by Steven Kent
As Atari grew, Bushnell surrounded himself with people he knew and trusted. He suddenly foresaw greater success than he had ever imagined and no longer had time for people who did not share his vision.
Ted Dabney, Bushnell’s longtime friend and co-founder of Atari, was the first casualty. According to Bushnell, Dabney still had a small-shop engineer’s mentality. He wasn’t ready to be part owner of an international company and slowed Atari’s progress.
At first, Dabney refused to leave, and he and Bushnell traded accusations. In the end, however, Dabney took over operation of the profitable amusement route and received several shares in the company. Years later, Dabney sold his stock at a great profit. In exchange for his original investment of $250, Dabney became a millionaire.
I bought him out two years into the business. What happened was that the business outgrew Ted, and he knew it. I mean, he was an engineer’s engineer, and he liked being in the company, but all of a sudden it got too big for him.
Ted ended up running the coin route. It was a very positive cash flow operation. When we sold off [Bushnell later sold Atari], he ended up with a large note for his shares and the operations, which he ran successfully for many years thereafter. I think, probably all totaled, it was worth about a million bucks.
—Nolan Bushnell
In Dabney’s place, Bushnell assembled a crew of Ampex expatriates and young gun executives. They became known around Atari as “the King, the Queen, and the Five Princes.”
The group included Al Alcorn, who led Atari’s research and development; Steve Bristow, who eventually became the vice president of engineering; Bill White, the chief financial officer; Gil Williams, head of manufacturing; Joe Keenan, one of Bushnell’s next-door neighbors who would later be president of both Atari and Kee Games; and Gene Lipkin, vice president of sales. (Keenan, a married heterosexual, was referred to as the “queen” because he was second in command, not because of his sexual orientation.)
Of the members of Bushnell’s team, Lipkin stands out as the only executive with a background in the coin-operated amusement industry. Before going to Atari, Lipkin worked at Allied Leisure Industries, a Florida game manufacturer.
Lipkin brought experience and savvy to the group. He rose quickly at Atari and proved to be a valuable asset.
Allied Leisure was started by an old timer in our business named Dave Braun, basically to give his son Bobby something to do. Bobby was severely crippled.
They had a factory in Hialeah, Florida, and they made a couple of pretty good motorcycle games. That’s where Gene Lipkin got his start, working as the sales manager for Dave Braun and Bobby Braun.
That motorcycle game was a good game, but it broke down a lot, and Gene ran around the country apologizing for the game as often as he was selling it.
—Eddie Adlum
Bushnell still preferred working smart and fun to working hard and made sure that the men around him agreed with his philosophy. They held meetings in hot tubs, drank heavily, experimented with drugs, and named projects after sexy female employees. Sometimes Atari board meetings seemed more like fraternity parties than business meetings.
It’s an accurate part of the mythology that we played around with pot at our planning sessions and things like that. And it’s actually, I think, a very interesting documentable piece of society that most of us played around. I mean this is the late 1960s, early 1970s.
But then, very quickly, most of us said, “Hey, this isn’t really effective. This isn’t good.” But by that time some of us had already destroyed our lives.
—Nolan Bushnell
I remember this board meeting … Nolan lived in Los Gatos in a very nice house on the hilltop with a hot tub out back. We had a board meeting in his tub. Nolan was saying how much money we were going to be worth, all these millions, and I thought to myself, “I’ll believe this when I see it.”
Nolan needed some papers and documents so he called his office and said, “Have Miss so and so bring them up.”
We were in this tub [when she arrived], so he proceeded to try to get her in the tub during the board meeting. Nolan’s attorney was miffed [because] we got his papers wet. He was not in the hot tub and he was not amused by any of this. That was the sort of fun we had.
—Al Alcorn
In 1974, Bushnell added a final asset to Atari’s arsenal. Steve Mayer and Larry Emmons, two of his former associates from Ampex, started a consulting company in Grass Valley, a small community near the California-Nevada border.
Bushnell respected Emmons’s and Mayer’s abilities and immediately began an exclusive relationship. Grass Valley became the Atari think-tank, the place Bushnell and his board went when they needed to plan a strategic move or devise some new and highly technical invention. Mayer and Emmons became the prime architects of many projects. “Grass Valley would build the technical stuff that people said couldn’t be built,” according to Bushnell.
They [Mayer and Emmons] both worked with me at Ampex, and so I knew they were good.
So we had this little group up in Grass Valley, California. We had kind of a reputation, you know, for smoking pot and things like that. And I think a lot of it came from the fact that we had a think tank in Grass Valley and people thought, “What is that? Grass Valley in California can only mean one thing.”
—Nolan Bushnell
Grass Valley was located deep in the Sierra Mountains near the Nevada border. It was a naturally scenic location, near towns that had once boomed during the silver rush. Atari executives adopted the Grass Valley facility as their company retreat. Bushnell and his board drove up for weekends and planning sessions. Trips to Grass Valley developed into an important part of Atari culture. In the end, the Grass Valley facility became so important that Bushnell bought it outright.
