using TTL (Transistor To Transistor Logic)vii to create a computer whose sole purpose was to play Computer Space. While this might have seemed like a step-back technology wise, it was a huge leap forward for creating a commercial game. With a black and white G.E. TV and $100 worth of electronic parts, they created the first viable, commercial video game.

“I worked it out and the economics were overwhelming."viii
- Nolan Bushnell

This seemingly simple decision towards simplification fueled the entire video game industry for most of the 1970’s.

“100% of the video games up until 1977 used my discreet logic technology... that I had a patent on.” ix - Nolan Bushnell

However, before a video game revolution could be started, it would need a game that people wanted to play. Unfortunately, Computer Space was not that game. Bushnell and Dabney sold their idea to Nutting Associates in late 1971. It landed in the coin-op industry with a resounding “thud”. Amusement operators who were used to buying jukeboxes and pinball machines had no idea what to do with it. The controls were too complicated, and the game too confusing for the average barroom (read: drunk) player.

"Nobody wants to read an encyclopedia to play a game"x - Bushnell on Computer Space

In the spring on 1972, while still working with Nutting to sell Computer Space, Bushnell visited Magnavox to take a look at the TV video game system that Ralph Baer had developed for the company. Bushnell left unimpressed. The analog computer used in the game (a computer used for applications that require a continuous change of one or more variables) was only useful for very simple games, and the graphics looked fuzzy. However, a simple tennis contest on display stuck with him, and the idea for a ping pong-type game was born.

1972: Atari Is Born

On June 27th, 1972, Nolan Bushnell and Ted Dabney officially created their own company named Syzygy Co., each contributing a $250 share -- mostly from the meager profits earned from Computer Space.xi Bushnell said they decided on Syzygy because “I thought it was a cool name when I found it in the dictionary”.xii However, they soon discovered that the name Syzygy was already taken by a roofing company.xiii Although they continued to use it for couple years afterwards to describe their engineering process, they had to choose another name.xiv Bushnell suggested “Atari”, a hold-over from his days as Go player at Utah State. Atari roughly translated to “you are about to be engulfed"xv, which they thought sounded pretty cool at the time and also served another purpose.

“I thought Atari was a good warning to the competition in the gaming industry” xvi - Nolan Bushnell

They started their new business on two fronts. While Bushnell went ahead to start designing a new video game, Ted Dabney used some existing equipment to start a coin operated game service business.

“When we did Computer Space there were about 7 prototype units that were really not to standard that could be sold to 3rd parties. We saw them as an opportunity and we put them on location and collected the quarters every week. When we did that some of the places wanted pinball so we started buying equipment and collecting the quarters. That was one of the early ways we financed the business.” xvii - Nolan Bushnell

In the spring and summer of 1972, Atari began the engineering process for their first game. To augment their team, Atari hired one of Bushnell’s fellow Ampex employees, Al Alcorn, as a senior engineer. To lure Alcorn to Atari, Bushnell told him a little white lie: that he had a contract with G.E. to create a home version of Pong.

“Nolan told me that we had a contract from General Electric to design a home video game on a ping-pong theme.“xviii - Al Alcorn

Atari did have a tentative contract (with Bally, to create a driving game) but Bushnell wanted Alcorn to cut his teeth on something simple for his first effort. The primitive ping-pong game Bushnell had seen at Magnavox seemed like a good candidate.

"I had to come up with a game people already knew how to play; something so simple that any drunk in a bar could play."xix – Nolan Bushnell

Neither Alcorn nor Bushnell were impressed with Odyssey and its analog components, so the game would have to be improved. In any event, Pong was only practice, and Bushnell did not plan to take it seriously. “I thought it was going to be a throwaway,” Bushnell told Playboy Magazine, "but when he (Alcorn) got it up and running, it turned out to be a hell of a lot of fun.” xx

Just like Computer Space, Pong was a TTL discreet-logic machine. It had no microprocessor, but instead used individual chips to create the logic for the game. The key to saving money was to design the game so well that it used the fewest number of chips.

