All Your Base Are Belong to Us: How Fifty Years of Videogames Conquered Pop Culture

by Harold Goldberg

  With arcades established, Atari went on to prove that an at-home market existed too. Pong in the home made people forget TV programs for a while because Pong was its own TV program, one you could direct. Higinbotham had proved there was consumer curiosity for games. Baer proved the working concept could be made on an assembly line. But Bushnell had made games into a viable commercial enterprise.

  As he saw the phenomenon grow, Bushnell certainly wanted to manufacture more variations of Home Pong. And there were other games to publish, and bigger, better consoles to make. The world was his own to control, just like a Pong machine. And since he’d made that world, he knew how to win every game. But Bushnell needed more money to make Atari bigger.

  Today, you can turn over a flat rock in the Silicon Valley and a hundred venture capitalists will slither out. Back in the seventies, one man was pretty much the only game in town. Enter Don Valentine, a dour, plaid shirt–wearing venture capitalist who looked like an all-American astronaut. The smart, slow-speaking Valentine had short hair, a no-nonsense attitude, and always chose his words carefully. By 1967, Valentine was already something of a legend in the Silicon Valley, having cofounded National Semiconductor after a successful career in marketing at Fairchild Semiconductor. The 1972 start-up of Capital Management (today called Sequoia Capital) allowed Valentine, an inquisitive man who had many interests, to branch out beyond the magic material that is used for microprocessor chips and transistors. The company’s tagline said it all: “The entrepreneurs behind the entrepreneurs.” Ironically, Valentine was thrifty bordering on being cheap. He drove a practical Mercedes diesel station wagon, and when the Atari kids visited his mansion, they had to wear sweaters because the heat had been turned down. When his family spent extra cash on a customized license plate, Valentine chided them for wasting money.

  Bushnell met repeatedly with Valentine, stating that Sears’s exclusivity would end in late 1976. Then, they could sell Home Pong to, well, everywhere, to the multitudes and beyond. The sky was the limit, said the Atari boss. Bushnell also made it clear that Atari had amassed $3 million in profits in 1975. Atari was ready to break out, said Bushnell, if only the capital were there for infrastructure like a new factory to produce a new generation of consoles—consoles that could play more than just a tennis game.

  Valentine was fair, but prone to anger. He had a fit when, on the day before closing the venture capital deal, Bushnell asked for twice as much money because Atari’s net worth had skyrocketed. But when Valentine saw the numbers prepared by Atari’s legal and business team, he agreed to the extra cash. He even showed up with a car full of champagne. Valentine being Valentine, it certainly wasn’t Dom Pérignon.

  Because Valentine was in, everyone from Time, Inc., to Fidelity Investments came on board. In Atari’s coffers was a total of more than $4 million with which to make interactive entertainment even better than it already was. It was a heady, adventurous time indeed. The floors of Atari buzzed with the energy of Santa’s workshop—with the aroma of pot thrown in to add a Cheech and Chong essence to the mix. Workers roller-skated or skateboarded from place to place. Employees’ dogs were brought to the offices as barking companions who got them through crunch time. Workers would play with the dogs like they were kids again. But the sense of childlike wonder wouldn’t last very long at all.

  * In fact, Bushnell and Atari were involved with a lawsuit brought by Magnavox for patent infringement, which included Baer testifying before Judge John Grady in Chicago’s Northern Illinois Federal District Court in early June 1976, long after Pong’s release. The suit never made it to trial. Bushnell and Atari settled with Magnavox on June 10 and Atari became an Odyssey licensee.

  HIGHEST HIGHS, LOWEST LOWS

  They were sweating like pigs in the ninety-five-degree weather, driving a convoy of fourteen trucks through the middle of what’s called the Friendliest Place on Earth by the optimistic chamber of commerce in Alamogordo, New Mexico. In late September 1983, Alamogordo was a family values kind of town with a bizarre bent, a place where you could buy a red nautical dress—for your miniature dog. Maybe the streak of strangeness came from its history. Alamogordo also has the dubious distinction of being the place where the first A-bomb was tested. As they convoyed, the eighteen-wheelers passed a nearby camp at Bonito Lake, a small zoo, and a pistachio nut grove. Outside of town on Highway 54, they readied for business. Amid the heavy heat of the desert, its gnarly scrub bushes, and the occasional noisy rattlesnake, the heavy equipment crawled into the Alamogordo landfill. Reporters were kept away. So were the local townspeople. What was thrown in the dump and unceremoniously buried in the desert and then poured over with concrete epitomized all that was wrong with Atari. Atari was trying to bury their failure and with it, one of the most foolish, most expensive videogame licensing deals of all time.

