Replay: The History of Video Games (11 page)

Texas Instruments ca
me up with
Speak & Spell
, an educational toy that used a speech synthesizer to challenge kids to spell words on a touchpad keyboard in a robotic monotone. It sold in huge numbers inspiring Texas Instruments to release
Speak & Read
and
Speak & Math.
[4]
Just as successful was Milton Bradley’s
Simon
, a disc-shaped electronic toy invented by Howard Morrison and Magnavox Odyssey inventor Ralph Baer, who got the idea from
Touch-Me
, an Atari coin-op game released in 1974 that later became the company’s sole, unsuccessful venture into handheld games.
Simon
consisted of four large primary coloured buttons that would light up the buttons in a random sequence and play a musical note to accompany each one. The player then had to repeat the sequence. It sold millions and would become a pop cultural icon thanks to its distinctive looks. Another smash hit was Parker Brothers’
Merlin
, a multi-purpose LED game that could play blackjack, tic-tac-toe and
Simon
-esque memory games. It even doubled as a musical instrument, allowing users to play tunes by pressing its buttons. Demand for these games was so huge that stores quickly sold out, leaving parents desperately combing shops and retail parks in search of the elusive toys.

George Ditomassi, the general manager of Milton Bradley’s game division, told the press the clamour for
Simon
had taken the company by surprise. “It was just impossible for us to foresee this kind of demand. We knew we had a good item from the day we saw it, but we had no thinking of anything like this,” he told the
St Petersburg Independent
as retailers and parents alike bemoaned the lack of
Simon
s on the shelves. The demand for portable games peaked in Christmas 1979 with estimated sales of $400 million in the US alone – up from $35-$40 million in 1977.

The craze left Atari struggling to get the public to buy the 2600, which in turn caused the relationship between Warner and Bushnell to break down. Bushnell’s initial optimism about the Warner deal had faded fast. Warner had this way of saying nothing’s going to change, you’re going to manage it just the way you’ve always managed it but you can use our cash and all our properties. It felt like you got to play in a bigger sandbox without the stress,” he said. လAt the time I believed it was just a financial transaction and that beyond having enough liquidity to buy some stuff, not a lot would change. I was naive, but that’s what I believed.”

Warner, however, had other ideas. For a start Gerard believed Atari’s internal operations needed massive changes: “Bushnell and Keenan were not managers, they were hot-shot entrepreneurs. They were really engineers and understood the engineering side, but they weren’t managers and this place needed a manager.” Warner started pushing for a bigger marketing operation, more managers and formal financial controls. Part of the conflict between Bushnell and Warner stemmed from the differences in East Coast and West Coast management styles.

“The biggest difference was a marketing-centric versus an engineering-centric company. The egalitarian ‘we’re all in this together’ approach versus hierarchy,” said Bushnell. “East Coast guys, if they came into the engineering department at 8.30am and there was no-one there, they would say: ‘Boy, what a lax place’. But they were out having Martinis at nine o’clock when those guys were still working at night. East Coast is much more about form over substance and that was one of the things that Atari really tried to move away from. We wanted to be all substance and no form.”

But not every pre-Warner Atari employee was thinking along the same lines as Bushnell. “You know the old story about are you saluting the person or are you saluting the hat? I always thought the company had consensus. In my naïve way I thought the people who were working for me would agree with me because I was the boss,” he said. “I first realised that power was shifting to Warner was at one of our early planning sessions right after the purchase when we were having a planning session and Manny was there. He came up with a couple of things I thought were absolutely ridiculous and my people kind of saluted it. I thought ‘Woah! What’s going on here?’. It was really surprising to me. Everyone’s willing to salute the hat and I thought it was the substance of my arguments and ideas. Naive me.”

Unhappy with the way Atari was going, Warner decided to bring in a consultant who it felt could help knock the company into shape. It chose Ray Kassar, a vice-president of textiles manufacturer Burlington Industries. Kassar didn’t want the job: “The Atari job was offered to me from a recommendation of a friend who was working for Warner. My reaction was that I had no interest at all in what he was offering. My friend insisted I meet with Manny Gerard and, after four hours of talk, I said I’ll take it under certain conditions and they agreed. I said I’ll only go for a couple of weeks.”

