Authors: Steven Kent
The Ultimate History of Video Games: From Pong to Pokémon and Beyond—The Story Behind the Craze That Touched Our Lives and Changed the World (19 page)
According to Kassar, his first assignment was to determine whether Warner should liquidate Atari. After testing the VCS, Kassar was impressed and decided not to abandon it. He reported to Steve Ross that with some changes, Atari could be a profitable company.
My plan was to stay in California for as little time as possible. Warner really thought I was going to go out there and liquidate the company. That’s what they wanted me to do. They were looking for me to give them a recommendation.
Believe me, there’s only one person who knows the full story and that is me. Even Manny Gerard doesn’t know the full story ’cause he was sitting in New York. I was there. I was running the company.
—Ray Kassar
Predictably, Nolan Bushnell and Ray Kassar found very little common ground. Kassar, who routinely arrived at work at 7:30
A.M.
, did not approve of Bushnell’s “work smart, not hard” attitude. He was bothered by the stories of drug abuse among Atari’s employees and felt that Bushnell’s laid-back style did little to discourage it. He disagreed with Bushnell about the future of the VCS and wanted to use it as the lead product in Atari’s Christmas lineup.
The first or second week I was there, Nolan invited me to a management committee meeting. I arrived at his office at 3:00. Everybody was sitting around in jeans and T-shirts. In fact, when I first arrived at Atari, Nolan was walking around the company in a T-shirt that said, “I love to screw.”
Anyway, I arrived at this so-called management committee meeting and there were about six or seven of them drinking beer and smoking marijuana.
They offered me a joint.
I said, “No, I don’t do drugs.”
And Nolan said, “Well, why don’t you just relax? We’re just kind of … ”
I said, “Look, are you having a meeting? If you’re having a meeting, I’ll stay. If you’re not, I’m leaving.”
He said, “No, we’re just going to drink some beer and wine.” So I left.
—Ray Kassar
The final battle came at a Warner Communications budget meeting held in New York City in November 1978. Atari had been mildly profitable, but Steve Ross was not satisfied. Bushnell’s solution was to close down the pinball division and abandon the VCS.
In Bushnell’s mind, the only way Atari pinball could succeed was to make specialty tables. Standard pinball playfields were 22 inches wide; Atari’s first three tables were 29 inches wide. If Gerard insisted on making standard tables, Bushnell wanted to close down the division all together.
Gerard said that Bushnell also proposed discontinuing the VCS, but Bushnell said he only wanted to cut its price. Either way, his suggestions were in direct opposition to those of Gerard and Kassar. The battle lines were drawn.
The ultimate parting with Nolan came at the budget meeting of Warner in 1978. Nolan came to the meeting, got up at the meeting, and everybody sat there in stunned amazement as Nolan said, “Sell off your remaining inventory of 2600s. [2600 was another name for VCS.] You’ve saturated the market. The market is saturated at the top. It’s over.”
Remember, there were a lot of Warner people who didn’t know nothing about nothing. And nobody in the room could figure what the hell Nolan was talking about.
—Manny Gerard
I said, “If, in fact, you guys are bound and determined to do regular pinball machines, I think we should close the division down because you aren’t going to make any money.”
The battle was really over pricing the VCS. I felt that the strongest position would be to price the hardware lower and the software higher.
—Nolan Bushnell
By this time, it was too late to make changes in the Christmas lineup. If Bushnell was right, Warner faced another holiday bloodbath.
The meeting erupted into a shouting match. Bushnell felt that Gerard and the entire Warner team had no feel for the electronics industry. Gerard claimed that Bushnell was no longer taking the business seriously. He said that Bushnell’s decisions were erratic. Not only had Bushnell’s recommendations caught the Warner people off guard, they even surprised Atari’s executive team.
The day after the showdown, Gerard had a private meeting with Steve Ross, in which they discussed Atari’s future. Ross wanted to know what Gerard
thought would happen over the holidays. Gerard said that Atari had not saturated the market with the VCS and that he expected the system to sell well.
The next day I got called into Ross’s office, and he basically goes nuts, and I mean nuts. He says to me, “Oh my God, what do we do?”
I said, “Look Steve, there are only two possible outcomes.” It’s now December 10th or thereabouts, and I said, “Steve, in my opinion, on December 26th there’s going to be a game in every home in America, in which case we’ve got one of the biggest businesses you ever saw. If I’m wrong, we’ve got us a big problem. But what the hell, all we have to do is do nothing for two weeks, and we’re going to know. Okay.”
He said, “I guess so.”
By December 26th we knew we had a monster business on our hands.
—Manny Gerard
Shortly after the budget meeting, Gerard returned to California. While there, he heard that Bushnell was holding an Atari board meeting without Warner representation. This was the last straw. Gerard had an attorney draw up papers, and he dismissed Bushnell.
There was this whole thing in which it came to my attention that Nolan was trying to call a board meeting with Joe [Keenan], and they said something about didn’t I get my notice? I said to myself, this is untenable, then I got the contracts out, I got the lawyers out, and I removed Nolan from office.
Nolan was simply removed and he was put on the beach. Okay?
Then Joe asked to be put on the beach. That’s a … word of ours, because by putting him on the beach, he was entitled to certain modest compensation in some bonus pool arrangements.