  Two years before, in 1981, Warner Bros. CEO Steve Ross had made a deal with Steven Spielberg regarding an E.T.: the Extra-Terrestrial videogame. Ross, whose empathy served his salesmanship well, loved movies more than anything, especially movies that made him money. Although he liked and even played games, it was in the film industry that his true loyalties lay. Spielberg would be assured of $23 million in royalties just to sign on the dotted line. If the game did well, he would receive even more. If the game tanked, the director would be off the hook. Spielberg looked up to Ross as the ultimate father figure, so much that he filmed a short, expensive homage for his sixty-fifth birthday. It starred Spielberg, Quincy Jones, Chevy Chase, Clint Eastwood, and the top Warner movie executives, as hobos. Very much like Frank Capra’s It’s a Wonderful Life (which was Ross’s favorite movie), the film pointed out, George Bailey style, how bad off Ross’s pals and associates would have been without their magnanimous CEO. Spielberg and Ross would have done anything for each other, and the Atari licensing contract for the E.T. game looked an awful lot like a case of one hand washing the other—at the expense of the videogame company’s future.

  Because the E.T.: the Extra-Terrestrial game deadline was nearly impossible to meet, Atari designer Howard Warshaw was between a rock and a hard place. If the game had been on the shelves in tandem with the movie’s summer release, it might have fared better, even though it was a buggy game with poor graphics and audio. As it stood, the E.T. phenomenon was waning when the cartridge premiered in late 1982. Atari manufactured four million cartridges. Only 1.5 million were sold, and that may be a liberal estimate when coupled with the fact that many of the games were returned due to their overwhelmingly crappy quality. Eventually, the games hit bargain bins for 10 cents each, and even then, few bought them. So millions of E.T. game cartridges were unceremoniously dumped, crushed, and buried in Alamogordo. From plastic dust they were born and to plastic dust and desert sand they returned.

  In 1975 that plastic hadn’t been worthless at all. It was precious gold to the principals of Atari, and it would only become more valuable as the decade progressed. Atari’s arcade business was still thriving, and Home Pong exceeded sales expectations, and demand exceeded supply. Alcorn hired an unkempt and unshaven Steve Jobs, who in turn asked his best friend, the diffident genius Steve Wozniak, for help with what would be one of Atari’s most popular additions to its ever expanding library. Without telling Alcorn, Bushnell asked Jobs to help him streamline the innards of a brick-breaking arcade game called Breakout. Bushnell wanted to save money because the chips used in each arcade machine were still pricey at the time. He coaxed the brazen, odoriferous Jobs with $750 and a $100 bonus for each chip removed from the prototype. Wozniak, who worked with Jobs simply because it was fun, was fascinated by the challenge and didn’t sleep at all while he worked on it. In less than three days, he cut the chip number from seventy to twenty. Alcorn was amazed by this miracle of engineering. But he was also pissed off at Bushnell, who was doing what he always did, throwing a lot of utter crap against the wall to see what would stick—without Alcorn’s approval.

  Wozniak pocketed $375, but Jobs kept the remainder of the
$5,000. When Wozniak discovered what Jobs had been paid, his hacker heart, which had led him to work on Breakout for art’s sake, was broken. Wozniak never really trusted Jobs completely again—even though they went on to create Apple together.*

  Breakout was indeed a tour de force of design—even though Wozniak’s work was ultimately scrapped because many at Atari didn’t understand how to replicate the genius design on a mass production level. Still, breaking bricks with an oddly and slowly bouncing ball was one thing. When the ball sped up and the paddle became smaller, your heart seemed as though it would break out as well, right through your rib cage. Just when you believed you could beat it, that dastardly internal computer chip that seemed so superhuman would beat you into submission. Breakout did so well in the United States, Namco came calling to license it in Japan.

