Super Mario Nation

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“Carl Lind, the head of the department, says, ‘Mr. Alcorn, you’re telling me that you’re going to reduce that rat’s nest of wire to a little piece of silicon the size of your fingernail?’

“‘Yes, sir.’

“He looked at me, leaned over the table, and said, ‘How are you going to solder the wires to it?’”

Home Pong received more than enough support. Quinn asked how many units Atari could manufacture. When Bushnell told him 75,000 in time for Christmas, Quinn insisted that he double that output. Bushnell agreed.

Sears executives calculated the success of the products in their catalogue by comparing dollars with inches: They measured the amount of space given to each product and matched it to the amount of dollars they grossed. Through 1975 the reigning champion was an Adidas sneaker. By the beginning of 1976 Home Pong had emerged as the new dollars-to-inches champion.

That year was a tumultuous one for the young industry, with several companies wrestling for leadership in the home market. There was a shortage of microchips, and because Coleco (a name derived from the Connecticut Leather Company) was the only outfit that received a full shipment of chips in 1976, it became the biggest home-console manufacturer that spring. By August, however, Fairchild Camera and Instrument had released the Channel F, the first game console that used interchangeable cartridges. The consoles made by Atari, Coleco, and other competitors were like calculators and could play only games that were built into their circuits; the Channel F, on the other hand, was like a minicomputer that could be programmed to play a library of games.

Atari also had a cartridge system under development—the Video Computer System (VCS). Compared with the VCS, which used the same eight-bit microprocessor as the Apple II computer, the Channel F was as primitive as Pong. But Atari didn’t have enough money to produce the VCS in the quantities necessary to dominate the market. Seeking more capital, Bushnell took the first steps toward selling Atari stock on the New York Stock Exchange, but a slump in the market scared him. The only other option was to sell the company. Bushnell found a willing customer in Warner Communications. Atari, a company founded just four years earlier with $500, sold for $28 million.

Warner Communications took over Atari during one of the video-game industry’s bleakest years. The national protests against video-game violence had taken their toll on the arcade business; so too had the lack of innovative games. The home business was also slow; consumers had wearied of Home Pong and its myriad imitators.

Atari manufactured 400,000 units of the VCS for Christmas 1977; but sales were low, and although they remained steadier than expected after the holidays, Steve Ross, the president of Warner Communications, was furious. He had by then invested $100 million buying and building Atari, and so far he had seen very little return.

The tension between Bushnell and the new owners of his company increased. They saw him as no longer caring about his company. This may well have been true; at a budget meeting Bushnell claimed that the market was saturated with VCS systems and that Atari needed a new console. After the grim Christmas of 1977, Ross fired Bushnell. He replaced him with Ray Kassar, a flamboyant man who had risen through the ranks of Burlington Industries. Ross first sent Kassar to decide whether he should liquidate Atari or continue its operations after the disappointing Christmas. Kassar knew nothing about high-tech industries, but he liked the VCS and suggested giving the company another year.

 
 
 

Though he knew little about computers, Kassar was a man who understood the public’s taste. In 1978 Atari enjoyed a record-setting Christmas, and the year marked the beginning of a new era of home video-game technology, as the industry, still less than a decade old, enjoyed its first real boom.

In 1978 Midway distributed a new arcade game from Taito. When the game was launched in Japan, it had barely received any notice, and Taito executives dismissed it. A few months after its release, however, the game had become so popular that Japan was suffering a national coin shortage. The cause of this frenzy was called Space Invaders. Prior to its advent a top-selling arcade game meant about 15,000 units sold. Taito sold 300,000 Space Invaders, 60,000 of them in the United States.

Space Invaders helped everybody in the industry. Its popularity opened new outlets to coin-operated games. Soon they could be found in movie theaters and restaurants. It even helped Nolan Bushnell, whose new venture was Pizza Time Theaters, a company that opened Chuck E. Cheese restaurants—pizza parlors with video-game arcades.