Atari's infamous entry into the programmable race begins in 1975. The first Stella prototype is developed by Steve Mayer and Ron Milner, of the Atari consulting firm Cyan Engineering, part of the company's Grass Valley think tank. A further prototype is then created by Cyan employee Joe DeCuir, with Jay Miner (who later designs the ground-breaking Amiga computer) further refining the Stella chip at Atari's Los Gatos plant. Named the Atari VCS (Video Computer System), it barely arrives in stores in time for the 1977 Christmas season. It comes with the pack-in cartridge Combat, designed by initial Stella programmer Larry Kaplan, along with DeCuir and Larry Wagner. Combat was originally planned to be integrated right into the ROMs of the machine as a built-in game. Running a 1.19 MHz 8-bit Motorola 6507 microprocessor, it retails for US$249.95. Nine cartridges are introduced along with the system. While there is very little mark-up on the machines due to the high price of the components, the carts cost very little to produce, and sell for around US$40 each. But for two years the VCS struggles to find a niche in the marketplace, and Atari loses millions, substantially dragging down Warner's stock price. There are major production problems, including defective chips and cases, and the easy-going Zen style management techniques of Bushnell, who describes himself as "a bizarre manager", begins to cause problems with Warner head Steve Ross. Under pressure from above, Bushnell leaves Atari in 1978, and the work atmosphere changes perceptively as Warner cracks down on the relaxed attitude towards dress and work hours that the 'hippies' at Atari had previously enjoyed. That year, utilizing the influx of Warner cash, the company produces 800,000 VCS units, a highly optimistic production run. Most of the inventory languishes in Atari warehouses.
Between 1979-1980, 12 new games are released for the VCS, but the company is about to make a move that will blow the lid off the home videogame industry. In 1980 Atari becomes the first videogame company to license an arcade game. Space Invaders, originally made by Japanese game maker Taito and then licensed for North American release by Midway, becomes the killer app for the VCS. People rush out and buy the system just to play the game. There are 112 different variations on gameplay available, including invisible aliens, moving bunkers and simultaneous two-player action. Raking in $100 million for Atari, designer Rick Mauer only earns $11, 000 dollars for his work, and he never designs another game for Atari.
Over the next two years, the Atari VCS completely dominates the home videogame market, its only rival of any significance being Mattel's Intellivision unit. Over 25 million VCS (later remodelled and named the 2600) systems are sold, grossing over five billion dollars for Atari. It also smashes the tradition of seasonal toy sales; Atari begins pushing the machine all through the year. Over the course of its production run, over 200 games are produced for the system by 40 manufacturers. Approximately 120 million cartridges are sold, and there are 55 different compatible videogame systems eventually released world-wide. The company that had shrunk Warner Communication's market share during the early days of the VCS was now responsible for half of the mother corporation's profits.
In 1979, railing against Atari's policy of refusing to give credit to the authors for the best-selling games they're creating, Larry Kaplan, Alan Miller, Bob Whitehead and David Crane leave the company to form the first third-party manufacturer of videogame software, Activision, with former music industry executive Jim Levy at the helm. The Mountain View, CA upstart releases Dragster, Crane's adaptation of the 1977 Atari/Kee coin-op Drag Race, as the first game independently released for the VCS, in 1980. It's followed closely by Checkers, Boxing and Fishing Derby. 52 games in total are released by the company between 1980 and 1988, with the designers' identities prominently featured in all packaging. Later additions to the Activision crew include Garry Kitchen, Carol Shaw, Alan Miller and Stephen Cartright. These game creators become so famous they're stopped in the streets for autographs by game aficionados, and collectively receive around 12,000 fan letters a week.
Some well-known Activision releases:
Stephen Cartright's Barnstorming, Megamania (1982), Hacker (C-64 1985) and Hacker II: The Doomsday Papers (Atari ST 1987)
David Crane's Freeway (1981), Laser Blast (1981), Grand Prix (1982), Decathlon (1983) and Ghostbusters (1984)
Larry Kaplan's Kaboom! (1981)
Garry Kitchen's Keystone Kapers (1983)
Steve Kitchen's Space Shuttle: A Journey into Space (1983)
Alan Miller's Tennis (1981), Enduro (1983) and Robot Tank (1983)
John Van Ryzin's H.E.R.O. (1983)
Carol Shaw's River Raid (1982)
Pitfall is Crane's tour-de-force 1982 run-and-jump game featuring on-screen Indiana Jones wannabe Pitfall Harry running through a jungle in search of treasure. The game goes on to become the best-selling third-party videogame cartridge of all time, selling well over a million copies and holding the #1 spot on Billboard's videogame sales chart for an astounding 64 weeks. Pitfall is followed by Pitfall II: Lost Caverns in 1984, and a Playstation 3D make-over Pitfall: The Mayan Adventure in 1998. Pitfall Harry even makes it to the arcade in a coin-op version produced by Sega in 1985. The company has its best year financially in 1983, with income peaking at $150 million. Atari launches the obligatory lawsuit over the new company, which obstensively concerns non-disclosure agreements the former Atari employees had signed, but is really about Atari's control over the software available for their systems. The videogame giant loses the suit, opening the floodgates of third-party gamemakers.
