As the pandemic raged in 2020, a revolution was taking place in the entertainment world. In that year, video game sales grew 20% to a staggering $179.7 billion, making more money than the global movies and North American sports industries combined.
Of course, it was helped by the fact that we were collectively housed, theaters were closed and sports were grounded.
But it was also a testament to the wild growth, innovation and popularity of the video game industry, whose humble roots can be traced back in large part to a California company trying to make coin-operated machines lucrative.
That little start-up called Atari — which launched on June 27, 1972 — eventually changed the world: first with a rudimentary table tennis game called Pong, and later a culture-changing home console. It would also briefly employ Apple founders Steve Wozniak and Steve Jobs and was an early darling of Silicon Valley’s then-nascent tech universe.
“Part of their cultural legacy is that they were able to take video games from a public space to a private space,” Matthew Thomas Payne, associate professor of media studies at the University of Notre Dame and author of several game books, including “Playing War: Military Video Games After 9 /11,” told The Post. “They’ve domesticated this technology… But they could never have imagined it [its current iteration]†
“How do you draw the line from Pong to Fortnite, for example? It’s a complex story,” Payne says.
Pong and beyond
This week marks the half-century since eccentric Nolan Bushnell—who also founded Chuck E. Cheese—and Ted Dabney started the pioneering company in Sunnyvale, California.
Before launching Atari, they created the first arcade video game called Computer Space in 1971. It was based on the game Spacewar!, created in 1962 by MIT students who Payne noted would be considered hackers today.
About a year later, the couple formed Atari with the simple tennis game Pong.
“They’ve figured out how to commodify the game,” said Payne, who went on to tell a story that “is always told in their original story,” even if its veracity is disputed.
As the story goes, in September 1972, they installed Pong in Andy Capp’s Lounge, a watering hole in Sunnyvale that also had a pinball machine. The next day the bartender called to say the machine was broken.
“Al Alcorn, who was one of the programmers, goes to check it out and lo and behold, it was overflowing with quarters. And they know they have a winner on their hands with this prototype,” Payne says.
They made home console versions of Pong and followed with other arcade games. In 1976, the company was bought by Warner Communications for a reported $28 million.
In September 1977, it released its best-selling Atari 2600 for $199 – eventually selling over 30 million units. The console had joysticks and the ability to swap different cartridges for popular games such as Combat and later Frogger, Pac-Man and Space Invaders.
“One of the first successful attempts to bring video games into the home was Atari 2600, which would have been the first computer in the home,” Payne says. “It was really the beginning of home calculation.”
Payne notes that Atari was not the first to make a home video game console, and its success led to legal battles within the fledgling industry. Magnavox, which had created a home system called Odyssey with a tennis table game, went after Atari and other companies making Pong knock-offs. In 1974, they filed a patent infringement lawsuit against Atari, eventually settling for $1.5 million.
The video game crash of 1983
But Atari had other problems.
The company would take a huge blow in the now infamous video game crash of 1983, which rocked the market. Payne attributed the sector’s recession to a lack of oversight.
“Atari was unable to lock up outside publishers and they produced complete trash games and oversaturated the market. The bottom fell out.”
The year after the crash, Atari sold its home console and computer divisions.
Bushnell, who left Atari in 1978, attributes the problems to the sale to Warner.
“Atari had an extraordinary corporate culture that was destroyed within two years of the sale,” Bushnell said on Reddit in 2014 of his company’s notoriously riotous office, which even had a hot tub. “I think Atari would still be important today if that sale hadn’t happened.”
In 1985, Nintendo released its Nintendo Entertainment System for $149.99 – which was a much-needed shock to the industry.
“It’s Nintendo coming back and saving the day for home games after Atari’s rise and fall,” Payne said. “Other companies like Sega and Nintendo saw those lessons and calibrated accordingly and were able to survive much longer than Atari.”
Of course, with the advent of streaming, gaming is now a growing multi-billion dollar business. Esports is so popular that many professional sports franchises have their own Esports teams, filling arenas.
But a nostalgia for Atari still exists, and there are even throwback consoles that mimic the 2600 as part of the Atari Flashback series.
The company, which filed for bankruptcy in 2013, has changed hands several times over the years. Now it’s back, making games. In 2017, it announced a new game console and, a year later, the creation of a game show of its original hit, ‘Million Dollar Pong’. In 2020, Atari said it would launch a video game-themed hotel chain.
“While we still recognize Atari, it’s nowhere near the power it once was in video games,” Payne says. “But it still holds up. It still speaks to the early days of the industry.”