By Alex Daud Briggs
There have been several titans in gaming, with brands like Nintendo, PlayStation, and Xbox duking it out at the top – but whatever happened to Atari?
Atari feels like almost a ghost within the gaming world; while the brand still exists today, they haven’t had any major game releases in years. It seems strange that a company who used to own the vast majority of the industry has plummeted to such lengths. Their rule was in a very young video game industry in North America, and as such, it was an environment that lacked the security and regulation of the one we have now. In many ways, these circumstances would lead to their demise.
An obvious reason for Atari’s downfall may be the lack of sales with their final console, the Atari Jaguar. What’s important to understand however is that the Atari who made the Jaguar was not the same company as the one that existed at the height of their influence in the early 80s. In reality, the original ‘Atari Inc’ had become defunct in 1984 when its parent company Warner Communications sold the developer’s assets to several other firms. This included what would become ‘Atari Corporation’, who would go on to make the Atari Jaguar, Lynx and 7800.
Atari Inc didn’t collapse on its own – the industry around them literally began crashing down under its own weight. In the early 1980s, Atari Inc was the biggest name in the gaming industry. Not only had they released arcade juggernauts like Pong, but they also revolutionized the market for home video game consoles. While they were not the first to develop the idea, their Atari 2600 would become the defining example of the concept quickly rising to 10 million in sales and giving Atari a large 75% ownership of the entire North American video game industry. It showed people the potential of gaming at home, something that in modern times has surpassed the arcade and become one of the dominant forms of entertainment. This, however, is where trouble arose, as where there’s success, there’s competition.
Soon after the 2600’s release, several other home consoles also came on to the market. These included the Intellivision, Coleco Vision, Magnavox Odyssey 2, Fairchild Channel F and many more. This was arguably the greatest problem plaguing the 80s. Today, there is a choice of three fairly distinct home consoles – at this period there were over seven. With so many different options, it was far more difficult to register the differences between each system. This made buying a console seem impossible, heavily alienating many consumers who found the selection confusing.
The reason for this menagerie of machines was due to how trendy gaming was at the time. Video games were a brand-new market rising in profit at a rapid pace. Many corporations entered the market by quickly rushing out consoles and games amidst a technological gold rush. In terms of the software itself, there was essentially no regulation of who could make a video game, nor were there laws on preventing the publishing of games for a console without approval from the console manufacturer. The result was a flood of poorly made games, games that were direct plagiarisms of more popular games, games made by dog food companies, and games explicitly about lewd or sexual content, amongst others. There was no quality control, and in a world without the internet, there was no way to fully assess new games beforehand. This made audiences wary about spending their hard-earned money on cartridges, especially with the arcades still going strong. In the end, the video game market saw an enormous decline in sales, going from about $3.2 billion in worth to a mere $100 million, whilst profits staggered by 97 percent. This came to be known as the North American Video Game Crash of 1983, and the event forced several prominent gaming companies out of the industry with it, including Atari.
Not only was the games industry doing poorly, but Atari themselves were making terrible financial decisions. Atari’s plans for game releases to combat their numerous competitors were overambitious. This was first seen with the 2600 port of Pac-Man, in which they ordered 12 million copies despite the fact that they had only sold around 10 million Atari 2600s at the time. Atari’s implication was that not only would every person that owned an Atari 2600 buy the game, but that 2 million more would buy one just to play Pac-Man. The port was rushed and of poor quality, and in the end, it flopped out the gate at around 7 million.
These game releases would become even more fatal with Atari’s release of a game adaptation of E.T the Extra-Terrestrial. The company spent $25 million on licensing, and the game was rushed into a six-week development process to meet the Christmas shopping period. It was a complete bomb, with three quarters of its stock being returned to Atari (who then preceded to bury them in the New Mexico desert). Today, ET is often referred to as “the worst video game of all time”, and while the title may be exaggerated, it was the final straw for Atari. Their financial situation was dire, and between 1982 and 1983, their share of the home console industry slipped from over 75 percent to under 40. The company’s assets were split and sold by Warner Communications in 1984, making the original Atari Inc defunct.
The North American video game market was eventually revitalized in the mid-eighties by Japanese electronics companies that remained unaffected by the crash. The most notable of these was Nintendo, who produced the next dominant home console; The Nintendo Entertainment System (NES). When localizing the NES, Nintendo implemented 10NES, a lock out chip within the console and its games which would only allow software authorised by Nintendo to be playable on the system. What this meant was that for a company to publish their game on the NES, they had to get Nintendo’s permission first. Nintendo’s policy for the system included restricting third party companies to a maximum of three games a year, and if Nintendo found content in the game they deemed inappropriate, they could force the developer to make amendments.
By modern standards, these policies are somewhat draconian – but then-Nintendo president Hiroshi Yamauchi gave a clear reason for them: “Atari collapsed because they gave too much freedom to third-party developers and the market was swamped with rubbish games”. This was an early form of what we now know as Digital Rights Management (DRM), a policy deployed by console manufactures to ensure that each piece of software for their system is properly licensed and regulated to avoid as the chaos of the early 80s. Atari may have fallen, but their legacy transformed an industry forever..
Atari was a victim of the industry. Video game home consoles had grown too fast without cementing an identity, leading to a market overwhelmed by garbage. It’s partially thanks to these failures however that the home console market has shaped into a secure environment for both producers and audiences. Since this time, the Atari brand has found its way to several new owners, and its current incarnation, Atari SA, has announced a new console called The Atari VCS. Whether this new console will live up the 2600 remains to be seen; regardless, the classic Atari still holds one of the greatest legacies of any video game company, and should be remembered for their contributions despite their end.