Successful Arcade Games
Shortly after founding Atari, Bushnell and Dabney hired Al Alcorn as the company’s first game engineer. At the time, Bushnell was working on a racing game using the physics of Computer Space and was attempting to interest pinball giant Bally Manufacturing in the game. Bushnell told Alcorn that Atari had a contract from General Electric for a ping-pong game and told him to design it. No such contract actually existed, but Bushnell considered a ping-pong game something easy to design to get Alcorn into the business. What Alcorn came back with was a tennis game in which the paddle was divided into segments to vary the angle of return and which sped up during long rallies to make them more exciting. Bushnell decided it was good enough to release and tried to talk Bally into taking it. Bally would not do so without a test run, so Bushnell set up a prototype in a bar. At one point, the machine stopped working because it was overstuffed with coins, and when Bushnell learned about this, he decided to sell it himself instead, a departure from Atari’s business model, which was to create the games and then license them to other companies for manufacturing and distribution. Named Pong, the game featured simple yet entertaining game play and therefore became an immediate success upon release in 1972, unlike the complex Computer Space. Atari sold at least 6,000 units of the game, more than the most popular pinball machines of the time could boast, and began the rise of the video game into mainstream culture. Those 6,000 machines represented only a third of the ball-and-paddle games on the market, however, as coin-op companies small and large soon released their own versions of Pong as well. Magnavox also took note of Pong, specifically the similarities between the game and its own tennis game on the Odyssey, and threatened to sue. Alcorn almost certainly did not steal from Magnavox when designing Pong, but it does appear that Bushnell attended a trade show and was exposed to the Odyssey before he assigned Alcorn the project. The companies soon settled, with Atari becoming the official arcade distributor of Pong in return for a modest fee. Soon after the release of Pong, Bushnell bought out Dabney to become sole owner of the company.
Other successful arcade games
In 1973, Atari founded a rival company called Kee Games, headed by Bushnell’s second-in-command at Atari, Joe Keenan, that created clones of Atari products. Atari did so because arcade distributors of the day required exclusivity contracts for their areas of operation, limiting the reach of Atari’s products. Kee Games created the next big hit in video games in 1974, Tank, designed by Steve Bristow. Tank was a dueling game in which each player controlled a tank and had to negotiate a maze to destroy the tank of the other player and set off another wave of imitation when many other companies released one-on-one dueling games featuring both tanks and airplanes. The Atari/Kee Games relationship was kept a secret until uncovered in December of 1974. Tank was such a big hit, however, that everyone wanted to carry it and distributor exclusivity came to an end. The companies merged, with Joe Keenan becoming president of Atari. Atari was also responsible during this time for the first game to allow four-players (1973, Pong Doubles), the first game released as a waist-high "cocktail" cabinet (1974, Quadra Pong), the first arcade game involving pursuit in a maze (1973, Gotcha), the first driving/racing game (1974, Gran Trak 10), the first game with a scrolling playfield and a sit-down cabinet (1975, Hi-way), and the first first-person driving game (1976, Night Driver). Atari’s first big hit after Pong, however, was Breakout, essentially a single-player version of Pong in which the paddle is at the bottom of the screen and the player bounces a ball off the paddle to destroy bricks arrayed at the top of the screen. Released in 1976, Breakout sold 11,000 units.
While nearly every pinball company released a Pong clone in 1972 or 1973, very few companies remained dedicated to video game creation after that. The most important company was Bally Manufacturing, which released arcade games under its Midway label. Midway had its first big hit in 1975 with Gun Fight. Gun Fight was also the first Japanese video game imported into the American market, with Taito being the original creator of the game, which involved two cowboys on opposite sides of the screen dueling each other. Dave Nutting at Midway improved the graphics and added obstacles to the game, using the first microprocessor in an arcade game in the process, to create Midway’s hit version. In 1976, Nutting designed a submarine game called Sea Wolf, giving Midway a second hit that sold 10,000 units. Another company to tap into video games in the early days was California-based Gremlin, which had a big success in 1976 with Blockade, in which each player controlled a vehicle that drew lines on the screen and attempted to force the other player to crash into these lines. Japanese company Sega also got involved in 1976, creating the first boxing game, Heavyweight Champ, and one of the first motorcycle driving games, The Fonz. Sega and Gremlin began to jointly develop/release some games together starting in 1977, and in 1982, Sega purchased Gremlin outright in order to give itself a larger presence in the United States. 1976 also saw the first major protest against video game violence when a company called Exidy released Death Race in which the player had to run over "gremlins" that resembled human stick-figures. After an initial period of success, the video game market began to decline in late 1976 as the novelty of the games wore off.
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