Page 27 - Old School Gamer Magazine Issue #42 FREE Edition

sat down with Kassar in May 1979 requesting that the company treat them the same way that record labels treated their musicians, with royalties and their names on game boxes, Kassar’s response was “You’re no more important to those projects than the person on the assembly line who put them together. You’re a dime a dozen. You’re not unique. Anybody can do a cartridge.” This resulted
with these four leaving Atari and forming Activision, the first third- party software company.
Kassar also shut down the pinball division in 1979. The company only produced seven pinball tables but its final one was its most famous. Hercules, until 2014, was the world’s largest pinball machine and used a pool cue ball as its pinball.
The consumer division looked into producing handheld video games. Prototypes for Space Invaders and Super Breakout were created, but they were never released. Another proposed handheld, Cosmos, was touted as “The Newest Dimension in Electronic Entertainment”. Unfortunately, Atari couldn’t figure out how to make the Holoptics
an integral part of the gameplay instead of just cool-looking backdrops. The only handheld
that Atari actually released was Touch Me, Atari’s version of Milton Bradley’s megahit Simon, which itself was a home version of Atari’s Touch Me arcade game. Nearly
fifty years later Simon is the most popular electronics toy of all time and still being sold in one format or another. Sadly, nobody remembers Touch Me other than aficionados of video game history.
In 1982, with competition from Colecovision and its arcade-style graphics, Atari released its super system, the 5200. But instead of developing a new system from the ground up, Atari essentially took its three-year old 400 computer, removed the keyboard, and added a new plastic casing around it. But Atari erred by not making
the console compatible with the
cartridges from either the home computers or the VCS (which was renamed the 2600). Even worse were the notorious controllers that would not self-center and were prone to breakage.
The year ended on sour notes. On December 8, Atari announced that sales of its 2600 didn’t meet its predicted levels. The company also reported that it earned $1.2 million for the fourth-quarter, however that was down tremendously from the $136.5 million that the company had reported earning during the same quarter one year earlier. This sent Wall Street scurrying. Warner stock dropped seventeen points. But to make matters worse, it was revealed that 23 minutes before Atari made this announcement Ray Kassar sold $250,000 worth of his Warner stock.
By 1983 things began to fall apart. In January the computer division announced a new line of computers to replace the aging-but-popular 400 and 800s. But even though
the company touted that the new 1200XL would be completely compatible with the older models, early purchasers quickly discovered that it wasn’t. Word quickly spread through the industry that the 1200XL was Atari’s version of Ford’s Edsel.
The consumer division was receiving bad press for a number
of VCS games that didn’t meet customers’ expectations. Players complained that Pac-Man was nothing like the arcade game
that it had been based on. Worse yet, the VCS version of E.T.,
which programmer Howard Scott Warshaw was forced to create in just six weeks instead of the usual six months to meet the Christmas 1982 deadline, was receiving
harsh reviews as one of the worst games ever made. Returns had also begun to pour in. On top of that, Atari had produced more copies
of E.T. than there were consoles to play them on, and the excess was sitting in warehouses. In March
the company shut down its El Paso
manufacturing plant, and discarded its existing inventory from that plant by loading it onto fourteen tractor trailers and dumping it
into an Alamogordo, New Mexico landfill, where it was buried. Atari claimed that the games were defective and couldn’t be sold. Meanwhile opened a new division called Atarisoft which developed and sold Atari games for competing systems including the Apple II, Commodore 64, ColecoVision and the Intellivision. Another new division, Ataritel, was created to develop phones.
In May Atari officials met with Nintendo officials. Nintendo was preparing to release its Famicom console in July. It had no plans of going against Atari so they offered Atari the opportunity to release
the console under the Atari brand worldwide outside of Japan. Atari was excited about this offer and the group promised to meet again at CES in early June. Unfortunately,
it was at this particular CES that Coleco unveiled its new Adam computer, and they chose to have Donkey Kong running on it. Ray Kassar became enraged when he saw the display, because while Coleco did indeed own the U.S. home video game console rights to the game, Atari owned the home computer rights. Since the Adam was a computer, Coleco did not have rights to sell that game on their new system. Atari threatened Nintendo with both a halt to the console deal and litigation for breach of contract. Nintendo turned around and threatened Coleco with a lawsuit. Coleco tried to defend itself by arguing that although the Adam was a computer, it had the guts of a ColecoVision, which was a video game console. After a month of back-and-forth discussion Coleco promised to refrain from selling Donkey Kong specifically on the Adam home computer.
However, by this time Atari had more pressing matters than acquiring the Famicom. The deal was off. On July 7 Atari reported to the press that CEO Ray Kassar
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