Inspired by the great success Activision is enjoying, Imagic becomes the second third-party software manufacturer in 1981. Ex-Atari employees Bill Grubb and Dennis Kobel, one of the first programmers hired by Atari in 1971, along with Brian Dougherty form the company under a 2 million dollar business plan. Imagic is originally made up of 10 employees, consisting mostly of former Atari and Mattel crew. The list of programmers include 24 year-old Rob Fulop, creator of Atari VCS hits Night Driver and Missile Command, and VCS Video Pinball creator Bob Smith. Fulop designs Demon Attack, released in 1982, and it becomes the best-selling Imagic cartridge. The game is a close approximation of 1980 Centuri coin-op Pheonix, and licensee Atari sues Imagic over Demon Attack's similarity to their 1982 Pheonix port, with the two companies eventually settling out of court. Fulop also creates hit Cosmic Ark for Imagic, along with the lesser-known Fathom and an incredibly rare Rubik's Cube game called Cubicolor. While Imagic ports their hit games to other platforms such as the Intellivision and even the Odyssey2 during its dying days, the company fails to live up to Activision's success, with only 20 released games before succumbing to the great videogame crash of '83-'84.
Activision survives the crash by jumping ship to the booming home computer market, and changes its name to Mediagenic in 1988. Under the new moniker, they release the first ever entertainment CD-ROM, The Manhole, for the Apple Macintosh. Tallying up losses upwards of $60 million, this venture eventually sinks in 1991, and the company is resurrected later that year with the name returning to Activision, with Bobby Kotick at the helm.
The VCS also becomes a cottage industry for third-party developers of hardware, including prototype computer add-ons with keyboards and storage devices for the system. But the Entex Piggyback, Unitronics' Expander, and even Atari's own Graduate/My First Computer add-on all sink before seeing release. Only Spectravideo's Compumate makes it past the prototype stage and onto store shelves in 1983, only to disappear along with the videogame market at the end of the year. One of the more interesting and successful of the third-party manufacturers is Control Video Corporation (CVC), with a service called Gameline. The company is created by online information technology visionary William F. Von Meister, who had founded the first commercial online service The Source in June of 1979. His new venture offers downloadable games for the VCS over conventional phonelines through a 1200 baud modem. The programs are stored on a special cartridge called the Master Module, which connects to the phone line. It costs US$49.95 and there is a one-time hook-up fee for the service of US$15. Charges are approximately ten cents a game or $1 for up to an hour of play. It is the first of a planned comprehensive online BBS type of system for the VCS including email, news content, home banking and financial management. But licensing disagreements with most of the big cartridge makers, including Atari, prevents many of the biggest 2600 hits from appearing on the system. Just before the big videogame crash of 1983-84 shoots the whole deal down in flames, CVC president Von Meister is forced out, but not before he brings Marc Seriff and Steve Case into the company. Eventually the company changes its name to Quantum Computer Services in 1985, and then finally in 1989 forms into another online service from the ashes of Quantum...America Online. Von Meister does not share in the billion dollar success of AOL, and succumbs to cancer in 1995 at the age of 53.
Atari itself milks the system for all it's worth, trying to stave off the obvious obsolescence of the VCS by redesigning the same basic technology into smaller and more gimmicky versions. Wireless, voice recognition, and even a system to play the games by mind-control are all prototyped, but never released. The VCS is remodelled into the 2600 in 1982, and the pack-in cartridge becomes Pac-Man, an arcade license that the company figures will send the VCS back into the top-sellers amid such third-wave systems as the ColecoVision. With Pac-Man in the title, it sells over 10 million copies, but it is apparent that the game is a rush job and critics declare it a creative disaster. It takes the release of Coleco's graphically advanced ColecoVision to prompt Atari to offer more advanced technology with their 5200 machine. When Commodore expatriate Jack Tramiel buys the ailing consumer division of Atari in the summer of 1984, he remodels the 2600 into the even smaller US$50 2600jr a year after. The production run ends in 1991, making the Atari VCS the longest lasting home videogame system in history. After leaving Atari in '78, founder Nolan Bushnell goes on to run Chuck E. Cheese, a national chain of pizza parlors/arcades. After a myriad of comeback attempts of varying success, he is currently pinning his hopes on a venture spawned from the failed startup Playnet Technologies, started on July 1, 1999 and called uWink.com, developing internet-based gaming kiosks.
The Atari VCS/2600's contribution to the modern videogame landscape cannot be understated, even though we now look back at its blocky graphics and limited colour palette with nostalgic wonder that such a system could be the wellspring of today's 200 Mhz, 6 trillion polygon monstrosities. But the VCS marked the ascendancy of videogames to the top of the entertainment market, along with the programmers that wrestled with the restraining technology to produce some of the greatest games of all time.