The rise and fall of Atari: When corporate culture is everything
Posted: Mon Jan 06, 2025 6:15 am
They created the modern video game. They invented Silicon Valley. They built a pixel empire. They put the industry at their feet and when they had it all, they collapsed and buried their shame in a New Mexico desert. The story of Atari – with the potential to become a huge movie – helps us understand some of the most important lessons in the trajectory of a business from its birth to its consolidation and subsequent fall.
Computer space
It all began in 1962, when a young Nolan Bushnell, an electrical engineering student at the University of Utah, discovered the influence of video games during gaming sessions organised on the university's mainframes. At the time, his classmates were hooked on the legendary SpaceWar! – the first interactive video game in history – installed on the faculty's computers. Then Nolan had an idea.
The student decided to dedicate himself to the development of this new addictive entertainment, deducing that if his classmates spent so much time in front of a pixelated space war, they wouldn't mind spending their time playing something better.
While working at an electronics company, Bushnell devoted his free time to immersing himself in this new form of audiovisual entertainment ; he attended presentations of other video games while developing his first foray into the discipline, a prototype called Computer Space. The company Nutting Associates bought this game in 1971 and distributed 1,500 units among bars in the region.
It was a failure. The game was too complex for the standards of the time. Far from being disheartened, Bushnell took note and decided to develop something simpler within a company that understood his potential talent: his own. Nolan Bushnell and his friend Ted Dabney founded Atari in 1972.
PONG
In those years, the company barely had the means to develop original parts, so Bushnell put all his energy into building – through tricks – a reputation within the greece number data industry; he hired his children's nanny as a secretary, stopped answering the phones to give the impression of having too many customers, renamed his old van with a pretentious "company car", etc.
Atari was gaining momentum and soon enough the money was enough to hire its first employee, engineer Allan Alcorn, who had little knowledge of video games but did have some knowledge of computers. Alcorn followed in the footsteps of the pioneering Magnavox Odyssey – a tennis game – to develop a much simpler and cheaper gem, an iconic device that we all still know today: PONG.
Atari bosses tested its potential by placing a cheap prototype in a colleague's bar, but expectations quickly ran out of steam. The bar owner called two weeks later because the machine had broken down from swallowing so many coins.
Related article: Business lessons we can learn from 'Fortnite Battle Royale'
Despite starting out by making poor quality machines, Atari managed to sell 10,000 consoles in its first stage, placing itself at the top of the emerging gaming industry. After the famous PONG, they launched a battery of games including Gran Trak 10, SpaceRace and World Cup Football, bringing in huge profits for the founders. So much so that Nolan Bushnell fired his dirty Dabney, took control of the goose that laid the golden eggs and brought in people he trusted the most.
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Silicon Valley
It could be said that the former Electrical Engineering student had a controversial approach to business, since some time later it was discovered that Atari's main competitor, the also North American Kee Games, was actually controlled by Nolan himself. It was a –radical– strategy to take over the entire video game market.
Despite the setback that this uncomfortable discovery represented for the company, Atari continued to grow with the impetus of revolutionary ideas, such as the development of a console for the domestic market that included the game PONG. With such a strategy, Atari invented the video game console under the TV in our living room.
He also invented what we now know as Silicon Valley. At that time, in the mid-1970s, the company hired a very young Steve Jobs to work on Breakout , the company's new machine. Jobs was then working at Atari to pay for a spiritual trip to India because he was a hippie , someone not accustomed to the conventional ways of the business world; and he was not the only one at the company.
Computer space
It all began in 1962, when a young Nolan Bushnell, an electrical engineering student at the University of Utah, discovered the influence of video games during gaming sessions organised on the university's mainframes. At the time, his classmates were hooked on the legendary SpaceWar! – the first interactive video game in history – installed on the faculty's computers. Then Nolan had an idea.
The student decided to dedicate himself to the development of this new addictive entertainment, deducing that if his classmates spent so much time in front of a pixelated space war, they wouldn't mind spending their time playing something better.
While working at an electronics company, Bushnell devoted his free time to immersing himself in this new form of audiovisual entertainment ; he attended presentations of other video games while developing his first foray into the discipline, a prototype called Computer Space. The company Nutting Associates bought this game in 1971 and distributed 1,500 units among bars in the region.
It was a failure. The game was too complex for the standards of the time. Far from being disheartened, Bushnell took note and decided to develop something simpler within a company that understood his potential talent: his own. Nolan Bushnell and his friend Ted Dabney founded Atari in 1972.
PONG
In those years, the company barely had the means to develop original parts, so Bushnell put all his energy into building – through tricks – a reputation within the greece number data industry; he hired his children's nanny as a secretary, stopped answering the phones to give the impression of having too many customers, renamed his old van with a pretentious "company car", etc.
Atari was gaining momentum and soon enough the money was enough to hire its first employee, engineer Allan Alcorn, who had little knowledge of video games but did have some knowledge of computers. Alcorn followed in the footsteps of the pioneering Magnavox Odyssey – a tennis game – to develop a much simpler and cheaper gem, an iconic device that we all still know today: PONG.
Atari bosses tested its potential by placing a cheap prototype in a colleague's bar, but expectations quickly ran out of steam. The bar owner called two weeks later because the machine had broken down from swallowing so many coins.
Related article: Business lessons we can learn from 'Fortnite Battle Royale'
Despite starting out by making poor quality machines, Atari managed to sell 10,000 consoles in its first stage, placing itself at the top of the emerging gaming industry. After the famous PONG, they launched a battery of games including Gran Trak 10, SpaceRace and World Cup Football, bringing in huge profits for the founders. So much so that Nolan Bushnell fired his dirty Dabney, took control of the goose that laid the golden eggs and brought in people he trusted the most.
Improve your productivity and boost your results!
Try Holded completely free and without limits for 14 days.
Find out
Silicon Valley
It could be said that the former Electrical Engineering student had a controversial approach to business, since some time later it was discovered that Atari's main competitor, the also North American Kee Games, was actually controlled by Nolan himself. It was a –radical– strategy to take over the entire video game market.
Despite the setback that this uncomfortable discovery represented for the company, Atari continued to grow with the impetus of revolutionary ideas, such as the development of a console for the domestic market that included the game PONG. With such a strategy, Atari invented the video game console under the TV in our living room.
He also invented what we now know as Silicon Valley. At that time, in the mid-1970s, the company hired a very young Steve Jobs to work on Breakout , the company's new machine. Jobs was then working at Atari to pay for a spiritual trip to India because he was a hippie , someone not accustomed to the conventional ways of the business world; and he was not the only one at the company.