Page 26 - Old School Gamer Magazine Issue #42 FREE Edition

From late 1975 and throughout 1976, work proceeded on Atari’s new programmable home system.
Bushnell and Atari’s president, Joe Keenan, hoped to release it in time for Christmas 1977, but realized they didn’t have the finances to
do so. Bushnell wanted to take the company public but his underwriter believed that that wouldn’t raise
as much as they needed. Bushnell then sought help from Don Valentine, a venture capitalist who suggested that Bushnell should find someone to buy the company. Bushnell really didn’t want to do that but he felt it was absolutely necessary to save the company.
Warner Communications was a huge entertainment conglomerate that was already involved in movies, publishing and music. During the mid-seventies, sales from Warner’s most profitable division, its music division, began falling. Warner’s executives concluded that the music business had reached its peak and that the huge profits that they had been receiving weren’t going to continue for long. They felt that Warner should branch into a hot, new field, and they hired Manny Gerard to find it. When Gerard heard that Atari was on the market he became very interested. Atari and video games seemed to be just what Warner was looking for. In October 1976, Warner Communications
purchased Atari for $28 million. Although Warner was unhappy with the unorthodox form of management at Atari, Bushnell stayed on as CEO. The company was renamed Atari Incorporated.
The programmable system, the Atari Video Computer System (VCS), was released nationwide in October 1977. Designed to be a product that sold during the Christmas season, the console wasn’t an instant hit. Although it sold in decent numbers there was a high number of returns due to poor quality control and production of more consoles than they could quickly sell. Meanwhile, Warner was getting increasingly frustrated with Bushnell as began appearing less and less at the office and missing important business meetings.
In February 1978, Warner brought in Ray Kassar, a former head of fabric-maker Burlington Industries, as a temporary president of Atari’s Consumer Division. Throughout the year he worked on promoting the VCS and by Christmas all of the overstock had been sold. He was then asked to permanently become the president of the entire company. He refused unless they got rid of Bushnell. Warner agreed to this and Manny Gerard announced
that Bushnell’s position as CEO of Atari was terminated and that he would stay with the company
he co-founded as a creative and engineering consultant. Bushnell refused this position and left
Atari. In doing so, he was also prohibited from working with any of Atari’s competitors for five years. This in effect banned him from participating in the industry that he had created until October 1, 1983.
The years during Kassar’s reign
of the company were the most formative ones for Atari. The arcade division released some of its best- known titles: Asteroids, Missile Command, Battlezone, Centipede, Tempest and Pole Position among them. The consumer division released Space Invaders for the VCS, the first time a title was licensed
for a home console, and this game alone helped propel the VCS into the top-selling console of its day. Atari also started a home computer division. This was something that Nolan Bushnell had been against ever since Steve Jobs and Steve Wozniak presented their Apple computer to him, which he rejected because in his mind Atari was first and foremost a game company. However, the Atari 800 was a formidable entry into the computer market with its large array of software that include programming languages, word processing, finance, and of course games. Then there was the pinball division that had been started before Kassar came aboard, which released a number of innovative tables that were wider than the average pinball machine and employed electronics which had never been used before in pinball.
But not everything was rosy
within the world of Atari. For one, the free and open atmosphere
that employees, especially the developers, had enjoyed in the
past, was gone. Kassar tried to
turn Atari into an IBM clone where employees had to wear suits
and ties and conform to regular business hours. But the biggest complaint was by the programmers who weren’t receiving recognition for the best-selling games that they were creating. When four of them
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OLD SCHOOL GAMER MAGAZINE • ISSUE #42