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Fatal Board · VIDEO ESSAY

The Rise and Fall of Atari: The $10 Billion Gaming Giant That Invented Arcades Then Lost to Nintendo

Subscribe to the channel! https://www.youtube.com/channel/UCb0ps9eCp0y6yP1Xg4sDDFw?sub_confirmation=1 In 1972, two engineers put in $250 each and built a game so simple a man with a beer in his hand could play it. Eleven years later, the American home video game industry they created was worth $3.2 billion a year — over $10 billion in today's money — and Atari owned roughly 80% of it. Two years after that, it was worth $100 million. A 97% collapse. And the company that invented the arcade, invented the home console business, and invented the cartridge you bought separately had been sold off for $240 million in promissory notes with no cash changing hands at all. This is the full rise and fall of Atari — and it is not the story you have been told. Everyone repeats the same version: E.T. was the worst video game ever made, Atari buried it in the New Mexico desert to hide the evidence, and that killed the company. When the Alamogordo landfill was finally excavated in April 2014, roughly 1,300 cartridges came out of the ground and only about 10% of them were E.T. The real story runs through a boardroom in 1979, where four programmers — David Crane, Alan Miller, Bob Whitehead and Larry Kaplan — asked CEO Ray Kassar for their names on the box and a royalty on what sold. Crane's games had earned Atari over $20 million. His salary was $20,000. Kassar, a textile executive with 26 years at Burlington Industries, called them "high-strung prima donnas" and said anybody could do a cartridge. They left, founded Activision, and invented third-party publishing — the model that flooded Atari's own platform with 400+ titles from 158 publishers and drowned it. In October 2023, Microsoft finished buying Activision Blizzard for $68.7 billion. Inside: the quarter that jammed the Pong prototype at Andy Capp's Tavern in Sunnyvale; why the Atari 2600 was given a fake walnut finish; the $199 launch price ($1,060 today); the $20–25 million E.T. licence and the five weeks Howard Scott Warshaw was given to build the game; December 7, 1982, when Warner Communications stock fell from $52 to $36 and Ray Kassar sold 5,000 shares 23 minutes before the announcement; the Chicago show floor in June 1983 where Atari walked away from distributing Nintendo's Famicom in America; and the paperwork trail that ends with the Atari name selling to Hasbro Interactive for $5 million in 1998. If you knelt on that carpet, blew into a cartridge, or worked at Atari or in a store that sold it — tell us the model, the year, and whether it still works. This archive is being written in the comments. SOURCES Video game crash of 1983 — industry revenue $3.2B (1982) to $100M (1985): https://en.wikipedia.org/wiki/Video_game_crash_of_1983 E.T. the Extra-Terrestrial (Atari 2600) — licence cost, production, Alamogordo burial and 2014 excavation: https://en.wikipedia.org/wiki/E.T._(video_game) The Atari Compendium, "The Great Market Crash" — December 1982 announcement, stock movement, 1984 Tramiel terms: https://www.ataricompendium.com/archives/articles/crash/crash.html Rolling Stone — "Unearthed 'E.T.' Atari Games Sell for $108,000 at Auction": https://www.rollingstone.com/culture/culture-news/unearthed-e-t-atari-games-sell-for-108000-at-auction-46248/ Fortune — "Steve Jobs' first Silicon Valley boss turned down an offer to buy a third of Apple for $50,000": https://fortune.com/2025/08/15/nolan-bushnell-atari-boss-apple-steve-jobs-offer-trillion-dollars-personal-finance-youtube-cofounders Further reading (unlinked): Wikipedia — Atari, Inc. · Wikipedia — Activision (founding of the four programmers, Kassar quote) · Wikipedia — Atari 2600 (launch price, 30 million units) · Wikipedia — Nintendo Entertainment System (1983 Atari distribution talks, NES launch pricing) · Wikipedia — Ray Kassar (share sale, SEC matter, resignation) This channel is made by an enthusiast who loves business and technology history — nothing more. All videos are for educational and entertainment purposes only and reflect my personal views and interpretations. I research each story carefully using publicly available sources, but errors or omissions can happen. Nothing here is professional, financial, or legal advice, and this channel is not affiliated with, endorsed by, or sponsored by any company mentioned.

