History of Atari Article

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The original Atari Inc was founded in 1972 by Nolan Bushnell and Ted Dabney as an arcade engineering firm, dealing in pinball machines and the primordial arcade videogame market. After approaching the major arcade machine companies of the time to manufacture and distribute their new video arcade game Pong, they met resistance because of a perceived infancy and lack of viability in the market. Soon after deciding to manufacture and distribute the games on their own, the gamble paid off for Bushnell and Dabney, and the video arcade craze had started with Atari Inc at its forefront.

By 1975, Atari Inc entered the consumer electronics market by bringing Pong into the home, and in doing so it caught the eye of young media powerhouse, Warner Communications. By 1976 the two companies struck a deal, and Warner Communications purchased Atari Inc outright, soon transforming the engineering firm into the first key force in the early videogame industry.

Establishing itself with the Atari 2600, the company soon began expanding to home computers and setting up research into other consumer electronics-based industries. By 1982, Atari Inc accounted for over USD 2 billion in revenues, and 65 per cent of Warner's profit. Still pioneering the videogame business, Warner began wisely leveraging its other corporate assets to support Atari's growth, including lucrative partnerships with its DC Comics and Warner Bros. studios subsidiaries.

However, by 1983 the market was showing signs of problems, which climaxed in 1984. Atari Inc, being a large percentage of the market, was hit the hardest. Facing SEC problems and a large portion of their income gone, Warner began breaking up Atari Inc, selling its Consumer division to ex-Commodore founder Jack Tramiel. Despite initially retaining the arcade division, Warner eventually sold that as well, to Namco.

The Lynx. Not to be confused with The Lion. (Image courtesy of www.vintagecomputing.com.)

Combining the Atari Consumer properties with his own company, Tramiel Technology, he formed Atari Corporation in 1984. Initially concentrating on selling off the large back stock of Atari products and slashing unwanted projects, products and staff, by 1985 he entered head-on into the emerging GUI-based personal computer industry with the Atari ST - multiple successions of which remained the company's main product through the early nineties.

Tramiel also dabbled in videogames along the way by later releasing the Atari Inc-produced Atari 7800 as well as the externally-produced Atari Lynx - the first colour handheld game system in the industry.

But by 1993 it was clear that Atari Corp was losing more and more market share to the DOS-based PC compatibles and the emerging Wintel format thanks to the release of Windows 3.1 the previous year. Shifting all its efforts to what ultimately became its last product, the Atari Jaguar, they were soon stung by the release of the world-conquering Sony PlayStation in 1994.

In 1996, the last vestiges of what is known in the industry as the "real" Atari began winding down. After coming out of retirement to run Atari Corp following his son's heart attack, Jack Tramiel decided to close things down and take advantage of a merger offer with JTS.

Atari Corp had recently received a financial windfall from a number of settlements, which made such a deal very attractive to JTS, an up-and-coming drive manufacturer, in a move that would have allowed Tramiel to dump the floundering computer and videogame company.

Staying in the videogame market with its failed Jaguar or even re-entering the computer market would have squandered the money in a field now being dominated by Sony, Nintendo and SEGA, as well as the Wintel computer market dominated by Microsoft.

So, after the shareholders approved the process, Atari Corp reverse-merged with JTS becoming a division within the new JTS Corp. During this period, Atari consisted of one desk at JTS, doing minor support for the Jaguar, trying to move back stock and updating Atari's first website.

JTS started selling off some Atari patents, but within another year it became clear that one of the key tenets behind the of approval of the merger by the stock-holders was not being followed - continuing to release Atari-branded products.

Fearing lawsuits and facing its own financial problems due to its lack of success in the drive market, JTS sold off the Atari properties to Hasbro, which proceeded to fold the Atari properties under its Hasbro Interactive division, naming the holding company Atari Interactive.

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