“I had the prototype running in three months and I was very disappointed because it had about 75 TTL IC's and would cost way too much for a high volume home machine. It turns out that Nolan had something else in mind. He lied about the contract with GE and gave me this project because it was the simplest game he could think of and he just wanted me to practice on something.” xxi - Al Alcorn

Alcorn added small details like ball English and simulated physics that went beyond Bushnell’s original concept, but still kept the design elegant, and cheap.

“Since I was under the impression that this was to be a real product I worked hard to make it playable and inexpensive.” xxii - Al Alcorn

After Nolan Bushnell saw how well Pong was turning out, he and Ted Dabney decided to test-market it at one of the locations on their pinball route, Andy Capp’s Tavern in Sunnyvale California. xxiii It was an almost instant success. People started lining up before the bar opened just to play the game. Some wouldn’t even order anything -- just play Pong. Unlike the pages of instructions for Computer Space, Pong instructions are the model of simplicity: “Avoid missing ball for high score."

“Two weeks after installing the game, Al Alcorn got a late-night phone call from the manager of the bar. The game had broken down, and he wondered if he could fix it. When Alcorn went to check the machine, he found a most unusual problem. There were so many quarters jammed into the coin drop that the game had stopped working. xxiv Under the coin-drop was a plastic milk jug with the top cut off, and it was filled with quarters, making the “credit” mechanism not work.

“When we first put it on location I asked Nolan what would constitute good performance. I think he said that if it did $25 a week that would be a good game. It was doing over $100 per week right away.” xxv - Al Alcorn

“At that point in time, I knew I had a successful business.” xxvi
- Nolan Bushnell

A successful test-market, however, did not mean instant sales. In the fall 1972 Bushnell set out on a road trip with a portable version of Atari's Pong machine to look for potential buyers. The Pong game was offered to Bally first, but they declined to purchased it, preferring a game that did not require 2 players. Bally had contracted Atari to do a driving game, and Nolan tried very hard to get them to accept Pong instead, but Bally refused.

Other amusement manufacturers at the AMOA trade show didn’t “get it” either. In 1972, the pinball and other amusement game manufacturers made machines with many electromechanical and moving parts. Pong had only two moving parts and this baffled them. They didn’t understand or envision the industry changing.

Instead of persuing established manufacturers, Bushnell decided to manufacture Pong himself. It was not an easy sell to Dabney or Alcorn, who thought Atari was a technology company that would license its inventions, not manufacture them.

“Nolan had to convince us to be in the manufacturing business. In the end it turned out to be the best strategy” xxvii - Al Alcorn

It was his boldest move yet, and would prove ultimately successful. He leased an old roller rink in Santa Clara and converted it into a production line manned by low-paid hippies. The first Pong game shipped from this facility in November 1972. xxviii

On November 19th, 1979 Pong was officially released,xxix and the “Steam Age” of the coin operated video game began.

1973: Pong Is A Smash Hit!

"As a result of Pong, a player can gain a deep intuitive understanding of the simplest Newtonian physics." xxx - Carl Sagan

By March of 1973, Pong was deemed a bona fide phenomenon for Atari. They had sold 8000 - 10000 machines, and would eventually sell upwards of 35,000. The day Pong was released is marked by the coin-op industry as the first nail in the coffin of pinball. xxxi

Atari was so successful in its first year for two reasons. First, they used an early version of a “Just-In-Time” manufacturing processes.

“With expensive parts, such as cabinets, we tried to get them out the same day they came in and we made sure that 75% of the cost turned over in less than a week." xxxii
- Nolan Bushnell

Secondly, Atari also took advantage of the soaring demand for Pong by insisting on cash payments from distributors instead of going along with the longer terms common in the coin-operated game industry. xxxiii

pong By March of 1973, Atari had made a little over $3.2 million dollars. However, there was a black side to this fortune. Atari’s patent for Pong took a long time to clear -- too long to stop a myriad of copycats from showing-up almost immediately.

“I filed for a patent, but in those days patents took 3 years to issue. I don’t think my patent issued until 1975 or 1976.” xxxiv
- Nolan Bushnell

Since the game was designed using a discreet logic TTL design, there was very little they could do to protect their intellectual property. Anyone who owned a machine could open it up, examine the circuit board, and copy it chip for chip. By the end of 1973, there were so many competitors selling Pong-style games that Atari was no longer the leading manufacturer of its own game. Some of the copies were made so well that they looked exactly like the original Atari versions.

