Big Daddy

Atari Founder Nolan Bushnell Is The Father of Video Games

Pinball is dead. And the man responsible for its death is an athletic-looking guy in his late thirties who sports a trim Vandyke beard and a mischievous grin. His name is Nolan Bushnell.

This is the guy that thought up the game we all remember as the FIRST ONE. That game was Pong. And to market Pong, he formed a tiny company whose name comes from a polite Samurai warning to one’s opponent that he is about to be attacked: Atari!

Sure, Pong seems primitive now. Sure, we’ve all moved on to better things. But every video freak has to remember and respect Pong, just as he remembers and respects Edison’s primitive phonograph. Without Pong, there’d be no Space Invaders, no Defender, no Pac-Man.

In fact, once Pong hit the market, pinball—that game of the ball bearings that worked on (snicker) gravity—just about dug itself a hole and crawled in. Poor Elton John, letting himself get photographed from an impossibly low angle, wearing stacked silver shoes, slapping clumsily at electro—mechanical flipper controls. If The Who had asked Nolan Bushnell, he’d have told them where the real action was.

Who exactly is Nolan Bushnell—this grinning prophet of the video game? Well, actually he’s not that different from you or me. Just an All-American lover of fun and games, carnivals and pizza-pie.

Bushnell had a proper middle-American upbringing in Ogden, Utah. His family was Mormons. His dad was a cement contractor; his mom a housewife. The young Nolan enjoyed monkeying around with his own amateur radio set, call letters: W7 DUK. Later he would earn pocket money repairing tv’s, radios and washing machines. He seemed to have a knack for electrical and mechanical devices.

He showed a rare blend of mechanical talent with a love of sports. Nolan shot hoops for his high school team, and he loved the more intellectual games as well—he was on the debating team and played tournament chess.

In the early sixties Bushnell headed off to the University of Utah to study electrical engineering—the magical flow of electrons through wires. To support himself, he worked nights at an amusement park in Salt Lake City.

Nolan was fascinated with the carnival and the arcade games. He began to understand the needs of the carnival players. It seemed wrong to him to hustle teenage couples who strolled the midway into knocking over milk bottles with a baseball. But those forlorn lovers kept coming back for more, as if they were eternally searching for a game they could really sink their teeth into.

Sci-Fi Fantasy

Back at school in the fall, Nolan tried out a new game, Space Wars, on the $8 million computer. It was some rocket/flying saucer space battle that had been cooked up in 1962 by a crazed visionary at MIT named Steve Russel. Wouldn’t it be fantastic, thought Bushnell, if you could bring a game like that to the carnival midway? He recalls: “The problem was that it would take a heck of a Jot of quarters to pay for an $8 million machine, so I just filed the concept away in the back of my mind.”

A few years later, while Nolan was east at MIT getting his masters degree, the silicone computer chip was developed, as if in answer to his needs. This miracle chip—a cluster of miniature circuits on a piece of plastic smaller than a postage stamp—made computers get small. And it made them get cheap.

After Nolan finished school, he got a job in Sunnyvale, California with Ampex, the company that is best known for recording equipment, amplifiers and audio tape. His salary was decent for a guy just out of school in 1970: $12,000 a year. But Nolan was married and had a daughter already. His salary did not permit a champagne lifestyle. And Nolan wanted to be wealthy. Very wealthy.

At Ampex, he got to talking to a fellow employee named Ted Dabney about his ideas for video games that everyone could afford. Dabney was enthusiastic. They began tinkering with hardware on weekends in a an office/shop that Nolan had set up in his daughter’s bedroom. The project grew. Pretty soon Nolan’s daughter had to move out to the livingroom couch.

Electronic Octopus

Sure that they were on to something hot, Bushnell and Dabney quit their jobs at Ampex to devote full time to their project. Nolan’s first idea was to hook up a number of terminals to one minicomputer. It would be a kind of electronic octopus with player terminals branching out like so many tentacles from a computer brain. But, though he kept adding more components and circuits, it just wasn’t working.

Then, as if a silicone chip fell out of the sky and hit him on the head, the modern Newton emerged from the Jab one day, bleary eyed, rubbing his sore temple, and shouting Eureka!—He could make individual free standing terminals with microprocessor technology! The minute the idea came to him, he recalls, “I worked it out and the economics were overwhelming.”

In 1971, the first coin-op video game was born. Nolan dubbed it Computer Space—“A cosmic dogfight between a spaceship and a flying saucer.”