I don’t remember the numbers, but Nolan and Joe got 1 percent of this bonus pool, which, at that moment in time, he [Bushnell] believed was valueless. I believe what was going on was that they perceived they could make a fortune with Chuck E. Cheese, and who gave a shit about Atari anyway?
—Manny Gerard
Bushnell’s forced retirement knocked him out of the video-game industry. One of Warner’s original stipulations for purchasing Atari was that Bushnell sign a seven-year noncompete clause. Once he left Atari, he was not allowed to work for any video-game company until 1983. On the other hand, he still received bonuses based on Atari’s performance. If Gerard and Kassar ran Atari profitably, he stood to make some easy money.
Ray Kassar replaced Bushnell as the CEO of Atari. His autocratic style had angered a few Atari employees when he was just a consultant. Now that he was chief executive, he offended people in droves. Once Bushnell left, several of Atari’s key figures followed within the next few years.
A lot of us didn’t know Ray when he was appointed to run the company, so he gathered the entire consumer engineering department in one of the cafeterias to talk about how he was going to run things.
The question just came up, “What’s your background?” He said it was from the textile industry, importing fabric and stuff like that.
Somebody asked him, “Well, how are you going to interact with electronics designers?”
He said, “Well, I’ve worked with designers all my life.”
I remember saying to myself, “What does he mean by that?”
He went on to say, “The towel designers … ”
I was like, oh-oh, we’re in for a lot of trouble. This is going to be a disaster. And it sure turned out to be a disaster.
—Alan Miller, former Atari game designer, cofounder of Activision and Accolade
*
Atari did not make the first joystick. German scientists developed the joystick during World War II for controlling guided missiles.
The Return of BushnellSolid-state pinball was a really foolish market—they sold before they even finished building it. It was a wonderful market for Bally that only lasted about three years and went into the dumps. The reason it went into the dumps is because a video game called
Space Invaders
came out and captured the attention of everybody on the face of the earth.—Eddie Adlum
Nolan started Chuck E. Cheese at about the same time that Warner bought Atari. You want to hear about Chuck E. Cheese?
—Al Alcorn
In the spring of 1978, Taito approached Midway about distributing a new arcade game in the United States. The game had originally been invented as a hexadecimal test used for evaluating computer programmers. Someone decided to convert the test into a video game that Taito distributed in Japan, despite the unenthusiastic blessing of company executives. The game was called
Space Invaders.
Space Invaders
did very poorly for the first few months after being introduced to Japanese arcades. By the time the game was three months old, however, it started to show signs of life. More than a year passed between the time that
Space Invaders
was introduced in Japan and when it arrived in the United States. By that time, it had become an unprecedented phenomenon in Japanese arcades.
By the end of its arcade life, more than 100,000 units of
Space Invaders
blanketed Japan. So many people were playing the game that it caused a national coin shortage. The Japanese mint had to triple the production of the 100-yen piece because so many coins were glutted in the arcades.
In 1978, Taito came out with
Space Invaders
in Japan. It was such an outrageous hit in Japan that many vegetable stores and other little stores would get rid of their vegetables and dedicate the whole store to
Space Invaders.
All told, worldwide, they say there were at least 300,000
Space Invaders
games built, including counterfeit versions.—Eddie Adlum
Even after
Space Invaders’
triumph in Japan, Taito executives felt that the game’s theme of defending space stations from an extraterrestrial attack was too different from other games to appeal to American audiences. Most of the top games of 1978 were based on popular themes such as driving, sports, and war. In
Space Invaders
, players moved a laser turret from side-to-side along the bottom of the screen, instead of controlling familiar objects.
The aliens in
Space Invaders
marched in a rectangular formation eight columns long and five rows deep. They marched horizontally, advancing toward the bottom of the screen. Players lost if the invading alien army reached the bottom or if players lost all their turrets.
To defend against the invaders, players had to shoot at the aliens with their laser turrets while avoiding descending enemy missiles. Four bases toward the bottom of the screen offered limited cover from missile barrages, but enemy fire could obliterate those bases quickly. Destroying an entire wave of aliens earned 990 points. Extra points could be earned by shooting flying saucers that flew across the top of the screen at 25-second intervals.
There was no way to beat
Space Invaders;
the alien waves kept coming until the player either gave up or was killed. The best you could hope for was to post the highest score of the day at the top of the screen.
After testing the game, Taito of America’s vice president of product development Keith Egging predicted that
Space Invaders
would do well in the United States. He set up a prototype in a secret testing location in Colorado. The players’ response convinced him that Taito had sold Midway a major hit.
I was exceptionally confident that it would do good in this country. I had just started with the company [Taito of America], and they thought I was a nut. I said we could sell tens of thousands, and they said, “You can’t sell that many.”
—Keith Egging, former vice president of project development, Taito of America
Midway introduced
Space Invaders
into the United States in October 1978, and American audiences adopted it almost immediately. Midway sold
Space Invaders
machines for approximately $1,700. The orders poured in so quickly that the company became backlogged. Arcade owners gladly paid the price; the game could pay for itself in a single month. In good locations, each machine earned between $300 and $400 per week.