Some of the Pong competition in 1973 included: Elepong from Taito, Davis Cup by Taito (each player had two paddles), Computer Space Ball (1972) from Nutting Associates, Hockey by Ramtek, Hockey TV from Sega, Leader from Midway (a very innovative 4-player Pong variant with a wall in the middle for deflection), Olympic Tennis from See-Fun (2 or 4 players), Pro Tennis from Williams Mfg. Co. (4 players), Paddle Battle from Allied Leisure (exact copy of Pong), Paddle-Ball from Williams (exact copy of Pong), Pong-Tron from Sega (exact copy of Pong), Pong-Tron II from Sega (exact copy of Pong), Pro Hockey from Taito, Rally from For-Play, TV Hockey from Chicago Coin (exact copy of Pong), T.V. Tennis from US Billiards (exact copy of Pong), TV Ping Pong from Chicago Coin (exact copy of Pong), Table Tennis from Nutting Associates (exact copy of Pong), Tennis Tourney from Allied Leisure (4 player Pong), Winner from Midway (an exact copy of Pong) and Winner IV from Midway.

Atari could have fought each one of these copycats -- but they could not afford to do it.

According to Nolan Bushnell

“Atari was always scrambling for cash, and we thought to spend money on attorneys was not a smart thing to do.” - Nolan Bushnell

However, it wasn’t just the copycats Atari had to worry about, it was other legal problems as well. Magnavox and Ralph Baer did not take kindly to the success of Atari’s Pong, especially since they had created a very similar game more than a year earlier. They took Atari to court, suing them over Pong. They used the sign-in-sheet for the 1972 Magnavox demo that Bushnell attended as proof that he saw the Magnavox video games before he came up with his own idea. However, Bushnell maintained that while he might have seen the Magnavox product, his was far superior:

“They did an excellent job of creating a game using analog circuitry, but it just wasn't fun.” xxxv
- Nolan Bushnell

Skillfully, Nolan Bushnell turned this legal problem into an advantage for Atari. Atari settled with Magnavox, and the case never went to court. They paid a licensing fee close to $500,000 and became the sole licensor of Pong from Magnavox.

“It was a strategic thing. Magnavox was desperate to settle with me. They had seen lab books and I had been in business for two years before the Odyssey game was supposed to hit the streets. We settled basically for an amount of money that was less than I was spending on attorney’s fees at the time. $500,000 paid over five years. Less than 1/10th of 1%. It was a usage royalty.”xxxvi - Nolan Bushnell

"As far as we were concerned, that was the end of our problems with Atari" xxxvii
- Ralph Baer

Magnavox then agreed to go after all of Atari’s competitors as part of the deal, which basically freed Atari to create new and different games while the competition was stuck in court.

“In our agreement we required that they go after all our competitors. Literally, I felt that if we could keep everyone else distracted and paying money, that could only help our business. I was not worried about Magnavox being a competitor. It was a strategic business move. Any time you can damage your competitors, walk away from it with token royalty and have everyone else sweating bullets because they knew that had copied my stuff. It was a good thing for Atari.”
- Nolan Bushnell

The final analysis of these early lawsuits shows that it really did not matter who invented “the video game”, but it did matter who made it successful.

“I didn't invent the video game -- I commercialized it.” xxxviii - Nolan Bushnell

1973: Innovative Leisure

Besides fighting copycats and legal battles in 1973, Atari continued to strengthen their engineering team, and create new games. At this point, creating games was almost entirely an engineering process. All the gameplay, graphics, and controls were governed by the TTL discreet logic and mechanical engineering skills of the technical team. For this reason, Atari continued to hire as many good technical people as possible. In June of 1973, Al Alcorn hired Steve Bristow to help create new games. Bristow was a fellow Ampex employee, and great engineer. He would stay at Atari for more than 10 years. Bristow and Alcorn, along with a couple of electrical engineers, set out with a directive from Bushnell to develop more games in vein of Pong. xxxix

However, while Bushnell concentrated on the engineers, the manufacturing process was in trouble. Pong games were breaking down, and customers were complaining that Atari’s machines were not reliable. Part of this problem was that Atari was not able to pay enough money to its manufacturing staff.