His engineering friends went ape over Computer Space and even started camping out in his back yard just to get their mitts on the buttons. Bushnell and Dabney sold the game to Nutting Associates, the company that was known for its Computer Quiz game. Then they sat back and waited for the bucks to come rolling in.

Computer Space was a flop. Bushnell now thinks the game was just ahead of its time. It required players to control a spaceship in a gravity-less environment using “thrust,” “fire” and “rotate” buttons. Bushnell saw too many players slip in a quater and then just stand there dumbfounded while the evil saucer winged over and zapped their drifting spaceship. He realized that if players weren’t going to take the time to read the directions, he’d have to make a game they already knew how to play.

Like…tennis, or…, ping-PONG! Actually, Pong was an accident. Bushnell had teamed up with an engineer named Al Alcorn, to design a driving game. As a warm-up exercise for Alcorn Nolan assigned him to do a quick ping-pong type game. The game turned out to be so much fun, they decided to market it. Nolan knew this one was going to be a hit when he installed a test version of the game in Al Capp’s Tavern, and the patrons practically beat each other up for the privilege of dropping quarters into its slot. In fact, the first Pong broke down because the coin box was jammed with money!

This time, instead of licensing the game to someone else, Bushnell and Dabney put up $500 apiece from the royalties of Computer Space to form their own company: Atari. As Bushnell had expected, Pong and Atari made economic history. But perhaps the game and the company mean more to the players themselves. A greying thirty-year-old Asteroids freak remembers playing Pong for the first time on the boardwalk of down-and-out Coney Island; “I was with my girlfriend, and I just plunked in a quarter to see what was inside this tv set. The damn screen lights up and I see what’s going on and all I can say is ‘wow!’ I had brought five bucks with me, and after a few hours, all I had left was thirty five cents for the subway home. And I didn’t care!”

Atari sold 10,000 Pong games, all told. It looked like it would be clear sailing for the new company. But the problem with Pong was that it was easy to imitate. Pong “knock-offs” (the industry word for rip-offs) began appearing on the market in 1973 featuring slight alterations in design, more paddles, different speeds, and so forth. Over 25 companies made Pong-type games. And if you count all the different ones together, it’s the most popular coin-op game of all time, surpassing even the big three—Space Invaders, Asteroids, and Pac-Man—with total sales of more than 100,000 machines.

But Atari only got one tenth of the action. The fledgling company was still a seat-of-the-pants operation, and it was in danger of drowning in the sea of competition. After the first successful year, Dabney predicted disaster and wanted out. Nolan, still a believer, bought Dabney’s share of the company in ‘73.

“Amateur Night In Dixie”

Of course, with hindsight, it’s easy to say that Ted Dabney made the biggest mistake of his life when he signed away his share of the company. But try to picture a company made up primarily of long-haired, tee shirted engineers, and you’ll get a glimmer of why Atari was shaky. Emanuel Garard, the acquisitions man at Warner Communications, recalls that Atari had no sales department to speak of, or manufacturing, or advertising: “Everything but research was lacking. It was amateur night in Dixie.”

But Nolan wasn’t one to do things by the book. He didn’t want to play the part of stuffy chairman of the board. He was in the idea business. He wanted to make games. And he was willing to gamble everything he’d made already on the chance to develop something new. If it worked with Pong, it would work again.

Still, Nolan acknowledges that his business naiveté led to some financial disasters. There was one game called Trak Ten that nearly brought the house down. Nolan remembers: “We thought we were making money hand over fist, but the machine was selling for $995 and costing $1100 to make. We were shipping a hundred dollar bill out the door with every unit.”

And then there was the lifestyle of Atari employees—not exactly subdued. Think tank sessions were held at a vacation retreat Atari owned on the California coast in Pajaro Dunes. It was called “Grass Valley” for obvious reasons. There were hot tubs, saunas and plenty of beer and pot. It was a kind of paradise of goofing and clowning. Gene Lipkin, former president of Atari’s coin-op division, recalls: “It was like having a meeting at a fraternity house with everyone trying to get their ideas on the board at the same time.”

They used to code name the new games after the women who worked at Atari. Bushnell says, “I remember Arlette the best. Boy, was she stacked and had the tiniest waist. I think she was ‘Super Pong.’”

