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[electronic music]
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I think the term hacker
started out in chess for
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some chess player who's
enthusiastic, but not very good.
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Cambridge, Massachusetts, 1961:
hackers are invented at MIT.
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it sort of evolved
to mean somebody who
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was playing around with
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something like a
computer or electronics,
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someone who wasn't focused on a
nice, big, important project,
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but was just fiddling around.
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A hacker may have been the
ultimate weapon developed
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at MIT during the Cold War,
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and they completely
lost control over it.
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Early on, the Tech
Model Railroad Club
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was a group of geeks at MIT.
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When they discovered computers,
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they became very
interested in computers.
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Hackers were as
competitive and cocky
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as any other college student.
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Everyone was an engineer
or wanted to be one;
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people liked to speculate
on how to solve problems
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and how to solve
problems really well.
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When a hacker dreams
of another world,
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he is likely to make it real.
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As an early geek, he was very
involved in science fiction
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I had a program that
displayed two space ships,
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and to make things interesting
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they could fire torpedoes
as well as accelerate
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and the torpedoes would blow up
torpedoes and other space ships.
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Immerging yourself
in another world was
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the start of a
long-lasting fascination.
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If you could imagine an
engineering student in the 60s
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going over to the
engineering building
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in the middle of the night
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and confronting a magical
display with moving objects
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and a game, and being
totally mesmerized,
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00:03:03,167 --> 00:03:05,125
flabbergasted, enchanted,
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00:03:05,708 --> 00:03:09,167
that was my experience with
Steve Russell's Space War.
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I could not imagine a more
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compelling, wonderful
game experience
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at that point in time, and it
profoundly changed my life.
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When fascination
meets ambition,
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then comes the Silicon
Valley archetype.
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After I graduated from college
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I determined that
someday I was going to
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build a video game
for the masses.
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Young Bushnell
instinctively felt
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there was something
hot in this idea.
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Nolan Bushnell was a
young engineer from Utah,
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of the Mormon faith.
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When he was at the
University of Utah he saw
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the first Space War
game on a PDP1.
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I didn't really pursue
it commercially until
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after I graduated.
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00:03:54,125 --> 00:03:57,292
He worked at an amusement
park in Salt Lake City,
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so he understood
coin-operated business.
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00:04:01,625 --> 00:04:04,125
Nolan Bushnell was
not really a hacker,
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nor he was merely a dreamer.
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He had salesmanship.
He had charisma.
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He was tall and he was
handsome and he was witty
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and he could talk a
million miles an hour.
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The amusement park
was not known
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as a place that paid
a lot of money,
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but it was summer in Utah,
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girls would come down
there, it was a fun job.
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I became manager of
the whole department.
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Nolan Bushnell was,
from the very start,
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someone hard to
be put in a box.
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00:04:36,208 --> 00:04:40,917
My business mindset really
came from a very young age
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and it had to do
with ham radio.
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00:04:44,500 --> 00:04:47,625
I decided, literally
at 10 years old,
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to make adult kinds of money.
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Will this early inclination turn
into a real business ability?
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Nolan Bushnell was a visionary.
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Nolan Bushnell was somebody
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people wanted to
line up and follow.
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Business wasn't
really his strength.
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Nolan Bushnell's strength
was in recognizing
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something that is neat.
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Neat was his word.
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Who was Nolan Bushnell
according to himself?
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I loved technology and things
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but I also decided that
I wanted to be popular,
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and so, for some reason,
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I always had an ability to
sort of reinvent myself,
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I can remember the
day I sold my
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ham radio transmitter
to buy a pair of skis,
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you know, which represented kind
of a transition in mindset.
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But Nolan Bushnell also
was a conscious gambler.
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I also learned how to
spend a lot of money.
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For the first three
years of college
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when I do my budget I would have
poker winnings as a line item.
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The problem with
being good at poker
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is that no matter
how good you are
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there's somebody out
there that's better
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I was better than all of
my fraternity brothers
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but I was not better
than this one guy
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that came down and picked me
cleaner than a Christmas goose.
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By 1969, Nolan Bushnell looked
like he had settled down.
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You really learn how
to be an engineer your
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first year on the job.
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Without that first year
and a half at Ampex
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I don't believe
that my approach to
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the video game would've
been at all the same.
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Truth is that the gambler was
waiting for another bet.
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He actually formed a
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club inside of Ampex to
invest in the stock market.
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Back in those days, individuals
didn't invest in the market.
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Establishing my own company
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and quitting was a
whole different thing.
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Al Alcorn entered
Ampex at nineteen
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while Nolan was enticing Ted
Dabney into some venture of his.
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Ted and I, who was my
office mate at Ampex,
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00:07:02,208 --> 00:07:04,958
were talking about
this video game.
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Making a coin-operated
entertainment device
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using a computer.
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00:07:08,708 --> 00:07:11,917
Nolan was still so impressed
by the Space War game
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that he copycatted it.
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00:07:13,708 --> 00:07:17,167
He had designed a game in his
own time called Computer Space.
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00:07:17,333 --> 00:07:19,750
Ted said "Yeah, sounds
great, let's do it!"
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00:07:19,833 --> 00:07:22,083
Nolan thought he was
going to have to have
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00:07:22,125 --> 00:07:23,458
once central computer
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00:07:23,583 --> 00:07:27,917
and maybe run 10 or 20 games but
the economics didn't make sense.
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00:07:28,250 --> 00:07:30,417
Even mini computers
were too expensive.
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00:07:30,500 --> 00:07:32,958
His first, and fairly
academic, approach
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wasn't sustainable at all.
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00:07:34,917 --> 00:07:38,208
He's decided he's gonna
try and find a way to
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00:07:38,583 --> 00:07:40,708
make it something that
could be marketable.
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Displays at that time
were 25,000 dollars,
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00:07:45,750 --> 00:07:49,000
and I said "Shucks, I can buy a
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00:07:49,042 --> 00:07:51,125
consumer television
set for 100 bucks."
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00:07:51,417 --> 00:07:54,667
Nolan discovered that
computational sustainability
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00:07:54,999 --> 00:07:56,250
was also an issue.
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00:07:56,333 --> 00:07:59,583
I was just doing this all in
calculations and on paper,
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00:08:00,292 --> 00:08:05,417
and I had to keep adding
functionality to the hardware
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00:08:06,125 --> 00:08:10,000
to relieve the burden
on the minicomputer,
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00:08:10,208 --> 00:08:13,708
and finally I said this
computer is too slow.
