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Scott Steinberg: Desperation Play (part one)

After 30 years, is it finally game over for Atari?

Sex. Drugs. Joysticks. Despite its squeaky-clean public image, indelibly etched into thirty/forty-something males' collective consciousness, courtesy of quarter-munching hits like Asteroids, Pong and Centipede, game industry pioneer Atari has long been a beacon for counterculture elements. (See: Tell-all documentary Once Upon Atari, chronicling the company's rampant narcotics abuse, casual attitude towards hedonism and sometimes absurd approach to business.) And, like any other hard-partying star of the '70s and early '80s, by now, you'd expect it to be either a. dead or b. trapped in a catatonic haze.

Having watched its arcade, home PC and set-top holdings slowly apportioned off over the years, founding members flee by the truckload and historic software catalogue change hands like so much cheap dross, some would say these assumptions aren't far off the mark. From the firm's meteoric rise and subsequent sale to Warner, Hasbro and French game publisher Infogrames to the loss of its coin-operated division and multiple flirtations with NASDAQ delisting, make no bones about it. This is a company that's enjoyed more extra lives than Pac-Man or Pitfall Harry, the star mascots who first helped propel the firm's Atari 2600/VCS console to household-name prominence in 1982. (Only to flame out spectacularly in an industry-wide crash the year following, when a glut of sub-par titles flooded the market, prompting an extinction-level event that would haunt the business until the dawn of the Nintendo Entertainment System.) Still, for all the corporation's ups, downs and WTFs over the past four decades, it continues to chug merrily along, most recently having repositioned itself as a publisher of next-generation and massively-multiplayer online (MMO) games.

Out last June, Ghostbusters for PC and all major console platforms - an official interactive sequel to the films starring the original cast - marks the outfit's most recent attempt at resurgence. In honor of its debut, and the winter launch of superhero simulator Champions Online, we spoke with several insiders, including Yar's Revenge and E.T. creator Howard Scott Warshaw, to chart the corporation's mixed history. (Soon to be reprised in a Paramount film simply named Atari, starring Leonardo DiCaprio as charismatic founder Nolan Bushnell...) Succeed or fail, one thing is certain. This isn't the trusted childhood friend you grew up with. So eighty-six the rose-colored lenses, set aside the warm, fuzzy montages and forget that time Adventure kept you company on a long, lonely night while everyone else was busy shimmying away at the prom. We're about to take a brisk stroll down memory lane, which, in retrospect, looks more than a little seedy, decrepit and desperately in need of gentrification.

Early Years (1972-1984)

Fascinated by early computers and their potential social applications, former midway barker Nolan Bushnell joins with colleague Ted Dabney to form "Syzygy." In 1971, the pair produce the world's first commercial coin-operated game, Computer Space, for Nutting Associates, while servicing broken pinball machines by day. A commercial failure due to its complexity, the pair nonetheless reunite to form Atari (Chinese board game Go's equivalent of the chess term "check") on June 27, 1972. With the help of engineer Al Alcorn, primitive table tennis offering Pong is launched at bars and bowling alleys across America, whose unprecedented success leads to further coin-operated machines and a triumphant home conversion in 1975.

In 1976, Warner Communications buys the company for 28 million USD, and launches iconic set-top console the VCS (a.k.a. the Atari 2600) a year after. Despite its mismanagement (CEO Ray Kassar was notorious for keeping programmers' identities anonymous and initially denying profit-sharing opportunities, as well as treating employees like disposable temps), the success of cartridges like Space Invaders and Pac-Man ignites an entertainment revolution. Heated competition from rivals such as the Intellivision and ColecoVision, and the loss of key design talent to startups such as Activision aside (sample blunder: Missile Command programmer Rob Fulop sells 2.5 million games, is rewarded with a gift certificate for a free turkey for Christmas), the company becomes a staple in arcades and basements the world over. Likewise, PCs such as the Atari 800 see it expand successfully into the home computing market, and become one of Warner's most profitable divisions.

But by 1983, the party ends as suddenly as it's begun, with the simultaneous arrival of countless low-quality VCS titles causing the market to tank, e.g. the legendarily disastrous E.T. the Extra-Terrestrial, built by one-man (Warshaw) in less than six weeks. Almost single-handedly sinking the company due to issues with overproduction (it wasn't uncommon with high-profile Atari titles for more cartridges to be produced than there were existing systems), millions were reputedly buried in a desert landfill. Like fans and shareholders, programmers - many who'd become millionaires, then paupers overnight due to scattershot royalty programs and poor tax planning - quickly saw the virtual limelight fade. Soon, the media began to label video games a dying fad, and proclaimed the pastime a passing indulgence, with retailers reticent to stock systems and supporting titles for years to come.

The Expert's Take: According to Warshaw, "Nolan Bushnell was a visionary who brought computers into the home and changed cultural perceptions about their place in the world. At the time, most of these systems were still built by hobbyists from kits. But none of us realized just how huge the business would be.