Unknown Territory
With Atari’s growing success, Bushnell settled into the role of manager and lead promoter. He left the technical wizardry in the hands of Mayer and Emmons, while Alcorn and Bristow handled the practical matters of engineering.
Bushnell now focused his attention on the future. Though he dedicated some of his time to inventing new products, he spent most days trying to divine new paths for Atari’s future. His steady inclination was toward unbridled growth. If there was an increase in orders, Bushnell wanted more workers. He implicitly believed that Atari would continue to grow as long as his research and development teams came up with new ideas.
One of Bushnell’s first tasks was to apply for patents to protect Atari products. He remembered the lessons he had learned at the hands of Magnavox and wanted to avoid further problems. The solid-state technology behind Pong was completely original and Bushnell hoped to fend off imitators. Unfortunately, by the time the patent came through, it had no teeth. Countless competitors had already built and shipped imitations.
Nolan filed for a patent on the motion circuit with a guy who was a patent attorney on the low end of the totem pole. We were a very small company.
The guy was fundamentally incompetent. The patent was flawed because it was filed too late. We told him that, but he told us it didn’t make any difference. It was patently wrong—pun intended.
—Al Alcorn
By the middle of 1974, computerized ping-pong machines were in every bar and bowling alley across the United States, but Atari had made less than one-third of them. Bushnell called his competitors “the Jackals” because they had an unfair advantage.
The Jackals
In those days it just took a long time to get patents through. That was a problem, so we tried to be fast and to out-innovate the competition.
—Nolan Bushnell
There were a handful of companies that came in to develop games like Pong. Nolan applied for a patent, but, of course, that patent wasn’t awarded until many years later. I was there, by the way, when he got it. And at that time Nolan looked at the documents and said, “Well, great,” but he decided not to do anything about it legally.
—Eddie Adlum
Success Has Its Problems
The biggest accusation against Atari was that we caused radio interference at the exact frequency used by the Nevada Highway Patrol. It was absolutely true.
It probably happened everywhere, but they figured it out in Nevada because everything is so far apart. They’d get close to a bar and all of a sudden they couldn’t communicate with headquarters. Then someone noticed that after 2:00 A.M., when the bars would shut down, it would be okay, so they knew it was something in the bars. They went around unplugging stuff and finally they unplugged a video game and the interference went away. So the Highway Patrol almost shut us down throughout Nevada.
We had to create these big wire-mesh shields that shielded the computer and cut down the radio interference. We really tried to keep that puppy quiet because we didn’t know if we were doing the same thing in New York, and the local authorities would never, ever be able to track it down there.
—Nolan Bushnell
The Imitators
Now that Atari had established “television games” as an arcade phenomenon, a number of factors conspired against the company’s ability to preserve the phenomena for itself. The first problem was that Nolan Bushnell couldn’t promote his machines without competitors trying to steal his ideas.
No sooner had Pong become the hottest innovation in amusement machines than dozens of potential competitors began studying it. According to Al Alcorn, engineers from rival game companies started visiting Andy Capp’s Tavern shortly after he installed the first Pong prototype.
More important, unlike Ralph Baer, Bushnell had no way to protect his solid-state game technology. He filed for a patent, but the patent took so long to arrive that other companies had already manufactured and sold games using similar architecture. Bushnell had entered into an industry in which success spawned imitation, and everybody considered Pong a success, with Pong machines earning $200 per week.1 There was no way to stop companies from copying it.
Just as pinball manufacturers stole Williams’s tilt mechanism and Gottlieb’s flippers, they began making electronic ping-pong games. Within three months of Pong’s release, competitors with names like Electronic Paddle Ball started to surface. Ramtek, Meadows Games, and Nutting (the company that made Computer Space) were among the first companies to make their own versions of Pong. In the next few years, established manufacturers like Midway and National Semiconductor followed.
Curiously, Atari did not build the number of Pong machines that the world would think. I don’t know the actual number because the video-game industry generally begins with Pong, even though Computer Space pre-dated it as an actual video game.
Pong was the beginning of the video era, a new idea in those days. People ripped it off. There were some companies that just came out of nowhere, saw what was happening with Pong, and said I want to get part of this action.
—Eddie Adlum
Forgeries flooded arcades all over the world. As Atari expanded to overseas markets, its success attracted international attention. In 1975, an Italian manufacturer began imitating Atari’s Breakout. Its forgeries were so well made that the only way to spot them was to check the address on the back of the machine. By this time, Atari had moved to San Jose. The Italians used the correct (current) address, while the Atari-made machines still had the company’s old Santa Clara address.
Bushnell developed a grave dislike for his imitators. He called them “jackals” and believed that the only way to stay ahead of them was constantly to generate new games and ideas. He considered his imitators less creative and believed they would be unable to develop games on their own.
In an effort to stay ahead, Atari entered 1974 producing a new game every other month. Bushnell’s new strategy allowed the competition to copy games, and Atari retaliated by coming out with new ones.