But while everyone had a great time and came up with lots of off-the-wall ideas, nothing could rival Pong’s success. And standard business ventures backfired badly. Atari lost $500,000 trying to expand to Japan. Then it lost more money trying to open a chain of arcades in Hawaii.

Meanwhile, the public was getting sick of Pong. Arcade owners were sitting around with Pong this and Pong that and the players were staying away in droves. If they still wanted to play Pong, they could play it on their home tv sets. Coleco was the early leader in the sales of home games, made possible by the development of a new “dedicated chip” that could store enough data to operate four paddle games and two target games in one unit.

No Bucks

Nolan saw the potential in the home game market and determined to make Atari number one. Except there was just one little problem. Atari was running out of money.

As a way of getting some cash to work with, Nolan made a deal with Sears to market his own dedicated home game, which would sell as a Sears product, Telestar Arcade. Atari was in such bad shape that Sears had to lend them money just to manufacture its order.

But Nolan knew that the Telestar Arcade was soon going to be made obsolete by the programmable game, which was already on the drawing boards. If he waited, he would Jose everything to other companies that could build and manufacture the game faster. There were two options for raising cash. The first was to go public and offer shares of Atari stock on the open market. The second was to sell the company to a large conglomerate with enough cash to bankroll his research department and build the games. He chose the latter course and sold out to Warner Communications in 1976.

The deal took four months to negotiate. Warner’s brass had more trouble accepting the lifestyle at Atari than the company’s products. They love the games. But tee shirts, long hair, pot smoking and showing up to work when you felt like it wasn’t the way Warner subsidiaries usually operated.

When the deal went down, Nolan became wealthy. Very wealthy. Warner paid somewhere in the neighborhood ofS28 million for Atari. Nolan himself came out of it with $15 million. Plus, he retained his chairman of the board status. He was rich, but he wasn’t happy: “I’m not a very good chief operating officer,” he says. “I like to develop the strategy, not to work it.” He frequently took holidays from work.

Talking Rats

Besides, Nolan was getting interested in a new business idea—A chain of pizza parlors with entertainment provided by robot animals and, of course, video games.

Actually, his new brainstorm dated back to 1974 when Nolan picked up a costume for $800 at an industry show, brought it back to his engineers, and told them to make it dance and sing. It took Atari’s wizards two years to develop the prototype talking, singing, moving robot—a likeable rat named Chuck E. Cheese. But by then Atari belonged to Warner and the new bosses didn’t think too much of Pizza Time Theaters, as Nolan called the new venture. As a token gesture, they built one Pizza Time Theater and then pointed to the dismal profits whenever Bushnell tried to convince them to expand.

Finally, Nolan decided he was through with Atari. The pizza business is “more fun than games,” he declared. He bought back the rights to Pizza Time Theaters from Atari for $500,000. Then he resigned.

New Smash

Pizza Time Theater was a hit from that moment on. This childlike guy just seems to know what kids like. Imagine the face of an eight-year-old walking into one of Nolan’s new shops: Wow, more than a hundred video games in glistening rows off to one side; then, in the center a real stage that comes alive every eight minutes with this funny rat telling silly jokes and introducing other singing robot animals, including Jasper T. Jowls and Harmony Howlette, a country and western coyote that sings like Loretta Lynn. And finally—pizza. What more can a kid ask for? It’s the perfect day-club for the swinging pre-pubescent set.

This time Bushnell went public with his stock from the start, while retaining a controlling interest. It opened at $15 a share. Last seen it was $25 and rising. Bushnell is now estimated to be worth over $70 million. There are about a hundred Pizza Time Theaters in the U.S., Canada, and Australia. Bushnell estimates he’ll have 800-1000 in operation by 1985, and he predicts that five years after that, Chuck E. Cheese will be more familiar to kids than that little mouse with the big ears.

No wonder it doesn’t bother him that Atari really blossomed under the careful businesslike Warner management. Or that the programmable home game really hit it big the year after he left. Or that another project he’d breathed the first life into, Asteroids, became a monster smash coin-op game. Or that, for the last two years, Atari has been making more money for Warner than its movie company. To Bushnell, the real reward is the magic of creation, not just the bucks.

What’s next? No one knows. In fact, we can be certain of only one thing about Nolan Bushnell: There’ll be more surprises. A reporter once asked him why he doesn’t retire now that he’s made his fortune. Bushnell replied, “That would be boredom. Some people were meant to build things.”

Move over, Walt Disney. The man who slew pinball is gunning for you.