On his arrival in California, Kassar was shocked at Atari’s business practices: “The company had no infrastructure. No chief financial officer, no manufacturing person, no human resources, there was nothing. I had no idea how bad it was.” Just like Bushnell, Kassar felt there was a clash between Atari’s West Coast culture and the East Coast approach of Warner and himself. “We’re all more serious in the east, you have a job and you do it the best you can – it’s not a playground,” he said. “In California at that time things were very casual. They still are. That’s ok, that wasn’t a problem for me, but someone had to be a grown-up. They were a bunch of kids playing games.” It was a divide that Kassar noticed from day one: “When I arrived on the first day, I was dressed in a business suit and a tie, and I met Nolan Bushnell. He had a t-shirt on. The t-shirt said ‘I love to fuck’. That was my introduction Atari.”

The divisions were not just at board level. Staff in the company’s coin-op games division, once the heart of Atari’s activities, felt spurned by Warner’s focus on the consumer division and 2600. “Warner, it seemed to us, fell in love with the consumer side and the computer side and thought the coin-op group was old time,” said Noah Anglin, a manager in the coin-op division when Warner bought Atari.

The rift between Bushnell and Warner came to a head in November 1978 in a budget meeting in the Atari owners’ New York offices. By then Bushnell had started to lose interest in Atari, partly because of his newfound wealth but also because of his increasing frustration with the direction Warner was taking the business. “There was a kind of disengagement,” said Bushnell. “I found it very difficult to support activities I thought were stupid. I took a lot of trips, usually to a trade show, but then a week’s holiday one side or the other.”

But when Bushnell arriv
ed in New York that November, he was in a fighting mood. “There were two or three things that were really bugging me,” he said. “First of all I felt that we needed to replace the VCS as quickly as possible – the VCS was already obsolete. I was afraid someone else was going to come and totally outclass it and it took two to three years to get a new product like that through the engineering cycle. The second issue was that we were about ready to start marketing the Atari 800 home computer and Warner was adamant that it was going to have it as a closed computer system and if anyone wanted to buy software they had to buy it from Atari. They would prosecute and sue third-party software developers. I just thought that was mad. The third big issue was the Atari pinball division. We had created these wide-body pinballs and Manny wanted to get into what I called the standard pinball business. The reality was that our cost to manufacture in California was $150 higher than in Chicago, and when you added in the extra freight to the east coast, it was an almost $200 disadvantage.”
[5]

Annoyed and angry at what he saw as stupidity on Warner’s part Bushnell went into the meeting with fire in his belly. “The Warner board, and Manny particularly, just didn’t want to hear the fact that the 2600 was obsolete and I didn’t choose my words very well. I said: ‘The 2600 is obsolete. It’s a piece of shit’.”

The Warner board was shocked. “Nolan sits in the meeting and looks up at one point and says sell all your remaining 2600s, the market is saturated. It’s all over,” said Gerard. “Everybody in the room, including me, kinda stares at him and doesn’t know what to say. The guys from Atari didn’t know what to say. It was stunning. So raw.”

Bushnell’s dismissal of the 2600’s prospects unnerved Steve Ross, Warner’s chairman. “Steve was in a panic,” said Gerard. “Steve was a very good guy and very smart man. He said: ‘The guy I bought the company from says it’s all saturated’. I said ‘Steve, you don’t know what the fuck you’re talking about’. He looked at me. I said: ‘Steve, listen to me, it’s now the 8th December. On December 26th there are two possibilities. Either there will not be a 2600 on the shelf of any retailer in America, in which case you have the biggest business you ever saw, or there were going to be plenty of them and we’re fucked. So let’s all relax because in 18 days we’re going to know the answer.”