  When the Atari team arranged to meet the Namco president, Masaya Nakamura, in Japan, the head of the company was late to the gathering. As the Atari executives, still not much older than teenagers, sat around shooting the breeze in the president’s fastidious office, they felt so loose and confident that Steve Bristow positioned himself behind Nakamura’s desk. Comfortable in the power broker’s chair, he brazenly put his feet up on the finely polished desk. When Nakamura entered, he said nothing, but his face grew red as he steamed inside. He had that “Get the fuck out of my chair” look on his face. After the meeting, Namco partnered with Atari. But Namco suspiciously soon requested that Bushnell stop all overseas shipments of Breakout because the game wasn’t a hit. The Japanese company reported selling fewer than fifty machines. In reality, the game was a breakout success for Namco, placing the company that started with coin-operated mechanical horse rides on a department store rooftop, in the mid-1950s, near the top of the Japanese arcade scene. Throughout Japan, massive pachinko parlors had their gambling machines removed, only to be replaced by Breakout clones. Japanese businessmen flocked to these parlors, often using them for betting illegally. Though they couldn’t prove it, everyone at Atari was certain Namco was behind the Breakout clones. And it wasn’t only Namco that was a thorn in Bushnell’s backside. Dozens and dozens of companies were knocking off clones of Atari games.

  Beyond that annoyance, others were beating Atari’s 2600 console to market with gaming machines that were high tech for the time. A company called Fairchild released the Channel F in August 1976, beating Atari by over a year. Imagined by future Intel founder Robert Noyce and engineered by Jerry Lawson, the Channel F introduced the idea of cartridges to home videogames. Its large, palm-sized Videocarts featured rudimentary graphics and barely recognizable characters made of pixels. But the primitive artwork gave life to characters and saucers in lurid living color. Beyond chess, the finest of these was a bowling game with cinnamon red pins and an alley that returned your ball. If the ball didn’t speed from left to right and back again before you rolled it, and if there was no beeping when pins were hit, it would have been a very accurate simulation. You could even play the Fairchild F via a telephone connection and via a partnership with a syndicated TV show called TV POWWW.

  But Coleco’s Telstar was the most successful pre–Atari 2600 console, bringing in nearly $100 million in sales to the Connecticut company. Between 1976 and 1978, the variants of the console were so numerous, a game head would look at the systems as a wolf looks at a flock of sheep, salivating. The oddest addition was 1977’s Telstar Arcade, a seemingly haphazard mishmash of plastic that looked something like a triangular umbrella holder with places for a Wild West pistol, a steering wheel, and a gearshift. It made you think you were about to play as Clint Eastwood in a futuristic cowboy racing game.

  While the 2600 wasn’t the first to market, Bushnell was still seen as a videogame god among men. After Home Pong sold 150,000 units, the New York Times dubbed him “The Man with the Golden Touch” and alluded to him with the same respect Silicon Valley tech wizards did: They called him King Pong. Every member of the team was excited about launching the 2600 in the fall of 1977. It was Atari’s biggest design idea yet, a comparatively inexpensive gaming console that used far fewer chips than most of the competitors. But Atari was out of money. Its millions weren’t nearly enough to accomplish the three things Bushnell aspired to do: keep manufacturing Atari’s home version of Pong, make more double-wide pinball machines for Bally, and create the microcomputer multi-gaming console that for a time bore the code name of Stella. It was not named after the current office hottie, but after a turquoise blue ten-speed bike that sat up against one of the carrels and was owned and pedaled each day to the office by Atari engineer Joe Decuir. Stella, with its eight-bit graphics processor, became the Atari 2600, proudly nicknamed the Video Computer System (VCS).

  Despite the potential of this new invention, and in addition to imitators that seemed to grow and flourish like so many Elvis impersonators, Bushnell had to deal with a poor economy that put a dent into video arcade sales across the country. Only Midway with Sea Wolf truly thrived in 1976. When you stepped up to the fancy metal periscope that hung from the Sea Wolf cabinet and heard the underwater-like sonar sounds, it made you feel like you were a heroic undersea gunner who would save the world from attack. Many quarters were spent trying to torpedo the swift-moving PT boat that sped across the screen.

  The year 1976 saw unemployment in the United States rise to nearly 8 percent. As the economy slumped and inflation skyrocketed, a weakened President Ford tried desperately to steer the country toward better days with the specious WIN (Whip Inflation Now) program. Swiftly emerging from the wrecked economy wasn’t to be. Bushnell, Valentine, and Atari’s board of directors had dreamed of taking Atari to the stock market and of amassing unimaginable fortune while producing popular and artistic games for the VCS. They even had the prospectus ready. They had dolled themselves up in business suits and traveled to Wall Street to speak to prospective underwriters. But there was no money to be had. The IPO turned into a no PO. Bushnell and the board determined, after a tense, sometimes acrimonious meeting, not to go public.

  It was then that Bushnell decided to sell Atari.

