Atari Inc. was originally called Syzygy, an astronomical term. However, as there already existed at least one company with that name (accounts varying as to whether it was a candle company or roofing company), Bushnell wrote down several words from the game Go, eventually choosing Atari, a term that means that a stone or group of stones is in danger of being taken by one's opponent. The name "Atari" is arguably also rather more memorable in terms of spelling and pronunciation for most markets.
In 1973, Atari secretly spawned a "competitor" called Kee Games, headed by long-time partner Joe Keenan, to circumvent the pinball distributor's insistence on exclusive distribution deals. Though the relationship to Atari was discovered in 1974, Joe Keenan did such a good job managing the subsidiary that he was promoted to president of Atari in 1974.
Bushnell sold Atari to Warner Communications in 1976 for an estimated $28-$32 million, using part of the money to buy the Folgers Mansion. He departed from the division in 1979. While part of Warner, Atari achieved its greatest success, selling millions of Atari 2600 consoles. At its peak, Atari accounted for a third of Warner's annual income and became the fastest-growing company in the history of the United States (at the time).
The 1980s: Hurdles ahead
Although the Atari 2600 had garnered the lion's share of the home video game market, it experienced its first stiff competition in 1980 from Mattel's Intellivision, which featured ads touting its superior graphics capabilities relative to the 2600. Still, the 2600 remained the industry standard-bearer, due to its market superiority, and due to Atari featuring (by far) the greatest variety of game titles available.
However, Atari ran into problems in the early 1980s. Its home computer, video game console, and arcade divisions operated independently of one another and rarely cooperated. Faced with fierce competition and price wars in the game console and home computer markets, Atari was never able to follow on the success of the 2600. In 1982, Atari released disappointing versions of two highly publicized games, Pac-Man and E.T., causing a pileup of unsold inventory and depressing prices. Also in 1982, Atari settled a court case with Activision, a competing game developer primarily composed of disgruntled Atari ex-employees, officially opening the 2600 to third-party development. The market quickly became saturated, depressing prices further. In addition, in December 1982, Atari executives Ray Kassar and Dennis Groth were investigated for insider trading (later found to be false). Larry Emmons, employee No.3, retired in 1982. He was head of research and development of the small group of talented engineers in Grass Valley, California. The Atari 5200 game console, released as a next-generation follow up to the 2600, was based on the Atari 800 computer (but was incompatible with Atari 800 game cartridges), and its sales never met the company's expectations. It is rumored that in 1983, in response to a massive number of returned orders from distributors, Atari buried millions of unsold game cartridges (the bulk of them consisting of two titles, Pac-Man and E.T.) in a New Mexico desert landfill. Howard Scott Warshaw (the programmer behind E.T., Yars' Revenge, Raiders of the Lost Ark, and Saboteur) still reflects fondly on his Atari days.
Still, Atari held a formidable position in the world video game market. They were the number one console maker in every market except Japan, whose market belonged to Nintendo, which had released their first game console, the Famicom (known to the rest of the world as the NES) in 1983. The system took Japan by storm, and Nintendo began to look to other markets. They approached Atari and offered a licensing deal: Atari would build and sell the system, paying Nintendo a royalty. The deal was in the works, and the two companies tentatively decided to sign the agreement at the 1983 Summer CES. Unfortunately, at that same show Coleco was showing their new Adam computer, and the display unit was running Nintendo's Donkey Kong. But Atari owned the rights to publish Donkey Kong for computers. Atari CEO Ray Kassar had a fit, accusing Nintendo of double dealing with the Donkey Kong license. Nintendo in turn tore into Coleco, who only had the console rights to the game. In the coming month, Ray Kassar was forced to leave Atari, and executives involved in the Famicom deal were forced to start over again from scratch.
These problems were followed by the infamous video game crash of 1983, which caused losses that totalled more than $500 million. Warner's stock price slid from $60 to $20, and the company began searching for a buyer for its troubled division. As for Nintendo, Atari could no longer afford the Famicom deal, and eventually Nintendo would be forced to go it alone.
