Nolan Bushnell is stuck with a rather large flop on his hands with Computer Space, but at least the futuristic fibreglass cabinet is a hit...the game shows up as a prop in the seminal cheesy 1974 SF movie Soylent Green, as a gift given to the mistress character played by co-star Leigh Taylor Young. Despite the inability of his first product to catch on with the public, Nutting Associates asks Bushnell to take a shot at developing another game. He is unable to reach an equitable agreement with managment, however, and Bushnell leaves to create his own company with partner Ted Dabney. Their intention is to design the games and then have a large company actually produce them. The initial venture capital is $250 from Bushnell and $250 from Dabney, their profits from Computer Space.
They christen the new company with the uncomfortable label Syzygy, an term from astronomy meaning the Earth, Moon and Sun in perfect alignment. "Designed by Syzygy" actually appeared on labels on Computer Space. But history thanks the roofing company that has already registered the name. So Bushnell picks a name from Go, a Japanese game he is fond of playing. Atari is the equivalent of "check" in the game, and that is the name they pick. The company is officially established on June 27, 1972, by a 27 year old Bushnell. The first product is to be a driving game, and Al Alcorn, the engineer Ampex had hired to replace Bushnell, is brought in to build it. But Bushnell changes his mind and decides that they should first break newcomer Alcorn in with a simplistic tennis game, where the player controls a paddle knocking a ball back and forth across the screen. He prods Alcorn along by telling him the company already has a contract with General Electric to
After much agonizing about the speed of the ball and how fast the spin-dial control moves the paddles, a prototype is made. The instructions for the world's second arcade videogame are legendarily simple: "AVOID MISSING BALL FOR HIGH SCORE". The machine is seen as a stepping stone...Bushnell plans to quickly leave PONG behind and build a "real", more complex game. He goes on a trip to Chicago to try and sell pinball giant Bally on the PONG concept. In one of history's great corporate blunders, they blow him off, totally misreading the potential of videogames. Undeterred, Bushnell decide to test the waters by installing the prototype in a local Sunnyvale watering hole called Andy Capps. Later that evening Alcorn gets an irate call from the bartender telling him that the game is broken and to "get the fucking thing out of here". When he arrives at the bar to examine it, he discovers that the machine doesn't work because it's jammed with too many quarters. Bushnell thus decides Atari will build PONG itself. He rents an abandoned roller skating rink, hires some locals, and by late 1972 is cranking out big, blue and yellow PONG cabinets. The game is a smash, pulling in $100 a week in quarters, $75 more than what Bushnell had predicted. Atari sells 8,500 machines in one year, at a time when 2,000 pinball games is considered a successful run. The PONG cabinets have a production cost of 500 dollars per unit and a sales price of $1,200 each. The game Bushnell considered a quickie knock-off will carry his company for the next two years.
1973 sees the start of a trend that will dog the industry forever more...a flood of imitations of a hit game. Literally dozens of PONG clones hit the market...makers include Nutting Associates, Bushnell's old employer. Some of the variations on the theme include:
|Eloping - Taito||Hockey TV - Sega||Paddle Ball - Williams||Pong Tron - Sega|
|Pong Tron II - Sega||Pro Hockey - Taito||Soccer - Taito||Super Soccer - Allied Leisure|
|Tennis Tourney - Allied Leisure||TV Football - Chicago Coin||TV Ping Pong - Chicago Coin||TV Ping Pong - Amuntronics|
|TV Table Tennis - PMC||TV Tennis - Chicago Coin||Winner - Midway|
|Dr. PONG||Pin PONG||PONG Cocktail|
|PONG Doubles||Puppy PONG||Quadrapong|
|Elimination - 1973||Formula K - 1974||Spike - 1974||Twin Racer - 1974|
|Crossfire - 1975||Indy 800 - 1975||Tank II - 1975||Flyball - 1976|
|Quiz Show - 1976||Sprint II - 1976||Tank 8 - 1976||Drag Race - 1977|
|Sprint 8 - 1977||Super Bug - 1977||Ultra Tank - 1978|
In 1974 Atari employees Bob Brown and Harold Lee propose a home version of PONG, able to be hooked up to any TV set. Lee, Brown and Alcorn produce the system, giving it the codename Darlene and starting a long Atari engineering department tradition of naming systems after female co-workers. However, retailers are skittish over the short life of Magnavox's TV-based Odyssey game and the system languishes in the Atari labs. In 1975 they cut a deal with Tom Quinn, head purchaser for the sporting goods department at national retailer Sears, to sell the system under the Sears Tele-Games label. The order is for 150,000 units. Bushnell has nowhere near the facilities to produce that many in the time Sears wants them, so he taps venture capitalist Don Valentine for a $10 million line-of-credit to expand. By Christmas, Atari's US$100 home PONG console becomes Sears biggest selling item, with reports of people waiting outside stores for hours to get one. And once again dozens of manufacturers swarm out of the woodwork, this time with myriad versions of home PONG games. Almost all of these machines are based on the new "PONG-on-a-chip" circuit developed by General Instruments, but the rush on these chips is so intense that only Coleco receives their shipment in time for the 1976 Christmas season. The release of its Telstar video table tennis unit, retailing for half as much as Atari's console, increases the company's overall sales by 65 percent.
By 1975 Atari is making 40 million dollars annually, drawing attention from huge media conglomerate Warner Communications. In 1976, under pressure from Valentine, Nolan Bushnell sells Atari to Warner for $28 million, with Joe Keenan as President and Bushnell pocketing $16 million and the title of CEO. With this new infusion of capital, Atari starts development on a project that will revolutionize the way people play games. It will soon launch the videogame industry into the mainstream and make the name Atari as ubiquitous as Coke and Kleenex. The project's code name: Stella.