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00:08:13,792 --> 00:08:16,417
And then I had what they
called an "Aha!" moment
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00:08:16,792 --> 00:08:19,458
where I said, "Get
rid of the computer,
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00:08:19,625 --> 00:08:20,999
I'll do it all on hardware."
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00:08:21,208 --> 00:08:23,417
If you wanted an
object on the screen
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00:08:23,458 --> 00:08:26,708
you had to put some
chips into it.
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00:08:27,167 --> 00:08:30,833
Finally, Space War was going
to be a viable arcade game.
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00:08:31,083 --> 00:08:34,167
Nolan Bushnell was obsessed
with getting ahead in life.
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When he saw Computer Space
or Space War he said,
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00:08:39,000 --> 00:08:41,625
"You know what, this
is new, this is great.
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00:08:41,750 --> 00:08:43,583
I see it before
everyone else does.
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00:08:43,667 --> 00:08:44,750
I'm gonna ride this wave."
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The money-making mindset of Mr.
Bushnell
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00:08:47,542 --> 00:08:49,333
started to work
harder than ever.
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00:08:49,458 --> 00:08:53,333
We started the company
with 250 dollars each,
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Ted Dabney and myself.
We chose Syzygy because
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00:08:57,667 --> 00:08:59,083
we thought it was a cool name.
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00:08:59,167 --> 00:09:01,708
We pulled it right out
of the dictionary.
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00:09:01,917 --> 00:09:06,292
Syzygy means an alignment of
planets in a solar system.
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00:09:06,500 --> 00:09:09,917
Even in those early days,
Nolan was paving the way
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00:09:09,999 --> 00:09:12,167
for one of the Silicon
Valley evergreen.
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00:09:12,417 --> 00:09:16,083
He immediately evicts
his daughter, Britta,
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00:09:16,125 --> 00:09:18,708
from her bedroom, and that
becomes his workshop.
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00:09:19,000 --> 00:09:21,667
And cute little Britta gets
to sleep in the living room.
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00:09:21,792 --> 00:09:25,583
I pitched it to
Nutting Associates,
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00:09:25,583 --> 00:09:28,000
who said, "Yeah, I will
put this into production,
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00:09:28,125 --> 00:09:32,292
but also would you come and
be our chief engineer?"
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People around him didn't get
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00:09:34,375 --> 00:09:37,042
his new entrepreneurial
style at first.
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In about 1971,
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he resigned from Ampex
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00:09:42,125 --> 00:09:45,667
to go work with a company
called Nutting Associates.
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We felt sorry for him.
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00:09:50,917 --> 00:09:54,042
Computer Space was the
ultimate space age thing.
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00:09:54,458 --> 00:09:57,333
He chose to use a
fibreglass cabinet,
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very sculpted looking.
At the time, modern.
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Fortunately for Nolan,
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00:10:01,500 --> 00:10:04,167
he never sold many of
the Computer Spaces.
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You can only make one cabinet a
day from a tool, from a mould,
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00:10:08,333 --> 00:10:10,542
so it would be very
hard to scale up.
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00:10:10,667 --> 00:10:11,750
But most of all,
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Computer Space was a great
learning opportunity.
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They put it in a bar
called The Dutch Goose.
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It did OK because at the
Dutch Goose you had geeks.
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The early Space War game
that ran on the PDP1
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was done for computer scientists
by computer scientists.
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Could a game with such
a steep learning curve
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be a national success?
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Computer Space didn't succeed
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00:10:39,958 --> 00:10:42,167
in retrospect because it was
too complicated a game.
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It took a special amount of
knowledge of action and reaction
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00:10:48,708 --> 00:10:52,417
and the way objects
operate in free space,
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00:10:52,417 --> 00:10:55,999
a little bit of knowledge
of Newton's second law,
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00:10:56,708 --> 00:10:57,875
things like that.
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It was not a game for the
average working-class guy.
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00:11:01,083 --> 00:11:03,542
They just didn't know
what was going on.
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00:11:03,583 --> 00:11:07,833
And so it did extremely well
around college campuses,
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00:11:07,917 --> 00:11:11,083
did no money at all in a
working-class neighbourhood.
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Computer Space proved there
was a market out there
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00:11:13,999 --> 00:11:15,125
for video games.
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People have said that
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00:11:16,417 --> 00:11:18,542
Computer Space was a failure
- it really wasn't.
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00:11:18,708 --> 00:11:21,542
It, you know, did about 3
million dollars in sales,
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00:11:22,000 --> 00:11:24,333
which, you know, not bad.
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00:11:24,417 --> 00:11:27,833
He immediately doesn't get along
very well with his bosses there.
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00:11:27,999 --> 00:11:31,208
I thought that as I
got to know Nutting,
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00:11:31,333 --> 00:11:34,083
they were not a very
clever company.
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00:11:34,167 --> 00:11:36,167
That became a
pattern with Nolan.
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00:11:36,417 --> 00:11:40,292
He was a great leader, maybe
not as much of a follower.
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00:11:42,000 --> 00:11:43,375
I grew up in San Francisco.
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00:11:43,500 --> 00:11:46,208
My neighbour, when we were
living in the Haight-Ashbury,
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00:11:46,250 --> 00:11:47,375
had a TV repair shop.
211
00:11:47,750 --> 00:11:51,250
Al Alcorn was the result
of putting a typical nerd
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00:11:51,292 --> 00:11:52,708
in a hippie environment.
213
00:11:54,000 --> 00:11:57,999
I wound up at Cal, University
of California, Berkeley.
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00:11:58,083 --> 00:12:01,125
Now, that was during the 60s.
I was very much involved in
215
00:12:01,125 --> 00:12:03,583
all of that stuff
too in Berkeley.
216
00:12:03,667 --> 00:12:05,750
Counter culture and technology
217
00:12:05,750 --> 00:12:09,208
were the explosive mixture
that made Silicon Valley.
218
00:12:09,333 --> 00:12:14,458
Silicon Valley had started
to build its reputation as a
219
00:12:14,999 --> 00:12:17,375
sort of centre of
good technology,
220
00:12:17,417 --> 00:12:21,708
and so I felt that it was
important to kind of be
221
00:12:21,875 --> 00:12:24,750
at the hub of where
things were happening.