"In the early days, anything went. For example, during the making of Raiders of the Lost Ark, I'd carry an actual bullwhip around and crack it behind the heads of marketers visiting the development department to scare the living crap out of them - it sounded like a gunshot. One time, we also floated an inflatable, helium-filled frog past the window of a French VP of engineering that everyone hated with a sign that said "Kick Me." You have to remember that, back then, we were the golden geese, and security had orders to keep police away - think about the message that sends.

"While nobody was kidnapping or murdering anyone, you could do almost anything with impunity. It was more or less the same environment as Hollywood is with Britney Spears and Lindsay Lohan today. We'd enjoy parties in the hot tub, demolition derbies with radio-controlled cars, designer drugs (it was normal to have announcements for MRB - marijuana review board - meetings at 3:20 broadcast over the company-wide intercom) in our offices... It was an exciting, huge, fun environment. At that point, nobody was thinking 'when is this going to end?'

"But then things started to fall apart under Warner, and they brought in executives from other industries like tobacco, began to lay off staff, and we saw the writing on the wall. This is the point where it all began to go to pieces."

A New Dawn (1984-1996)

Per Warshaw, here's where you begin to see a bifurcation between the classic Atari of yore and train wreck of a manufacturer that embittered audiences first became acquainted with during the mid-'80s. In 1983, with the business collapsing around it (no thanks in part to the introduction of underwhelming system upgrades like 1982's Atari 5200) and share prices slipping, Warner doesn't just let Ray Kassar go. (Inadvertently torpedoing a deal with Nintendo, who'd approached the firm to publish the soon-to-be-smash-hit Famicom - a.k.a. the NES -stateside in the transition process.) The media conglomerate also completes an 11th hour deal in July 1984 with entrepreneur Jack Tramiel, of Commodore computer fame, who buys the rights to its consumer division, including home PC and console holdings.

Warner eventually soldiers on for several years with the coin-operated arcade business, renamed Atari Games, which would subsequently be sold to Namco, Time Warner and Midway before eventually petering out early in the new millennium. But Atari Corporation, as Tramiel's new outfit is rechristened, continues to sell cartridges in shrinking quantities to support development of a new PC known as the Atari ST. A reasonably well-received system (at least in Europe), the computer, which debuted in 1985, was subsequently followed a year later by the release of two new set-top consoles, the Atari 2600 Jr. and Atari 7800.

But despite achieving some measure of success, the firm can't compete with the overwhelming popularity of the NES. Nor does its first color portable, the Lynx (released in '89), offer enough battery life or compelling software to effectively spar with the technically inferior, black-and-white Game Boy. Worse, largely missing the boat on console gaming's resurgence, Tramiel and co. continue to focus primarily on the PC market, to the firm's detriment. The loss of the well-regarded Amiga computer, which it had initially funded but eventually wound up ceding to Tramiel's ex-outfit Commodore, doesn't help its fortunes either. Likewise, an unsuccessful anti-monopoly lawsuit against Nintendo in 1989 only makes matters more depressing.

During this period, separate company Atari Games, which published titles for the NES under its Tengen subsidiary, would also face legal scraps with Nintendo of its own. Among other issues, scuffles would encompass an improperly licensed version of Tetris, and Tengen's attempt to produce unsanctioned games for the system by circumventing the console's copy protection.

By 1993, the world's first 64-bit home console, the Jaguar, becomes Atari Corp.'s great white hope. Despite playing home to critically-acclaimed outings such as Tempest 2000 and Aliens vs. Predator though, hits are few and far between and sales begin to quickly peter. Although it possesses 50 million USD in the bank thanks to a victorious patent infringement lawsuit against Sega, the introduction of Sony's PlayStation and Sega's Saturn soon leaves the company between a rock and a hard place. With no significant competing products in development, Atari merges into hard drive maker JTS Corporation, where it continues to live on in name only, licensing games and patents.

The Expert's Take: Says Warshaw, "There's a pronounced split here, which sees the company first begin to fall apart.

"Here's a good story that sums things up. First the firm was cut from 10,000 to 2,000 people. Then Tramiel came in, and he was going to whittle it down from 2,000 to 200. So Tramiel decides to come through to talk to all of the developers personally, to see who he wants to get rid of. During our interview, he asks if I'm married. I explain that I am, to a woman who works in the Atari software library section. He tells me 'Your wife shouldn't work, she should be waiting for you at home with dinner.' Just to put things in perspective, keep in mind that this is the first time we've ever spoken.

"Things pretty much went on the way they were going until people ran into this character. And when people ran into Tramiel, that's when you knew that this just wasn't the same Atari anymore. The coin-op group continued to run successfully for many years on the same track, because they didn't have to deal with this guy. But it wasn't the same for those of us left behind. [Under Warner's purview,] Ray Kassar didn't understand how games were made. But under Tramiel, it was like going from the Renaissance back to the Dark Ages.

"This is a guy who came in, sucked all the life out of everything, and then tried to suck the cash back out. Don't think of him someone who came in to do video games either - he was thrown out of Commodore, was pissed off, and had a personal agenda to get back at the startup he previously built from the ground up. At the time, consoles were labeled dead, and what he was doing was attempting to create a combination PC game platform - a very popular idea during this period. But it didn't work and, as a result, Atari never quite recovered, or regained the same momentum it possessed in the old days."

To be continued in part two.

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