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In 1972, two engineers put in $250 each and built a game so simple a man with a beer in his hand could play it. Eleven years later, the American home video game industry they created was worth $3.2 billion a year — over $10 billion in today's money — and Atari owned roughly 80% of it. Two years after that, it was worth $100 million. A 97% collapse. And the company that invented the arcade, invented the home console business, and invented the cartridge you bought separately had been sold off for $240 million in promissory notes with no cash changing hands at all.

This is the full rise and fall of Atari — and it is not the story you have been told.

Everyone repeats the same version: E.T. was the worst video game ever made, Atari buried it in the New Mexico desert to hide the evidence, and that killed the company. When the Alamogordo landfill was finally excavated in April 2014, roughly 1,300 cartridges came out of the ground and only about 10% of them were E.T. The real story runs through a boardroom in 1979, where four programmers — David Crane, Alan Miller, Bob Whitehead and Larry Kaplan — asked CEO Ray Kassar for their names on the box and a royalty on what sold. Crane's games had earned Atari over $20 million. His salary was $20,000. Kassar, a textile executive with 26 years at Burlington Industries, called them "high-strung prima donnas" and said anybody could do a cartridge.

They left, founded Activision, and invented third-party publishing — the model that flooded Atari's own platform with 400+ titles from 158 publishers and drowned it. In October 2023, Microsoft finished buying Activision Blizzard for $68.7 billion.

Inside: the quarter that jammed the Pong prototype at Andy Capp's Tavern in Sunnyvale; why the Atari 2600 was given a fake walnut finish; the $199 launch price ($1,060 today); the $20–25 million E.T. licence and the five weeks Howard Scott Warshaw was given to build the game; December 7, 1982, when Warner Communications stock fell from $52 to $36 and Ray Kassar sold 5,000 shares 23 minutes before the announcement; the Chicago show floor in June 1983 where Atari walked away from distributing Nintendo's Famicom in America; and the paperwork trail that ends with the Atari name selling to Hasbro Interactive for $5 million in 1998.

If you knelt on that carpet, blew into a cartridge, or worked at Atari or in a store that sold it — tell us the model, the year, and whether it still works. This archive is being written in the comments.

SOURCES

Video game crash of 1983 — industry revenue $3.2B (1982) to $100M (1985): https://en.wikipedia.org/wiki/Video_game_crash_of_1983
E.T. the Extra-Terrestrial (Atari 2600) — licence cost, production, Alamogordo burial and 2014 excavation: https://en.wikipedia.org/wiki/E.T._(video_game)
The Atari Compendium, "The Great Market Crash" — December 1982 announcement, stock movement, 1984 Tramiel terms: https://www.ataricompendium.com/archives/articles/crash/crash.html
Rolling Stone — "Unearthed 'E.T.' Atari Games Sell for $108,000 at Auction": https://www.rollingstone.com/culture/culture-news/unearthed-e-t-atari-games-sell-for-108000-at-auction-46248/
Fortune — "Steve Jobs' first Silicon Valley boss turned down an offer to buy a third of Apple for $50,000": https://fortune.com/2025/08/15/nolan-bushnell-atari-boss-apple-steve-jobs-offer-trillion-dollars-personal-finance-youtube-cofounders

Further reading (unlinked): Wikipedia — Atari, Inc. · Wikipedia — Activision (founding of the four programmers, Kassar quote) · Wikipedia — Atari 2600 (launch price, 30 million units) · Wikipedia — Nintendo Entertainment System (1983 Atari distribution talks, NES launch pricing) · Wikipedia — Ray Kassar (share sale, SEC matter, resignation)

This channel is made by an enthusiast who loves business and technology history — nothing more. All videos are for educational and entertainment purposes only and reflect my personal views and interpretations. I research each story carefully using publicly available sources, but errors or omissions can happen. Nothing here is professional, financial, or legal advice, and this channel is not affiliated with, endorsed by, or sponsored by any company mentioned.