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00:12:25,042 --> 00:12:27,833
Ampex, along with Hewlett
Packard and Fairchild,
223
00:12:27,875 --> 00:12:29,875
were the cradle of
that new breed.
224
00:12:29,999 --> 00:12:33,208
So in June of 1972 I
was working at Ampex
225
00:12:33,375 --> 00:12:35,833
and that is where I met Nolan
Bushnell and many other people
226
00:12:35,875 --> 00:12:37,917
that became the
core team of Atari.
227
00:12:37,958 --> 00:12:40,583
I thought that he was
a brilliant engineer,
228
00:12:40,833 --> 00:12:42,792
and a really good
229
00:12:43,125 --> 00:12:49,125
technologist and so he
was my first choice for hire.
230
00:12:49,667 --> 00:12:51,999
Computer Space had made
some money for Syzygy,
231
00:12:52,167 --> 00:12:55,208
but nowhere near to
Nolan's expectations.
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00:12:55,333 --> 00:12:57,417
The incompetence of Nutting
233
00:12:58,083 --> 00:12:59,750
gave me the
encouragement to say,
234
00:12:59,792 --> 00:13:02,167
"Hey, I couldn't mess it
up more than these bozos."
235
00:13:02,250 --> 00:13:03,042
[laughs]
236
00:13:03,208 --> 00:13:07,042
Syzygy was already in use so
we had to choose another name
237
00:13:07,625 --> 00:13:09,375
and we chose Atari.
238
00:13:09,917 --> 00:13:13,042
Nolan Bushnell, the Silicon
Valley entrepreneur,
239
00:13:13,250 --> 00:13:14,999
went for his first hiring.
240
00:13:15,542 --> 00:13:18,500
He offered me a thousand
dollar a month salary,
241
00:13:18,500 --> 00:13:21,292
which was less than I
was making at Ampex,
242
00:13:21,542 --> 00:13:23,208
and he offered me
stock in the company,
243
00:13:23,250 --> 00:13:25,500
which I considered
to be worthless.
244
00:13:25,625 --> 00:13:29,292
What was convincing Alcorn
was the new company spirit.
245
00:13:29,625 --> 00:13:32,500
We were young and we
had an attitude that,
246
00:13:32,625 --> 00:13:34,875
hey, if we took this
chance it would be fun.
247
00:13:34,917 --> 00:13:38,167
Nolan gut was telling him
they were going to be big.
248
00:13:38,250 --> 00:13:39,999
Nolan kept telling me,
oh, we're going to be a
249
00:13:40,000 --> 00:13:42,667
million dollar company.
I thought he was crazy.
250
00:13:42,917 --> 00:13:43,999
[laughs]
251
00:13:44,042 --> 00:13:45,375
it would fail in a year or two.
252
00:13:45,417 --> 00:13:46,792
I'd go back to Ampex
and everything
253
00:13:46,792 --> 00:13:49,042
would be fine and I'd
actually learned a lot.
254
00:13:49,042 --> 00:13:51,208
A new kind of workplace
was taking shape,
255
00:13:51,250 --> 00:13:53,999
a kind which was going
to be very popular.
256
00:13:54,042 --> 00:13:57,667
At Ampex you showed up at
8 o'clock in the morning,
257
00:13:57,667 --> 00:13:59,458
you left at 5 o'clock
in the evening,
258
00:13:59,500 --> 00:14:00,917
you had a one hour lunch.
259
00:14:00,999 --> 00:14:03,583
You didn't wear blue jeans,
you dressed in slacks,
260
00:14:03,625 --> 00:14:05,292
and a white shirt, maybe a tie,
261
00:14:05,333 --> 00:14:06,417
maybe you wore a lab coat.
262
00:14:06,458 --> 00:14:08,333
You stayed there your
whole life, and you got
263
00:14:08,375 --> 00:14:11,042
a gold watch, you got
retirement and a pension.
264
00:14:11,083 --> 00:14:12,250
I was from Berkeley, I mean...
265
00:14:12,333 --> 00:14:14,583
It was pretty clear
what was going on,
266
00:14:14,583 --> 00:14:16,625
at least in Nolan's mind.
267
00:14:16,708 --> 00:14:21,792
We decided that we were going
to have a New Age company,
268
00:14:21,958 --> 00:14:24,958
a company of the Age
of Aquarius where
269
00:14:24,999 --> 00:14:28,375
employees were going to be
treated as human beings.
270
00:14:28,417 --> 00:14:34,708
And we were going to be focused
on results, not process.
271
00:14:35,083 --> 00:14:36,917
We were going to
build a product and
272
00:14:36,958 --> 00:14:38,542
the product would
speak for itself.
273
00:14:38,583 --> 00:14:41,625
We had a very, very flat
organization structure,
274
00:14:41,625 --> 00:14:43,625
way before it was fashionable.
275
00:14:44,000 --> 00:14:45,999
Today everybody wants
to start a company,
276
00:14:45,999 --> 00:14:48,250
but back then it
just wasn't done.
277
00:14:56,500 --> 00:14:58,500
Ralph Bear is a
fascinating man.
278
00:14:58,625 --> 00:15:00,083
Largely self-educated,
279
00:15:00,125 --> 00:15:02,500
but with some education
in radio technology,
280
00:15:02,542 --> 00:15:06,167
and became the
quintessential inventor.
281
00:15:06,250 --> 00:15:09,417
Ralph Baer had nothing to do
with the Age of Aquarius.
282
00:15:09,792 --> 00:15:13,542
I had the initial concept
of doing something interactive
283
00:15:13,792 --> 00:15:16,417
it was just a matter of
putting patterns up there,
284
00:15:16,458 --> 00:15:18,667
manipulating patterns,
moving them around.
285
00:15:18,708 --> 00:15:22,542
In 1966 he was heading
500 people at Sanders,
286
00:15:22,583 --> 00:15:24,833
a giant military contractor.
287
00:15:25,083 --> 00:15:28,667
One day he's at a bus station
and he sees a TV and he thinks,
288
00:15:28,792 --> 00:15:31,208
"Oh my gosh what can
you do with a TV
289
00:15:31,208 --> 00:15:33,458
besides just watch
lame shows on it?"