“We were hiring people as fast as we could and paying them hippie wages, which was still above minimum wage. It was a situation where we were doing an awful lot of training”xl - Nolan Bushnell

Equipment “disappeared” from their facilities daily. They needed to make some kind of move to allay the fears of their customers.

To do this Atari created the “Durastress” trademark and began marketing their games as meeting “Military Specification 883” to their customers. “Military Specification 883” is defined by the Department Of Defense “Standard Test Methods and Procedures for Microelectronics”, and was a requirement for defense contractors. While their arcade games might not have required this process, it sure looked good on their advertising and showed that Atari, at least in print, was trying to seem more reliable. To improve manufacturing, Atari hired outside experts and began giving benefits to their line staff that were almost unheard of at the time.

“...all employees received the same medical benefits as the executives” ”xli
- Nolan Bushnell

At just about the same time, Atari created the first real slogan to describe their products:

“We define our product as innovative leisure. We will build the best products possible, and serve our markets in such a way that through time the Atari name is synonymous with: quality, imagination, research, after-sale service, and social responsibility.”xlii
- Nolan Bushnell

On July 16th, 1973 saw Atari second coin-op release, Space Race. It might not have been the complete innovation they needed, and while it was not exactly Pong, Atari made sure their customers knew it did not fall far from the tree.

“From The Originators Of Pong...” xliii - Space Race flyer

Space Race was designed by Al Alcorn as a two player-only timed game involving two ships flying towards the top of the screen. Players controlled the vertical position of the ships, and attempted to dodge asteroids to get to the top of the screen.. If they made it to the top, they received 1 point. The service manual has "Pong" scratched-out and "Space Race" written over it.xliv The machine is basically Pong with different TTL logic. Atari licensed the game to Bally/Midway under the name Asteroid.

Atari quickly followed-up Space Race with their second Pong-style game, Pong Doubles, in the Autumn of 1973. It was a 2-4 player version of Pong designed to stave off some of their growing competition.

“Atari’s New Video Game. 2 Or 4 Players”xlv
- Pong Doubles Flyer

1973: Partner’s Split

By late 1973 the growing competition in the games manufacturing business made Nolan Bushnell’s partner Ted Dabney very nervous. He decided to leave the company.

“We only had so much money and somewhere along the line he said ‘let’s split, I’ll take the operations business’ because at that time operations was making more money than manufacturing”
- Nolan Bushnell

Bushnell was not immune to Dabney’s fears, but he still believed in the arcade games business. But instead of quitting, Bushnell decided to expand the business. To do this he had to do something very creative. In October of 1973, Bushnell decided to grab as much market share as possible by signing exclusive contracts with distributors in each geographic area to buy only Atari games.

Because most geographic areas had two distributors, Bushnell separately (and semi-secretly) created Kee Games, named after Bushnell friend Joseph Keenan who became president of the company. Kee would sign exclusive contracts with the second distributor in a geographic area. The games that Kee and Atari produced individually were eventually released by both companies with unique names and some cosmetic differences. Steve Bristow went to work for Kee as their head of engineering.

“Joe Keenan was my next door neighbor. I told him, “I’d like to hire you to set up a company called Kee Games. We’ll make it look like it’s Kee for Keenan, and it will look like you’ve come in and started up a new coin-op manufacturer”xlvi - Nolan Bushnell

1973: Pong At One

After one year of operations, in November 1973, Atari had built and sold 6000 Pong machines, and sales were about $1,000,000 a month, with $15,000,000 in sales expected by the end of the fiscal year (June 1974). xlvii Even though there many competitors, Atari was still tried to push Pong in directions that the competition had never considered. Some of these ideas included prototypes, limited-run and unreleased versions of Pong such as Pong In A Barrel, Doctor Pong, and Puppy Pong. xlviii

At the same time, they worked on new ideas. The November AMOA show that year was quite different from 1972, when no one would give Atari’s Pong a passing glance. This time, Atari generated much interest with a showing of Pong Doubles, and a new game, Gotcha.

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