The problem was that, like everyone else, Atari was still basing its entire library on remakes of Pong. Other companies made paddle-ball games based on sports—Handball (Pong in a three-walled court) and Hockey (Pong with small goals and two paddles). Atari released Pin Pong, Dr. Pong, Pong Doubles, and QuadraPong.
Early on in the history of Atari, I went to a meeting for distributors. Nolan and I and several other people sat around a lunch table. After we were done eating and shooting the breeze, Nolan came up with the unforgettable statement/question: “I wonder what else we can do with a video game than play tennis and hockey.”
He answered his own question with driving games like Trak 10 and Grantrak. Very visionary guy.
—Eddie Adlum
In the end, the Grass Valley think tank came up with the solution. In 1974, Mayer and Emmons began designing the first racing game. Later named Trak 10, the racing simulation was every bit as primitive as Pong. Players used a wobbly steering wheel to control a boxy-looking car as it sped around an oval track.
Although Trak 10 had very basic graphics, it opened the gates for a flood of creative new ideas. One of Atari’s next titles was Gotcha, a game in which a player with a box chased a player with an X through a maze. Gotcha received only a lukewarm reception from arcade owners, though. In later years, maze chases would become one of the most popular themes in video games.
Even though it proved unsuccessful in the arcades, Bushnell was always sentimental about Gotcha. His role in the company quickly shifted after that, as Bushnell became more involved in management than game design. More than a year passed before he came up with another design.
Atari made the first sports game, Pong. They had the first maze game, Gotcha, and the first racing game, Trak 10. Imagine what would have happened if Bushnell had somehow managed to patent those ideas. You couldn’t have had Pac-Man or Pole Position. The whole industry would have been different.
—Steve Baxter, former producer, CNN Computer Connection
While other companies remained bogged down with electronic ping-pong and tennis, Atari came out with its second game—Space Race, a game in which players dodged asteroids as they flew tiny spaceships across a screen. The game did poorly, and Bushnell decided to return to the safety of tennis games.
Within a few years, however, Atari experimented with new themes—Steeple Chase, a multiplayer game in which players jumped horses over gates on a treadmill race track; and Stunt Cycle, a game in which players jumped buses—capitalizing on real-life stunt man Evel Knievel’s wave of popularity.
Atari established itself as the most diverse and prolific coin-operated video game company in history. The company developed an unwritten manifesto that did not allow designers to make games that had been done before. This legacy of innovation lasted more than a decade.
Though Atari was the first company to look beyond Pong for inspiration, other companies soon followed. In 1975, the movie Jaws, a story of a man-eating great white shark terrorizing a tourist town, set box-office earnings records and launched the nation into a frenzy. Beach resorts reported that tourists were afraid to go swimming, sometimes even in pools. The company Project Support Engineers (PSE) attempted to capitalize on shark mania with a game called Maneater.
Maneater was a shark-hunting game housed in a fiberglass cabinet shaped like the head of a shark. The distinctive cabinet made the game expensive to manufacture. Though the idea of hunting sharks initially attracted players, the game’s unexciting play did not attract repeat customers.
In 1975, Midway, one of the companies that originally rejected Pong, emerged as Atari’s closest competitor. Midway and Atari were very different organizations. While Atari had an established research and development department, Midway distributed games developed by other companies.
Gunfight, Midway’s first major video game hit, was a shoot-out in which two players controlled cowboys who shot at each other from opposite sides of the screen. It was not an original concept; a Japanese firm had created the game, then licensed it to Midway for the U.S. market. When Midway’s development team members first tested it, though, they found it less than entertaining. The graphics were b
locky and the gunfighters’ movements were quite limited. To try and salvage the game, Midway hired an outside designer, David Nutting, brother of Nutting Associates founder Bill Nutting. (Nutting and Associates went out of business shortly after the failure of Computer Space, and Bill Nutting spent the next few years flying missionaries and relief supplies into impoverished African nations.) Dave Nutting went on to create such classic games as Sea Wolf, Gorf, Wizard of Wor, and Baby Pac-Man.
While improving Gunfight, Nutting introduced new technology to the video-game market. The original game simply featured two cowboys shooting at each other. Nutting not only sharpened the graphics, he placed objects between the fighters. Sometimes cactus or stagecoaches appeared in the middle of the duel to add to the challenge. To power these changes, Nutting incorporated a microprocessor into the game’s design, making Gunfight the first video game with a microprocessor.
Gunfight opened the way for Japan to enter the American video-game market. Gunfight was originally developed by a firm named Taito—the Japanese term for “Far East.” Taito and Midway worked together until 1979. Their final project earned so much money that Taito abandoned Midway and opened its own U.S. operation.
The Visit
As Atari expanded its repertoire to include racing games, Nolan Bushnell and Gene Lipkin, vice president of sales, toured the country to find out what arcade owners and distributors thought about the future of video games. Lipkin, who had started in the business working for the Florida firm Allied Leisure, took Bushnell to have lunch with one of the most respected men in the amusement industry, Joel Hochberg, the New York City game technician who had moved to Philadelphia to manage an arcade-restaurant in 1961.