290
00:15:33,625 --> 00:15:36,792
I wrote a four page
paper on September 1st
291
00:15:36,833 --> 00:15:38,917
of '66, that lays it all out.
292
00:15:38,999 --> 00:15:40,917
It describes lots
of different games
293
00:15:41,250 --> 00:15:43,750
and the interaction between a
game and the television set
294
00:15:43,792 --> 00:15:45,250
and some of the technology.
295
00:15:46,625 --> 00:15:49,750
He had no issue in putting
someone on the job.
296
00:15:49,917 --> 00:15:52,458
I took a technician, put
him in a second room,
297
00:15:52,458 --> 00:15:54,042
and let him work on something.
298
00:15:56,250 --> 00:15:59,417
Basically I was asked,
questions like, "Are you still
299
00:15:59,458 --> 00:16:01,250
screwing around
with this stuff?"
300
00:16:04,333 --> 00:16:05,958
That is the kind
of support I got.
301
00:16:06,250 --> 00:16:07,792
[laughs]
302
00:16:08,167 --> 00:16:10,999
The hardest task was
finding a manufacturer
303
00:16:11,000 --> 00:16:12,417
to sell this idea to.
304
00:16:12,500 --> 00:16:16,000
We had RCV, Motorola, Magnavox,
305
00:16:16,042 --> 00:16:18,625
many others, producing
television sets,
306
00:16:18,875 --> 00:16:20,833
and they all said it was great,
307
00:16:20,875 --> 00:16:23,750
except nobody did
anything except Magnavox
308
00:16:24,458 --> 00:16:26,833
Out of that came the
Magnavox Odyssey game
309
00:16:26,875 --> 00:16:32,333
which first came out and was
sold publicly of May 1972.
310
00:16:32,708 --> 00:16:35,208
Odyssey came out in the
same days in which
311
00:16:35,208 --> 00:16:37,208
Al Alcorn was stepping in.
312
00:16:37,417 --> 00:16:39,417
We had gotten a contract
313
00:16:39,417 --> 00:16:41,875
with Bally Manufacturing
to build a driving game,
314
00:16:42,083 --> 00:16:46,708
but I felt that that was
too difficult of a problem
315
00:16:46,750 --> 00:16:49,750
to have Al start to work on.
316
00:16:49,875 --> 00:16:52,792
Somebody had said
there's a video game
317
00:16:53,042 --> 00:16:54,958
being showed in Burlingame,
318
00:16:55,750 --> 00:16:58,500
and I thought, "Oh boy,
I've got competition.
319
00:16:58,542 --> 00:17:00,500
The video game
business was ours!"
320
00:17:00,583 --> 00:17:02,792
There's a lot of
controversy over who was
321
00:17:02,833 --> 00:17:04,417
the real father of Pong.
322
00:17:05,125 --> 00:17:07,667
I went into the Magnavox
323
00:17:07,667 --> 00:17:10,083
demonstration lab and
there was Odyssey.
324
00:17:10,208 --> 00:17:11,167
I'll show you.
325
00:17:11,333 --> 00:17:13,292
I said well, there's
no competition here,
326
00:17:13,458 --> 00:17:16,083
so I went back and
that was actually the
327
00:17:16,083 --> 00:17:18,333
first day that Al
Alcorn showed up.
328
00:17:18,375 --> 00:17:19,375
Pay attention.
329
00:17:19,458 --> 00:17:20,875
While staring at Odyssey,
330
00:17:20,917 --> 00:17:24,667
Nolan started to frame some
basic aspects of video gaming.
331
00:17:24,792 --> 00:17:29,917
The striking of the ball had
no offensive aspect to it,
332
00:17:30,083 --> 00:17:31,708
it was simply blocking it,
333
00:17:31,792 --> 00:17:35,708
which is ultimately boring.
334
00:17:36,333 --> 00:17:37,542
It's not that fast.
335
00:17:37,583 --> 00:17:40,625
The motion in general
was not crisp,
336
00:17:40,708 --> 00:17:44,917
there was no sound,
there was no score.
337
00:17:44,958 --> 00:17:48,375
I said, you know, if
I were going to do
338
00:17:48,417 --> 00:17:51,208
a game like that, this
is how I'd do it.
339
00:17:51,583 --> 00:17:54,042
Eventually, Nolan showed
another key element
340
00:17:54,083 --> 00:17:56,750
of the Silicon Valley
way: ruthlessness.
341
00:17:56,875 --> 00:17:58,792
People say, oh I
shouldn't do that
342
00:17:58,917 --> 00:18:01,500
because someone else may have
patented it or something.
343
00:18:01,583 --> 00:18:04,542
Unless you are directly stealing
somebody else's concept,
344
00:18:04,917 --> 00:18:08,625
go for it and resolve it later.
That's what we did.
345
00:18:08,708 --> 00:18:11,333
The gentlemen's disagreement
that started with Pong
346
00:18:11,458 --> 00:18:14,500
had grown to include the very
concept of the video game.
347
00:18:14,750 --> 00:18:16,458
It was a totally different
348
00:18:16,667 --> 00:18:18,667
architecture,
different approach.
349
00:18:18,792 --> 00:18:20,083
The only similarity was a
350
00:18:20,083 --> 00:18:22,167
moving spot on a
cathode ray tube.
351
00:18:22,250 --> 00:18:25,625
Whether video games are
produced technically
352
00:18:25,833 --> 00:18:28,500
by one form of
technology or another
353
00:18:28,583 --> 00:18:29,708
is totally irrelevant.
354
00:18:29,917 --> 00:18:32,708
There is no question that I
am the original inventor
355
00:18:32,833 --> 00:18:33,833
of home games.
356
00:18:33,958 --> 00:18:36,792
The record is clear. There
is a four page document.
357
00:18:36,875 --> 00:18:39,999
On the other hand,
Bushnell and associates,
358
00:18:40,000 --> 00:18:44,667
like Al Alcorn, Ted Debney,
Steve Bristow and others,
359
00:18:44,917 --> 00:18:48,999
were basically inspired
by Nolan to do what?
360
00:18:49,000 --> 00:18:51,833
To put a coin slot on
the Space War game.
361
00:18:51,917 --> 00:18:54,458
Bushnell tends to see
the broader picture.
362
00:18:56,917 --> 00:19:02,333
The reality is that Pong was
successful and Odyssey wasn't.
