this video was brought to you by slightly a platform for startups and small businesses to create professional investor decks and sales presentations get one free month by signing up at sliding calm /youtube yes it's forgotten and its latest project seems to be a failure but if I say the name Atari you know what I'm talking about decades ago Atari was the video game console it helped develop the gaming world in the United States with its great 2600 console and games just pong and space invaders but then a little alien came along the market crashed and chaos and suit Atari bled money screwed up a line says and created faulty products its reputation was so tarnished that stores refused to sell the consoles and so autography collapsed gamers all over the world we owe a lot to the one successful company which is why we're going to talk about Atari in this episode of company forensics the early supercomputers the 60s saw the birth of the first video game to be played in multiple computers but it was a big deal since computers were the size of rooms back then it was called space war and many students saw it as just entertainment but one man was obsessed with the game Nolan Bushnell loved arcade games besides studying he worked on an amusement park where arcade games were aplenty and there he studied which games were the most addictive he was fascinated with how people knew the games were hard and still they played on so he sought to create something similar and started a company with Ted Dabney another engineering student their first idea was a copy of space war but they named it computer space yet their name was not that good then they tried placing computer space in arcades but it was bulky and expensive so only 750 units were placed instead of the expected 2, 300 but they didn't quit they formed the CCG game company and hired engineer al a corn again they copied another game the Magnavox Odyssey z' tennis game and named it pump and you've heard of pong their first company named sissy G was already taken so they had to think of another name Bushnell came up with the word Atari which was a normalized form of a Japanese word meaning to hit the target or to receive something fortuitously the word Atari is used in Japanese when a prediction comes true or when someone wins the lottery and the company did just that with pom but back then nobody really knew how to market a video game so Bushnell and Dabney decided to market the machine themselves in 1972 they turned to one of bushnell's obsessions arcades they placed a rudimentary version of the arcade machine in a tavern and it was so successful that the main problem it had was that it overflowed with quarters imagine that your problem being making too much money but hold it there just as the company grew things turned dark behind closed doors Dabney said Bushnell forced him out of the company but Bushnell says they just parted ways amicably yet additional resources say that Dabney felt Bushnell left him out of meetings ideas and business deals so much so that even would pong success Dabney left the company in 1973 selling his share for $250, 000 Dabney did continue to work for personal as an employee but as he put it with extreme caution and I believe him Bushnell was fixated with dominating the arcade market so he created another company called key which was Atari with a different name to sell exclusive contracts to the arcades that didn't buy Atari between the two companies they monetized the arcade market and he wanted more he wanted devices to be smaller so that people bought them for their houses and they ended up creating the Atari computer system VCS later named 2600 which carried four games odd joystick and two controllers all that for just eight hundred and forty nine dollars in today's money it was a partial success at first enough for him to keep working on it but hardware will always be expensive now and then so he saw investors and Warner Communications knocked on the door in 1976 Bushnell sold Atari for about twenty eight million dollars which was a lot of money back then he did continue to work on their Warner but he was let go as both he and the directors found the situation difficult by 1978 he had broken all ties with Atari and the successful video game brand was now entirely in Warner's hands this would be good and would be bad the booming market though the 2600 was a moderate success in the late 70s it didn't really take off until Atari licensed space invaders then the console became a hit and space invaders became the first game to sell 1 million units Atari under Warner's guidance aimed for the 2600 to be obsolete within three years so they started working on our replacement the 5200 and the 2600 did become obsolete but the market was changing too Atari was no longer the only console other manufacturers like Magnavox Mattel and calico were getting in on it so the company word heart not only to create the 5200 but also personal computers like the 400 and the 800 the interesting bit was that these computers used gaming console technology and again they weren't alone other companies like Commodore Tandy and IBM were also creating personal computers and computers were attractive they had keywords could perform other tasks and run video games and the 5200 would end up unable to reproduce its older brothers success in a place where everybody wanted a piece of a very large pie except the pie wasn't that big the video game crash in today's world everybody wants to create the perfect