A company that birthed console gaming as we know it but is nowhere to be seen on the modern scene, Atari is both a story of amazing success and perilous tragedy.
Serving as a cautionary tale for any entity that thinks it can single-handedly dominate the video games industry without focusing on that one segment, Atari’s story is one that is both deeper than modern gamers realize and broader as well.
Spanning more than just video games, Atari’s success in that area was almost an accident of happenstance. Lining up the best software available for its systems, Atari focused heavily on bringing some approximation of the arcade experience to home living rooms.
The only problem was that the main company was more focused on becoming a computing giant, throwing out its own PC variants into the market with abandon while continually harvesting profits from a dying console (the 2600) and stumbling into disaster after disaster with follow up consoles released after that.
Often associated with video games, a lot of the failure of Atari does not come from that industry but rather its wasted efforts in attempting to become a company like Apple that made PCs for home consumption. The recent Blade Runner 2049 film depicting a universe in which Atari is successful likely did not put forth a vision of an Atari based on video games but rather PC manufacturing and computer goods.
For example, did you know that Steve Jobs, of Apple fame, held his first job with Atari? Imagine a world where, rather than found Apple, Jobs instead stuck it out with Atari and transformed that company into the Apple we know today.
If that doesn’t give you some hint about how different Atari was from its popular perceptions then we don’t know what else will.
Founded in 1972, Atari had its first successes in the video games industry but quickly expanded to other fields as well. Initially heavily involved in the arcade industry, Atari’s lucrative profits from building gaming cabinets and the know-how acquired from this process was eventually applied to home consoles, an area that the company largely helped to pioneer.
Bringing a home console to the market was a hugely expensive proposition. Though the 2600 was only going to cost $199, adjusted for inflation this number quickly approaches close to $1000. Looking for partners to help defray the costs of production, Atari teamed up with Warner Communications in a partnership that was fraught from the very beginning with problems.
The 2600, though a success, proved to be a weight around the company’s neck as the follow up console, the 5200, was derided for its lack of compatibility with the uber-successful 2600. In a problem that haunts console manufacturers even today, the lack of backwards compatibility meant that many consumers were unwilling to move on to the new technology, extending the life of the 2600 well into the early 1980s. The “successor” to the 2600 in the form of the Atari ST, a personal computer, came out in the mid-1980s in an environment of tough competition and also one in which many retailers, burned by the 5200, were reluctant to carry Atari product. To secure space on shelves for its personal computer, Atari purchased a company called Federated Group in order to guarantee that the ST would show up on store shelves.
Of course, the ST was an epic failure and Atari’s attempts at rebuilding a foothold in the console market were hampered by the new industry giant, Nintendo, and the new arcade giant, Sega. Development on the Lynx and the Jaguar followed the ST debacle and everyone is aware of how well those stories went. By the mid-1990s time had run out for Atari, a company that had pioneered so many things and illustrated so many lessons for other manufacturers in the video game industry.
Often cited as an example of corporate malfeasance, few people remember that Atari both pioneered the business as we know it and simultaneously eschewed that business in favour of one in which they couldn’t compete. This heady combination would fell even the healthiest empire and Atari was not immune to the crosswinds of its own counter purposes.