363
00:19:02,417 --> 00:19:08,375
William Higinbotham did a
ping-pong type game in 1958
364
00:19:08,625 --> 00:19:10,667
and there were all kinds
of ping-pong games
365
00:19:10,708 --> 00:19:13,083
on the computer, on
PDP1, in the middle 60s
366
00:19:13,208 --> 00:19:16,625
so, you know, come
on, it's silly.
367
00:19:16,875 --> 00:19:19,500
What is sure is that Mr
Baer patented his ideas
368
00:19:19,542 --> 00:19:21,958
and Mr Bushnell did
not for a long time.
369
00:19:22,042 --> 00:19:24,000
The problem is that Ralph,
370
00:19:24,042 --> 00:19:26,125
despite all of his
many strengths,
371
00:19:26,250 --> 00:19:28,917
really didn't have a concept
on how to make things fun.
372
00:19:30,667 --> 00:19:32,500
The Odyssey sucked
as a game console
373
00:19:32,583 --> 00:19:35,917
By 1973, Nolan
Bushnell's mind-set
374
00:19:35,958 --> 00:19:38,333
was prevailing over
any competition.
375
00:19:38,417 --> 00:19:43,458
I think my games were very, very
good, they were cheap enough
376
00:19:44,083 --> 00:19:48,917
and they were commercial. And I
think I'm the commercial daddy.
377
00:19:49,083 --> 00:19:50,083
[laughs]
378
00:19:50,167 --> 00:19:51,708
It really wasn't until Atari
379
00:19:51,750 --> 00:19:53,875
came around that even
ping-pong became fun.
380
00:19:53,958 --> 00:19:54,958
C'est la vie.
381
00:19:58,875 --> 00:20:02,917
When Nolan hired me to
design the next video game
382
00:20:03,333 --> 00:20:06,833
apparently he wanted
me to get practice.
383
00:20:07,292 --> 00:20:09,708
He thought of the
very simplest game
384
00:20:09,999 --> 00:20:11,583
he could think of,
which became Pong
385
00:20:11,667 --> 00:20:15,042
which is just one object moving,
two score digits and some sound
386
00:20:15,250 --> 00:20:16,417
couldn't be any simpler.
387
00:20:17,000 --> 00:20:18,667
I did not think it
was marketable.
388
00:20:19,583 --> 00:20:21,208
The arcades at the time,
389
00:20:21,292 --> 00:20:25,500
they were all about flying,
or driving, or shooting
390
00:20:25,667 --> 00:20:26,667
[laughs]
391
00:20:27,333 --> 00:20:28,917
Being the role model for many
392
00:20:28,917 --> 00:20:30,958
Silicon Valley
entrepreneurs to come,
393
00:20:31,500 --> 00:20:33,958
Nolan manipulated
his first employee.
394
00:20:34,167 --> 00:20:36,583
I told him that we
were trying for
395
00:20:36,625 --> 00:20:39,000
a contract with
General Electric.
396
00:20:39,417 --> 00:20:42,999
He told me that he had a
contract for a home game.
397
00:20:43,917 --> 00:20:45,833
The fact that nobody
from General Electric
398
00:20:45,875 --> 00:20:47,999
ever called or came
by or wrote a letter
399
00:20:48,458 --> 00:20:49,417
didn't occur to me.
400
00:20:49,667 --> 00:20:51,875
Al Alcorn proved
sufficiently smart.
401
00:20:52,333 --> 00:20:58,458
It took Al less than a week
to get the Pong game going.
402
00:20:58,750 --> 00:21:03,042
He basically took a basic
Computer Space set of
403
00:21:03,042 --> 00:21:05,208
circuitries for the sync
and everything like that.
404
00:21:05,333 --> 00:21:06,875
Frankly, it was
kind of a failure.
405
00:21:06,917 --> 00:21:09,167
I had 75 chips in this thing
406
00:21:09,333 --> 00:21:11,375
and it couldn't really
exist to be more
407
00:21:11,417 --> 00:21:13,500
than 10 chips to
be a home product.
408
00:21:13,792 --> 00:21:16,167
But Nolan didn't tell me he
was going to throw it away.
409
00:21:16,917 --> 00:21:18,458
The most notable feature in the
410
00:21:18,500 --> 00:21:20,375
game was that it
was challenging.
411
00:21:20,708 --> 00:21:23,792
Alcorn segmented the
paddle and depending
412
00:21:23,833 --> 00:21:25,583
on which part of the
paddle hit the ball
413
00:21:25,750 --> 00:21:28,083
the ball would, would go
in different directions.
414
00:21:28,125 --> 00:21:31,333
You have the highest
risk of missing the ball
415
00:21:31,750 --> 00:21:35,375
and yet it's the most
effective shot back.
416
00:21:36,083 --> 00:21:39,583
That's probably the
one characteristic
417
00:21:39,625 --> 00:21:41,542
that really, really made Pong
418
00:21:42,000 --> 00:21:43,917
a commercially
successful product.
419
00:21:44,250 --> 00:21:47,125
They were shaping the paradigm
of the perfect gameplay.
420
00:21:47,458 --> 00:21:52,292
The other things that we did
to make Pong a good game
421
00:21:52,708 --> 00:21:56,250
was speed up after a
number of volleys
422
00:21:56,750 --> 00:22:00,042
The game got harder
as you played longer.
423
00:22:00,417 --> 00:22:02,458
It got very, very hard to play.
424
00:22:02,667 --> 00:22:04,750
The sound discussion
showed how an Age of
425
00:22:04,750 --> 00:22:07,875
Aquarius company solves
important issues.
426
00:22:08,042 --> 00:22:09,999
There was no sound
and then Nolan
427
00:22:10,000 --> 00:22:11,167
said, well, it's
gotta have sound.
428
00:22:11,208 --> 00:22:14,375
I said, "Really? What kind
of sound do you want?"
429
00:22:14,458 --> 00:22:16,375
And he said, "Well I'd
like the sound of a
430
00:22:16,417 --> 00:22:18,750
crowd cheering when
you get a point."
431
00:22:19,292 --> 00:22:20,583
I didn't know how to do that.
432
00:22:20,833 --> 00:22:22,583
Horizontal management
brings along
433
00:22:22,625 --> 00:22:24,167
the risk of getting backtalk.