  Yet there were no immediate takers. Quaker Oats and MCA didn’t believe the dancer had legs, especially with the economy the way it was. Disney, which was a conservative, family outfit, thought Atari was too radical, with unsustainable success. Bushnell was getting nervous and so was the board. But like the undaunted, fascinating talker he was, he interested Warner Communications—upon the urging of Don Valentine, who was one of Warner’s largest shareholders. If Warner chose to purchase the videogame company, Valentine would get a huge finder’s fee.

  By late summer, Bushnell had been in contact with Warner Bros. CEO Steve Ross, the smart, greedy, show-biz-loving entrepreneur who had turned his family’s funeral parlor business into gold before striking greater lucre with music and movies at Warner. While the dashing Ross liked to tell the press that he got the idea to purchase Atari after he couldn’t pull his kids away from Atari’s arcade games at Disneyland, Ross really had been talking with Bushnell prior to this fabricated eureka moment. Ross certainly knew how to charm. He flew Bushnell and Valentine to New York on Warner’s corporate jet. Clint Eastwood and his waifishly fetching girlfriend Sondra Locke were on the plane too. Eastwood and Locke were perfectly chatty with Bushnell and feigned interest in Atari. Eastwood even made Bushnell sandwiches. On the ground, there was a suite fit for a king in midtown Manhattan, and the screening of Eastwood’s upcoming Dirty Harry film, The Enforcer. The starstruck Bushnell felt special, accepted, appreciated beyond his niche. There were drinks and conviviality and all-night negotiations. By the time the early September sun rose over the East River, Bushnell had agreed to sell the company for approximately $28 million. Later, Bushnell would say that he sold the company for far too little and called Warner’s people “incompetent” executives who committed company suicide and homicide.

  He was both right and wrong. In December 1978, there was an ugly argument between Bushnell and Warner executives. Bushnell felt
in his heart that the Atari 2600 Video Computer System, the $199 console that shipped with a Combat game, was not high tech enough to continue selling well. Yet upon release in October 1977, the machine sold 250,000 units, and the next year 550,000 units. Warner expected to manufacture a second run that produced a million more systems. To outside eyes, 800,000 consoles sold within two years seemed like a huge amount. But due to production and marketing costs, the VCS was not making money. Though he had sold the company, Bushnell was still a part of Atari, and he had something to say.

  “The market isn’t holding. Stop making it. Stop selling it. Forget it!” Bushnell told the startled suits. “We’ve got to make a newer, better machine. Let’s sell the 2600 for cheap and do something with better graphics and better games. Prepare for the future. That’s the only way to go. The only way.”

  The executives looked like they’d had the wind knocked out of them. It was as if the 2600 itself had grown boxing gloves and sucker punched them repeatedly. Steve Ross felt an ache in the pit of his stomach, and as a master of the universe, he found that feeling unknown and unwelcome. Though he didn’t trust Atari as a long-term play, he genuinely liked the idea of Atari as a new kind of entertainment and he appreciated the ingenuity that went into each cartridge. He even played the games well into the night in his tony East Hampton mansion.

  But that day, that confusing day, made him angry. “What the fuck is going on here?” Ross asked. Swearing was unusual for the CEO. His ticker wasn’t what it once was, and he would have a heart attack in just a few years.

  Manny Gerard, the most senior Warner vice president who dealt directly with Atari, tried to calm Ross. He urged Ross to stay the course with the older machine, at least through the holiday season. His wait-and-see approach proved lucrative in the long run. The 2600, because of the variety of games available, began to sell like bottled water during a heat wave. During 1979 and 1980, videogame fans bought more than three million VCS machines. The knockoffs of Space Invaders and Pac-Man together sold an astonishing fifteen million copies. But it wasn’t just the thrill of playing familiar arcade games without constantly adding quarters. It was the idea that they could be played in the home on your own TV set with your friends—at any time. And you didn’t have to dress up or spend money on beer to play. The console features themselves weren’t so savagely amazing. It was the games that led people to buy in droves. And in the stores, Atari had the brand name that was the most familiar and most up-front. While the competing Fairchild Channel F console was the first to have cartridges, it never had the essential licensed hits, nor was it seen to be as hot as the familiar Atari brand. Atari was gaming nirvana, endless, eternal fun, the highest happiness you could find in entertainment. It was games like Superman, where you changed in a phone booth and flew over tall buildings in a single bound, your cape waving confidently in the wind as you saved the world. Later, it was Yars’ Revenge (comic book included) in which the David-like flying insect Yar, angry about the destruction of planet Razak IV, mandibled carefully or shot cannons adamantly through a vast rainbow-colored boundary. Beyond, he faced off with a brown Goliath named Qotile who bore a looming, repulsive alien visage. It creeped you out royally.