In July 1984, Warner sold the home computing and game console divisions of Atari to Jack Tramiel, the recently ousted founder of Atari competitor Commodore International, under the name Atari Corporation for $240 million in stocks under the new company. Warner retained the arcade division, continuing it under the name Atari Games and eventually selling it to Namco in 1985. Warner also sold the fledgling Ataritel to Mitsubishi.
Under Tramiel's ownership, Atari Corp. used the remaining stock of game console inventory to keep the company afloat while they finished development of their 16-bit computer system the Atari ST. In 1985 they released their update to the 8-bit computer line, the Atari XE series, as well as the 16-bit Atari ST line. Then, in 1986, Atari launched two consoles designed under the Warner Atari - Atari 2600jr and the Atari 7800 console (which saw limited release in 1984). Atari rebounded, producing a $25 million profit that year. The Atari ST line proved very successful (but mostly in Europe, not the U.S.), ultimately selling more than 4 million units. It was especially popular among musicians, as it had built in MIDI ports. Still, its closest competitor in the marketplace, the Commodore Amiga, outsold it 3 to 2. Atari eventually released a line of inexpensive IBM PC compatibles as well as an MS-DOS compatible palm computer called the Atari Portfolio.
In 1989, Atari also released the Atari Lynx, a handheld console with color graphics, to critical acclaim. However, a shortage of parts kept the system from being released nationwide for the 1989 Christmas season. As a result, the Lynx lost market share to Nintendo's Game Boy, which had only a black and white display but was widely available. Also in 1989, Atari Corp. sued Nintendo for $250 million, alleging it had an illegal monopoly. Atari lost.
The 1990s: Decline
As the fortunes of Atari's ST and PC compatible computers faded, consoles and software again became the company's main focus. In 1993, Atari released its last console, the Jaguar. After a period of initial success, it, too, failed to meet expectations. It was not nearly as powerful as Sony Computer Entertainment's PlayStation or Sega's Saturn and lacked the extensive third party support its Japanese competitors had easily secured for their consoles.
By 1996, a series of successful lawsuits followed by profitable investments had left Atari with millions of dollars in the bank, but the failure of the Lynx and Jaguar left Atari without any products to sell. In addition, Tramiel and his family wanted out. The result was a rapid succession of changes in ownership. In July 1996, Atari merged with JTS Inc.,a short-lived maker of hard disk drives, to form JTS Corp. Atari's role in the new company largely became a holder for the Atari properties and minor support, consequently the name largely disappeared from the market.
Although the original Atari ceased to exist, a large amount of underground development remains for Atari's game systems and computers of the 1970s and 1980s, and many of the retro-gaming conventions (such as World Of Atari, Classic Gaming Expo, Philly Classic, and the Midwest Gaming Classic), focus largely on Atari. There are also websites dedicated to the release of new products for the original Atari consoles and computers, such as AtariAge.
In March 1998, JTS sold the Atari name and assets to Hasbro Interactive for $5 million - less than a fifth of what Warner Communications had paid 22 years earlier. This transaction primarily involved the brand and intellectual property, which now fell under the Atari Interactive division of Hasbro Interactive. The brand name changed hands again in December 2000, when French software publisher Infogrames took over Hasbro Interactive.
In the meantime, Atari Games was bought out by its employees in 1986, who also founded Tengen to bring their arcade games in to the home. The new Time-Warner eventually started gaining more and more shares in the company until they eventually owned the company completely again by 1994. At that point Atari Games ceased to exist and became part of Time-Warner Interactive. By 1996, Time-Warner sold TWI to WMS Industries, Inc., owner of Midway at the time. WMS brought the properties under Midway (which it now renamed Midway Games Inc.), and re-instated the Atari Games name. In 1998, Midway was sold to its shareholders and spun off as a separate company. Over 1999-2000, Midway held closed door proceedings with Hasbro which ultimately led to Atari Games being renamed Midway Games West. Midway left the arcade industry in 2001, and shut down Midway Games West in 2003 - closing the chapter on what was left of the original Atari arcade division.