434
00:22:24,417 --> 00:22:26,583
It took about one
and a half chips to
435
00:22:26,625 --> 00:22:28,917
do all that sound.
Nolan didn't like it
436
00:22:29,000 --> 00:22:30,417
but I said if you
want to change it,
437
00:22:30,417 --> 00:22:31,875
then you do it. I'm
not going to do it.
438
00:22:32,625 --> 00:22:34,375
Once Pong arrived
it seemed to be
439
00:22:34,375 --> 00:22:36,583
reasonable to test
it on the ground.
440
00:22:36,833 --> 00:22:40,083
Ted Dabney built a cabinet for
this prototype over the weekend.
441
00:22:40,292 --> 00:22:42,167
It only said the word
Pong on it. There
442
00:22:42,208 --> 00:22:44,208
were no instructions,
there was a coin box
443
00:22:44,708 --> 00:22:48,792
a television set, the name
Pong and two controls.
444
00:22:49,292 --> 00:22:53,833
We put it in the Andy
Caps tavern in Sunnyvale.
445
00:22:53,917 --> 00:22:55,833
Nolan and I had a
beer and watched it.
446
00:22:55,833 --> 00:22:57,625
Somebody came over
and played it.
447
00:22:57,833 --> 00:22:59,083
Approaching the
game seemed to be
448
00:22:59,125 --> 00:23:01,000
very simple to the
people around it.
449
00:23:01,250 --> 00:23:03,458
And Nolan asked this guy,
"How did you like it?"
450
00:23:04,083 --> 00:23:05,750
He said, "I know all
about it, I know
451
00:23:05,792 --> 00:23:07,042
the guys who invented
this thing."
452
00:23:07,500 --> 00:23:09,417
We said, save the
bullshit for the girls.
453
00:23:09,750 --> 00:23:12,417
Nolan immediately
left for Chicago
454
00:23:12,500 --> 00:23:16,083
which was the amusement capital
of the world at the time.
455
00:23:16,292 --> 00:23:18,667
Nolan thought he could
sell the idea to Bally
456
00:23:18,708 --> 00:23:21,333
which was a big name in
the arcade business.
457
00:23:21,458 --> 00:23:23,500
Al gets a call in the
middle of the night from,
458
00:23:23,542 --> 00:23:25,583
from the manager at Andy
Capp's Tavern who says,
459
00:23:25,750 --> 00:23:27,958
"Your machine's broken.
Can you come fix it?
460
00:23:28,125 --> 00:23:30,458
Turns out it was so
stuffed full of quarters
461
00:23:30,708 --> 00:23:32,708
no one could, could get
any more money in.
462
00:23:32,833 --> 00:23:34,500
The coin box was
filled with quarters.
463
00:23:34,542 --> 00:23:35,958
Absolutely filled
with quarters.
464
00:23:36,083 --> 00:23:37,500
I put them in my pockets,
465
00:23:37,667 --> 00:23:39,999
I said "Gee, if that
ever happens again,
466
00:23:39,999 --> 00:23:42,125
you give me a call.
I can fix that."
467
00:23:42,292 --> 00:23:45,458
People's behaviour around
Pong was changing rapidly.
468
00:23:45,583 --> 00:23:47,750
The barkeep said the
most important thing and
469
00:23:47,792 --> 00:23:50,375
this is, this is the key,
this is the real key:
470
00:23:50,625 --> 00:23:52,083
he said "It's the
strangest thing,
471
00:23:52,125 --> 00:23:53,500
I've never seen this before.
472
00:23:53,667 --> 00:23:55,833
This morning I came
to open the bar
473
00:23:55,917 --> 00:23:57,458
and there were people
waiting outside
474
00:23:57,999 --> 00:24:00,999
and they didn't order drinks.
They came to play that game."
475
00:24:01,292 --> 00:24:03,750
I told Nolan what had happened.
Nolan said,
476
00:24:03,792 --> 00:24:05,833
"Very interesting,
very interesting..."
477
00:24:05,999 --> 00:24:08,083
Suddenly Nolan
changed his mind and
478
00:24:08,125 --> 00:24:10,083
wanted to keep the
game for himself.
479
00:24:10,500 --> 00:24:13,292
The company business model
had to change accordingly.
480
00:24:14,583 --> 00:24:17,083
When we started Atari,
the plan, the business
481
00:24:17,083 --> 00:24:19,292
plan, was to do
consulting engineering.
482
00:24:19,542 --> 00:24:21,708
We wouldn't be involved
with manufacturing
483
00:24:21,708 --> 00:24:23,250
or sales, or any of that stuff.
484
00:24:23,458 --> 00:24:25,208
Building prototypes
is one thing,
485
00:24:25,208 --> 00:24:27,417
manufacturing is a
wholly different thing.
486
00:24:27,667 --> 00:24:30,917
Atari was started
in a little shop
487
00:24:30,958 --> 00:24:35,167
in Santa Clara on
Scott Boulevard.
488
00:24:35,333 --> 00:24:36,792
I had a little lab
where I did my
489
00:24:36,792 --> 00:24:39,583
engineering and we
manufactured right there.
490
00:24:39,708 --> 00:24:42,625
We had no money to fund any
of this, and no space.
491
00:24:42,667 --> 00:24:44,875
I come home and tell my
wife that Nolan's crazy.
492
00:24:45,000 --> 00:24:49,792
He wants to build a 100 Pongs a
day. He's insane. But we did.
493
00:24:50,042 --> 00:24:52,292
Within two years we
became bigger than Bally.
494
00:24:52,542 --> 00:24:54,667
Nolan and his associates
had the chance
495
00:24:54,708 --> 00:24:57,458
to speculate about
Pong's success.
496
00:24:57,542 --> 00:25:01,083
The instructions were "avoid
missing ball for high score."
497
00:25:01,208 --> 00:25:03,625
You didn't have to worry
about this button
498
00:25:03,667 --> 00:25:05,833
gives you thrust,
this button fires
499
00:25:05,875 --> 00:25:07,625
and this button does this
and that button does that.
500
00:25:07,792 --> 00:25:09,792
It didn't have a lot
of naked ladies on it.
501
00:25:09,833 --> 00:25:11,917
It was very appealing
to women and men,
502
00:25:12,042 --> 00:25:15,250
and the other very important
thing, it was 25 cents a play.
