As the pandemic raged in 2020, a revolution took place in the world of entertainment. In that year, video game revenue grew 20% to a whopping $179.7 billion, making more money than the global movie and North American sports industries combined.
Sure, it was helped by the fact that we were collectively confined to our homes, theaters were closed, and sports were on hold.
But it was also a testament to the wild growth, innovation, and popularity of the video game industry, whose humble roots can be traced primarily to a California company trying to make coin-operated games lucrative.
That little startup called Atari, which launched on June 27, 1972, ended up changing the world: first with a rudimentary table tennis game called Pong, and then with a culture-changing home console. He would also briefly employ Apple founders Steve Wozniak and Steve Jobs, and was an early favorite of Silicon Valley’s then-burgeoning tech universe.
“Part of their cultural legacy is that they were able to bring video games from a public space to a private space,” said Matthew Thomas Payne, associate professor of media studies at the University of Notre Dame and author of several game books, including “Playing Games.” War: Military video games after 9/11,” he told The Post. “They domesticated this technology… But they could never have imagined [its current iteration].
“How do you draw the line between Pong and, say, Fortnite? It’s a complex story,” Payne said.
pong and beyond
This week marks half a century since the 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 grad students who Payne said would be considered hackers today .
About a year later, the pair formed Atari with the simple tennis game Pong.
“They figured out how to commodify the game,” Payne said, going on to tell a story that “is always told in its origin story,” even if its veracity has been questioned.
As the story goes, in September 1972, they set up Pong at Andy Capp’s Lounge, a Sunnyvale bar 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 full of quarters. And they know, thanks to this prototype, that they have a winner on their hands,” said Payne.
They made home console versions of Pong and followed up with other arcade games. In 1976, Warner Communications bought the company for $28 million.
In September 1977, he released his best-selling Atari 2600 for $199, eventually selling over 30 million units. The console featured joysticks and the ability to swap out multiple cartridges for popular games like Combat and later Frogger, Pac-Man, and Space Invaders.
“One of the first successful attempts at video games in the home was the Atari 2600, which would have been the first home computer,” Payne said. “It was really the beginning of home computing.”
Payne points out that Atari wasn’t the first to make a home game console, and its success sparked legal battles within the fledgling industry. Magnavox, which had created a home system called Odyssey that featured a table tennis game, went after Atari and other companies making knockoffs of Pong. In 1974, they filed a patent infringement lawsuit against Atari, which was eventually settled for $1.5 million.
The video game crash of 1983
But Atari had other problems.
The company would take a major hit in the now infamous video game crash of 1983, which brought the market crashing down. Payne blamed the industry downturn on a lack of oversight.
“Atari couldn’t block outside publishers and they produced complete garbage 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, blamed his sale problems on Warner.
“Atari had an extraordinary corporate culture that was destroyed within two years of the sale,” Bushnell said in 2014 on Reddit from his company’s notoriously corrupt 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, providing a much-needed jolt to the industry.
“It’s Nintendo coming back and saving the day for home gaming after the rise and fall of Atari,” Payne said. “Other companies like Sega and Nintendo saw those lessons and recalibrated 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 own esports teams, which are packing out stadiums.
But there is still a nostalgia for Atari, and there are even vintage 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, he’s back, making games. In 2017, he announced a new game console, and a year later, the creation of a game that showcases his original hit, “Million Dollar Pong.” In 2020, Atari said it would launch a video game-themed hotel chain.
“While we still recognize Atari, it no longer has the strength it once did in video games,” Payne said. “But it still holds. He still talks about the early years of the industry.”