Regardless of how sales went that Christmas, Bushnell’s days at Atari were numbered. “I had had it up to my ears,” said Bushnell. “It’s not clear whether I was fired or whether I quit. But Manny and I had a talk after the meeting and he says ‘we’ve got to do something, Nolan’ and I said ‘yeah, I should get out of here’.” In January 1979 Bushnell turned up for work at Atari for the last time to finalise his severence package. As part of the deal Bushnell was barred from working in the video games industry until 1983 – effectively exiled from the business he created. Keenan quit shortly after. The pair teamed up to set up Chuck E Cheese, a children’s pizza restaurant chain that used arcade video games and robots to lure in customers. Warner offered Kassar the post of chief executive – the New Yorker’s few weeks of consultancy work in California was about to turn into a three-year stint.

For Kassar, Bushnell’s exit was a relief. “I couldn’t have accomplished what I did with Nolan in the picture. Atari couldn’t have two bosses. Two people can’t run a company, one person has to have the final responsibility. Nolan would say one thing and I would say another. How do you resolve that? You have to have either him or me. I have nothing against Bushnell. He is a charming, bright guy, very capable and, after all, he started the whole thing, I didn’t.”

By the time Kassar took over, it was clear the 2600 had sold in large enough quantities during Christmas 1978 to allow Warner to dismiss Bushnell’s warning that the market was oversaturated, but problems still remained. “The 2600 was selling, but not in any great volume. The problem was the quality of the hardware, which was terrible. The return rate was excessively high,” said Kassar, who made improving the reliability of the console his first priority after taking control of Atari. With the potential profits from the 2600 so huge, Kassar focused most of his attention on making the console a success. The coin-op division that Atari built itself on and the company’s new home computer operation, found themselves sidelined. The coin-op division, used to being at the heart of the company, took the shift in focus badly. Its employees saw the division as the hit factory of Atari. After all, it was in their division that the great games that had made Atari’s reputation were born. Anglin felt the coin-op division harboured the soul of Atari: “If you talk to the coin-op guys you get the same love, passion. That passion, to me, didn’t exist in the other groups.”

The change from Bushnell to Kassar was dramatic, said Atari coin-op engineer Howard Delman: “Nolan understood the value of his engineers. He knew that we were the engine propelling the company. We were like kids in a candy store playing with fabulous technologies and doing things that no-one had ever done before. Under Warner and Kassar, the attitude changed significantly. The new engine propelling Atari was the marketing department and profit became the most important goal.” Not that this stopped the coin-op division from carrying the torch for Bushnell’s vision of Atari as a company of fun. “Apple were next door to us and one night some of our guys went over and painted worms on the big Apple sign. The next day Steve Jobs and all them were all upset about it,” said Anglin. “It was like ‘hey come on guys, have a sense of humor’.”

The split between Kassar and Atari’s game makers would grow even wider when the new Atari boss agreed to be interviewed by
Fortune
magazine. In the article Kassar described Atari’s game designers as a bunch of “high-strung prima donnas”. “It was a mistake,” said Kassar. “When I said that, it was an off-the-record comment and unfortunately it got on the record. I had great respect for the designers and the idea that I didn’t is a totally blown-up image of me by engineers who really hated the fact that I wasn’t an engineer and came from New York. I really did all I could to encourage the programmers, to cheer them up, to inspire them. Once this particularly bright programmer came to see me and I spent five hours with him because he was so critical and crucial and he was reading his poetry to me. It was a little off the wall but he was a great programmer and that’s all I cared about. Without the games we wouldn’t have had a business. The programmers had a lot of respect, they were left alone, they did what they pleased. As long as they produced, that was fine with me.”

The coin-op division responded to Kassar’s public criticism with its trademark playfulness. “Kassar was not an engineer and he made that perfectly clear when he called us ‘high-strung prima donnas’,” said coin-op game designer Ed Logg. “When that came out we all had t-shirts made saying ‘I’m just another high-strung prima donna’. Everybody in coin-op had one. That was one of our cheap shots back.” Not that every game designer rejected the high-strung prima donna tag. “We totally were,” said Rob Fulop, a game designer in Atari’s 2600 games division at the time. “Isn’t every actor or actress? So were The Beatles, so was Michael Jackson. People that create things are whacked out, high-strung prima donnas – that’s kind of how it works. I remember not feeling insulted at all.”