503
00:25:15,292 --> 00:25:17,625
Video games were new and
were about to change
504
00:25:17,667 --> 00:25:19,792
the arcade's environment
for a long time.
505
00:25:19,958 --> 00:25:23,667
Andy Capp's Tavern is one
of those bars where you
506
00:25:23,833 --> 00:25:26,208
eat your peanuts and spit
the shells on the ground.
507
00:25:26,417 --> 00:25:27,750
A lot of these games
were going into
508
00:25:27,750 --> 00:25:29,500
bars where people
had had six beers.
509
00:25:29,875 --> 00:25:32,125
They were not
kid-friendly places.
510
00:25:32,333 --> 00:25:34,292
Video games appealed
to kids and to
511
00:25:34,333 --> 00:25:36,500
the nerdy ones more
than anyone else.
512
00:25:36,583 --> 00:25:39,083
I saw this game
and I said, "Oh my god,
513
00:25:39,083 --> 00:25:42,125
you can make a game
on a television set.
514
00:25:42,250 --> 00:25:43,792
Who would've ever
thought of that?"
515
00:25:44,500 --> 00:25:47,292
Atari was bringing out the
first arcade game industry.
516
00:25:47,500 --> 00:25:50,875
Really, Pong was the first game
to reach the mass consciousness,
517
00:25:50,917 --> 00:25:53,125
showing some of the potential
518
00:25:53,125 --> 00:25:55,333
of this new medium
of video games.
519
00:25:55,917 --> 00:25:58,250
Video games delivered
the possibility of
520
00:25:58,250 --> 00:26:01,000
an alternative world
in the hands of kids.
521
00:26:01,250 --> 00:26:04,250
I built my own little pong
game and Steve Jobs said,
522
00:26:04,417 --> 00:26:06,792
"Wow, Atari!" Steve went
down and got a job.
523
00:26:06,958 --> 00:26:10,167
They put him on a night shift
where they would design games
524
00:26:10,250 --> 00:26:12,500
and I got to go down there
and see their newest stuff.
525
00:26:12,542 --> 00:26:14,750
I was in, I was in
heaven in those days.
526
00:26:16,708 --> 00:26:19,667
Atari grew very
rapidly after Pong.
527
00:26:19,708 --> 00:26:23,958
By the end of 1973, we sold
over a 1 million dollars worth
528
00:26:23,999 --> 00:26:28,292
of equipment. In 1974,
probably 3 or 4 million.
529
00:26:28,333 --> 00:26:30,583
We couldn't build them
fast enough. So we
530
00:26:30,583 --> 00:26:33,333
expanded, we rented an
old roller skating rink.
531
00:26:33,583 --> 00:26:35,667
All the existing
coin-op operators
532
00:26:35,708 --> 00:26:38,458
immediately jumped aboard
the new technology.
533
00:26:38,708 --> 00:26:44,208
Atari probably sold less
than 20 per cent of
534
00:26:44,292 --> 00:26:46,667
the Pong games in the
coin-operated world.
535
00:26:46,875 --> 00:26:49,542
We were heavily, heavily copied.
There were,
536
00:26:49,542 --> 00:26:54,500
at one time, 23 Pong-type
manufacturers.
537
00:26:55,167 --> 00:26:57,708
Nutting Associates had Computer
538
00:26:57,750 --> 00:27:01,042
Space Ball, Williams
had TV Tennis
539
00:27:01,208 --> 00:27:03,583
and they were all
copies of our game.
540
00:27:03,833 --> 00:27:06,875
Bally and Midway both came out
with their own versions of Pong.
541
00:27:07,000 --> 00:27:09,292
Nolan Bushnell had his
means to undermine
542
00:27:09,333 --> 00:27:12,333
competition, which became
a Silicon Valley classic.
543
00:27:12,750 --> 00:27:17,208
Our strategy was to
be the most innovative
544
00:27:17,208 --> 00:27:20,875
and the most clever
company around.
545
00:27:21,083 --> 00:27:23,708
What we had was the
ability to design
546
00:27:23,750 --> 00:27:25,500
new games which our
competition didn't.
547
00:27:25,542 --> 00:27:28,208
But it was very hard to
design these games because
548
00:27:28,208 --> 00:27:30,792
we were busy trying to make
Pongs at the same time.
549
00:27:30,958 --> 00:27:33,625
Atari started hiring
people at full speed.
550
00:27:33,833 --> 00:27:36,500
I came over and I thought: "Oh,
man, this looks pretty fun."
551
00:27:36,542 --> 00:27:38,917
I dressed up, I wore a suit,
and I went to the interview,
552
00:27:39,125 --> 00:27:41,292
and I walked in and
he's wearing like
553
00:27:41,333 --> 00:27:43,000
a T-shirt and blue
jeans and I said,
554
00:27:43,250 --> 00:27:45,375
"Thank God!" and I
pulled of my tie.
555
00:27:45,417 --> 00:27:48,417
It wasn't corporate,
it was a very casual place.
556
00:27:48,625 --> 00:27:49,875
That was great! [laughs]
557
00:27:50,333 --> 00:27:52,375
Atari brought the
Silicon Valley informal
558
00:27:52,417 --> 00:27:54,458
style to a whole
different level.
559
00:27:54,625 --> 00:27:56,708
There were parties
every Friday, and
560
00:27:56,708 --> 00:27:59,125
people would just
get together and talk
561
00:27:59,125 --> 00:28:03,583
and go around and play each
other's games, give them ideas.
562
00:28:03,833 --> 00:28:05,875
Nolan was starting
to fulfil his vision
563
00:28:05,917 --> 00:28:07,917
of an Aquarian
technology company.
564
00:28:08,083 --> 00:28:12,958
Our creative manifesto was to
always take the technology
565
00:28:13,042 --> 00:28:17,125
that was possible and
turn it into a game.
566
00:28:17,500 --> 00:28:21,375
The first change was
actually Pong Doubles.
567
00:28:21,375 --> 00:28:25,083
Then we did a game
called Space Race
568
00:28:25,292 --> 00:28:27,500
and then came Gotcha,
and then came
569
00:28:27,542 --> 00:28:29,958
Spike, and Volleyball
and then Trak 10.
570
00:28:30,083 --> 00:28:31,792
Technical limitations
brought to
571
00:28:31,833 --> 00:28:33,958
small teams and
fast development.