app back then it was the perfect video game and they were a bit ambitious companies like Atari estimated just like the days of television that all households would have a gaming console yes hopes were maybe too high people were buying consoles like crazy or so it seemed and this would increase demand for games right so why didn't that happen well because the industry was blinded by its own ambition demand was high but if demand was 100% companies were manufacturing 175 percent that wasn't the only problem here's a tiny example the Atari 5200 wasn't compatible with the 2600 so Atari had to manufacture specific games for each console and the scenery was common all across the market add to this that the market was opening prior to 1979 only Atari produced games for Atari but for engineers left the company as they felt they didn't get enough credit the four created Activision the first third-party video game developer so there was a market filled with hardware and eventually filled with software as well magic games by Apollo Parker Brothers collect Oh Activision CVS video games and Mattel were all creating games for the Atari and for other consoles third-party manufacturers went from three to thirty in just six months but their games weren't good many were just reverse engineered they were poor versions of other games with limited graphics and playability David Crane Activision's founder recognized this and even went as far as saying that many of the games produced during those years were the worst ever made in fact few games were groundbreaking only 10% of games produced 75 percent of sales and still the market was overflowing with mediocre products stores were damped so they returned unsold games but the publishers had no cash to refund them because their products were so bad they just couldn't sell them many companies folded and left the retailers with heaps of bad video games desperate sellers slashed the prices and still couldn't sell them it was chaos and then this guy came along the worst video game in history ET trying to write both the movie success atari ordered a designer to create the video game version but gave him just 5 weeks and very little money the result was an ugly unplayable bug-ridden game and Atari ordered not one but 700, 000 copies of the game there was a hype but there were no sales and this is considered the beginning of the industry's collapse sales went from 3.
2 billion to just one hundred million stores were fed up with the situation that they rejected selling consoles all together and customers of course didn't want to pay for expensive bad games many companies suffered but ET hid Atari hard so what did the company do well what would anyone do buried the games in the middle of the desert all 700, 000 copies of it that's right but it wasn't the only mistake Atari made bad deals 1982 talks between Nintendo and Atari were at full swing Nintendo sold its Famicom console successfully in Japan but had failed to enter the US market so they turned to Atari to form a partnership in 83 and intent of approach that Atari helped them build the device while in Tendo helped in the marketing and this seems like a great deal Atari's 5200 was a failure and the 7800 was still just a thought so the risk for Atari was low if the deal went bad intended would suffer not Atari but chaos was such that Ataris management literally lost track of negotiations so Nintendo confused and weary of this decided to enter the market themselves and the rest is history at least for a Nintendo because Atari would make the same mistake years later in 1988 Sega proposed to Atari that the latter build their devices and according to Michael Katz the precedent of video games division then negotiations went pretty far down the stream and as I recall they fell apart when Sega and Atari couldn't agree on terms then Sega decided to do with themselves and then Sega created the Genesis Atari meanwhile was left empty-handed a shaky survival after the videogame industry collapsed so did atari attempts at reorganization failed and it was sold to Jack Tramiel who renamed it to Atari corporation he did a good job if you ask me he managed to rebound the numbers earning 25 million dollars in profit in 1986 by using marketing and improving existing products he invested in innovation and created the Lynx a handheld console with color long battery duration and plenty of games but they made the mistake of releasing it after Christmas and everybody had already purchased another handheld the Gameboy so Nintendo struck again the 90s weren't kind either and even though the company had money its products were deficient the Jaguar console directly competing against Sega and Nintendo was a flop and the Lynx didn't sell well so tramiel's sold a company to Haas Pro in 1997 then Hasbro was taken over by Infogrames the French developer just three years later ironically after has / took over Atari they released the Jaguar patents to the public and now it has a difficult following the Infogrames kept Atari alive with promises of another console a retro-styled VCS but Atari seemed to be a stagnant money pit with a broken promise in 2017 there was finally word than the VCS would come out but it does so in a very tough market there is PlayStation Xbox Wii and even Nintendo released its retro NES version so one must ask is the VCS worth launching the lesson here is the following don't try to rush things just because you want to catch a trend because you can bury all your in the desert you.