The 2000s: Revival and re-release of Atari classics
In October 2001, Infogrames announced that it was "reinventing" the Atari brand with the launch of three new games. On May 7, 2003, Infogrames officially reorganized its US subsidiary as a separate entity known as Atari, Inc.. It named its European operations to Atari Europe, and kept the main holdings company as Infogrames Entertainment.
In 2002, Jakks Pacific, a toy making company, released a plug-and-play video game console called the Atari 10-in-1 TV Game, believed by many to arouse interest in the concept of self-contained entertainment devices that did not require separate hardware to operate. It was battery-operated and shaped similarly to an Atari 2600 joystick, and included A/V ports. In 2004, the same company created a device called Atari Paddle Games, in the shape of one of the 2600's "paddle" controllers with appropriate titles included. However, as stated, neither of the games were directly released by Atari.
The same year that the Paddle Games were released, Atari released a TV game of their own which they called the Atari Flashback Console. The device they produced looked like a minute version of the Atari 7800 console originally released in 1984, 20 years previously. The two controllers were small as well, having a joystick and two red buttons on each side. Twenty titles were built into the system. Unlike most plug-and-plays, the Flashback was not powered by batteries, but an (included) AC adaptor instead. The Flashback did fairly well in sales; however, many Atari fans felt disappointed. Many people felt that the device itself was far too small, and the joysticks felt very dissimilar to those of the 7800. Since the games were all recreated on hardware more closely resembling the Nintendo Entertainment System than the 7800, some of the aspects of certain games concerning the sound, graphics, or gameplay were either changed or omitted. Overall, many enthusiasts believed that the Flashback did not capture the true Atari experience.
Due to popular demand, Atari released a new version of the Flashback console, titled Atari Flashback 2, in August 2005.
Also, in late October 2005, Atari released one of two collections of its classic arcade games only for the Nokia N-Gage console, titled Atari Masterpieces. Atari Masterpieces Volume I includes classic arcade games: Asteroids, Battlezone, Black Widow, Millipede, Missile Command, Red Baron, Lunar Lander and Super Breakout, and features an exclusive interview with Nolan Bushnell. Atari Masterpieces Volume II is scheduled to be released in March 2006.
Atari's New Titles and Direction
Recently, Atari's top-selling titles have been the Dragon Ball Z games based on the popular anime license from Toei Animation in Japan. These include the Dragon Ball Z: Budokai series of games for next-generation console systems and the Dragon Ball Z: The Legacy of Goku series of games for the Game Boy Advance. These games have topped the best-seller charts for numerous console platforms since the release of Atari's first Dragon Ball Z game, The Legacy of Goku in 2002, which was the first Dragon Ball game to be made by an American company, Webfoot Technologies, and is one of the best-selling Game Boy Advance games of all time (#16). The best selling Budokai series is developed in Japan by Dimps and includes Dragon Ball Z: Budokai, Dragon Ball Z: Budokai 2, Dragon Ball Z: Budokai 3 and Dragon Ball Z: Budokai Tenkaichi. Following the success of the Budokai and Legacy of Goku series, Atari has released numerous other Dragon Ball titles including Dragon Ball Z: Supersonic Warriors, Dragon Ball Z: Super Sonic Warriors 2, Dragon Ball Z: Sagas, Dragon Ball GT: Transformation and Dragon Ball GT: Final Bout.
Atari also released a series of games based on the smash-hit The Matrix movie trilogy including Enter the Matrix and The Matrix: Path of Neo. These titles represent some of the most expensive video games ever developed. Enter the Matrix which was developed by Shiny Entertainment sold 1.38 million units for the Sony PlayStation 2 and 1 million units for the Nintendo GameCube, therefore it made the List of best selling computer and video games.
Other currently popular titles for Atari include the RollerCoaster Tycoon and Driver series.