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Subscribe to the channel! https://www.youtube.com/channel/UCb0ps9eCp0y6yP1Xg4sDDFw?sub_confirmation=1 In 1972, two engineers put in $250 each and built a game so simple a man with a beer in his hand could play it. Eleven years later, the American home video game industry they created was worth $3.2 billion a year — over $10 billion in today's money — and Atari owned roughly 80% of it. Two years after that, it was worth $100 million. A 97% collapse. And the company that invented the arcade, invented the home console business, and invented the cartridge you bought separately had been sold off for $240 million in promissory notes with no cash changing hands at all. This is the full rise and fall of Atari — and it is not the story you have been told. Everyone repeats the same version: E.T. was the worst video game ever made, Atari buried it in the New Mexico desert to hide the evidence, and that killed the company. When the Alamogordo landfill was finally excavated in April 2014, roughly 1,300 cartridges came out of the ground and only about 10% of them were E.T. The real story runs through a boardroom in 1979, where four programmers — David Crane, Alan Miller, Bob Whitehead and Larry Kaplan — asked CEO Ray Kassar for their names on the box and a royalty on what sold. Crane's games had earned Atari over $20 million. His salary was $20,000. Kassar, a textile executive with 26 years at Burlington Industries, called them "high-strung prima donnas" and said anybody could do a cartridge. They left, founded Activision, and invented third-party publishing — the model that flooded Atari's own platform with 400+ titles from 158 publishers and drowned it. In October 2023, Microsoft finished buying Activision Blizzard for $68.7 billion. Inside: the quarter that jammed the Pong prototype at Andy Capp's Tavern in Sunnyvale; why the Atari 2600 was given a fake walnut finish; the $199 launch price ($1,060 today); the $20–25 million E.T. licence and the five weeks Howard Scott Warshaw was given to build the game; December 7, 1982, when Warner Communications stock fell from $52 to $36 and Ray Kassar sold 5,000 shares 23 minutes before the announcement; the Chicago show floor in June 1983 where Atari walked away from distributing Nintendo's Famicom in America; and the paperwork trail that ends with the Atari name selling to Hasbro Interactive for $5 million in 1998. If you knelt on that carpet, blew into a cartridge, or worked at Atari or in a store that sold it — tell us the model, the year, and whether it still works. This archive is being written in the comments. SOURCES Video game crash of 1983 — industry revenue $3.2B (1982) to $100M (1985): https://en.wikipedia.org/wiki/Video_game_crash_of_1983 E.T. the Extra-Terrestrial (Atari 2600) — licence cost, production, Alamogordo burial and 2014 excavation: https://en.wikipedia.org/wiki/E.T._(video_game) The Atari Compendium, "The Great Market Crash" — December 1982 announcement, stock movement, 1984 Tramiel terms: https://www.ataricompendium.com/archives/articles/crash/crash.html Rolling Stone — "Unearthed 'E.T.' Atari Games Sell for $108,000 at Auction": https://www.rollingstone.com/culture/culture-news/unearthed-e-t-atari-games-sell-for-108000-at-auction-46248/ Fortune — "Steve Jobs' first Silicon Valley boss turned down an offer to buy a third of Apple for $50,000": https://fortune.com/2025/08/15/nolan-bushnell-atari-boss-apple-steve-jobs-offer-trillion-dollars-personal-finance-youtube-cofounders Further reading (unlinked): Wikipedia — Atari, Inc. · Wikipedia — Activision (founding of the four programmers, Kassar quote) · Wikipedia — Atari 2600 (launch price, 30 million units) · Wikipedia — Nintendo Entertainment System (1983 Atari distribution talks, NES launch pricing) · Wikipedia — Ray Kassar (share sale, SEC matter, resignation) This channel is made by an enthusiast who loves business and technology history — nothing more. All videos are for educational and entertainment purposes only and reflect my personal views and interpretations. I research each story carefully using publicly available sources, but errors or omissions can happen. Nothing here is professional, financial, or legal advice, and this channel is not affiliated with, endorsed by, or sponsored by any company mentioned.

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