572
00:28:33,999 --> 00:28:36,292
A team typically
consisted of the
573
00:28:36,333 --> 00:28:40,042
programmer, a technician
and an engineer.
574
00:28:40,333 --> 00:28:42,875
Your options of what you could
do were somewhat limited.
575
00:28:42,917 --> 00:28:44,917
The first thing you
had to do was to figure
576
00:28:44,958 --> 00:28:46,667
out whether or
not you could display
577
00:28:46,708 --> 00:28:48,417
what you wanted
to show in this game.
578
00:28:48,625 --> 00:28:50,458
In this environment
the mantra for
579
00:28:50,500 --> 00:28:52,542
the perfect game
started to spread.
580
00:28:52,833 --> 00:28:55,917
Nolan said it has to be easy to
learn and difficult to master.
581
00:28:56,042 --> 00:28:59,125
The old games are popular
because they did gameplay well.
582
00:28:59,708 --> 00:29:01,917
They thought about how
easy it was to do
583
00:29:01,917 --> 00:29:04,583
something interesting in
your first experience,
584
00:29:04,875 --> 00:29:06,375
and how there was
something to learn,
585
00:29:06,417 --> 00:29:07,958
there was a reason
to keep playing it.
586
00:29:08,083 --> 00:29:10,500
One bright day the
revolving doors at Atari
587
00:29:10,542 --> 00:29:12,792
brought in the Silicon
Valley icon to be.
588
00:29:13,083 --> 00:29:14,083
Steve Jobs.
589
00:29:14,333 --> 00:29:18,750
I never expected that
his company would
590
00:29:18,750 --> 00:29:21,042
be as big and
successful as it is,
591
00:29:21,750 --> 00:29:25,333
as I had a chance to
own a third of it for
592
00:29:25,417 --> 00:29:29,000
50,000 dollars and I said no.
I've regretted that.
593
00:29:29,417 --> 00:29:30,500
[laughs]
594
00:29:30,583 --> 00:29:32,625
Steve was put on a new game.
595
00:29:33,125 --> 00:29:34,792
You know, I didn't sleep
a wink last night.
596
00:29:34,999 --> 00:29:38,000
I needed an engineer to
work on Breakout for me.
597
00:29:38,250 --> 00:29:40,000
Nolan didn't know
that Steve was not
598
00:29:40,000 --> 00:29:42,125
an engineer. He could not
really design games.
599
00:29:42,208 --> 00:29:44,333
Steve Jobs came to me one day
and he said, Nolan Bushnell
600
00:29:44,333 --> 00:29:47,458
founder of Atari, wants a
one player version of Pong.
601
00:29:47,667 --> 00:29:50,708
Breakout was the testbed of
the Apple successful duo.
602
00:29:50,917 --> 00:29:53,375
Breakout was, was an
amazing thing because
603
00:29:53,667 --> 00:29:55,375
it was one of those games
that just has hung
604
00:29:55,375 --> 00:29:57,167
around as one of the
classics of all time.
605
00:29:57,250 --> 00:30:00,000
Atari had distributors
all around the world and
606
00:30:00,042 --> 00:30:02,750
in Japan they relied on
a company called Namco.
607
00:30:02,917 --> 00:30:07,458
Masaya Nakamura, the
president of Namco saw the
608
00:30:07,500 --> 00:30:10,417
Yakuza coming out
with Breakout knock-offs
609
00:30:10,917 --> 00:30:13,542
and he went to Nolan
and said, "I need more
610
00:30:13,583 --> 00:30:17,125
copies and I need them
now," and Nolan said no.
611
00:30:17,500 --> 00:30:19,708
Rumours had it that
Nolan was unable to
612
00:30:19,708 --> 00:30:22,292
speak or to think clearly
on that occasion.
613
00:30:22,500 --> 00:30:24,417
Nolan had been out partying
pretty hard by the
614
00:30:24,417 --> 00:30:27,125
time that he, that he
finally tracked Nolan down.
615
00:30:27,917 --> 00:30:30,999
Pretty soon Namco chose to
work with Bally and Midway,
616
00:30:31,292 --> 00:30:34,042
and so years later of course
you see Pac-man come.
617
00:30:34,417 --> 00:30:37,125
Still, in the USA, the
coin-op industry was
618
00:30:37,125 --> 00:30:40,167
held as one and the same
with organized crime.
619
00:30:40,292 --> 00:30:46,500
It was kind of run by mob types.
Or claimed to be.
620
00:30:46,583 --> 00:30:49,250
Indeed the industry
had a bad reputation.
621
00:30:49,500 --> 00:30:51,917
In fact, when we
started Atari we tried
622
00:30:51,958 --> 00:30:54,167
to go to the bank to
get a loan for money
623
00:30:54,167 --> 00:30:56,375
and they basically
turned us down because
624
00:30:56,417 --> 00:30:58,333
they assumed it was
a bad industry.
625
00:30:58,542 --> 00:31:00,999
The bad industry had recurring
meetings and dinners
626
00:31:01,167 --> 00:31:03,667
but one time Bushnell
had another commitment.
627
00:31:04,042 --> 00:31:06,625
Nolan couldn't go, and he
said, "Al, I want you to go."
628
00:31:06,750 --> 00:31:07,708
I took my wife,
629
00:31:07,792 --> 00:31:09,708
and we were sitting
at a table with
630
00:31:09,708 --> 00:31:11,625
an older couple that
were operators,
631
00:31:12,042 --> 00:31:14,750
and I introduced
myself from Atari and
632
00:31:14,792 --> 00:31:17,417
the guy said, "Oh
you're from Atari!"
633
00:31:17,625 --> 00:31:19,167
He reaches in his
pocket and pulls
634
00:31:19,208 --> 00:31:21,999
out a pistol, puts
it on the table.
635
00:31:22,208 --> 00:31:24,833
He said, "You know you're
operating in my territory."
636
00:31:25,042 --> 00:31:27,250
I said, "Well, we're going
to stop right now!"
637
00:31:27,417 --> 00:31:28,083
[laughs]
638
00:31:28,250 --> 00:31:31,875
I went back and I told Nolan
that guy pulled a gun on me!
639
00:31:32,083 --> 00:31:33,708
"Oh he wasn't going
to shoot you."
640
00:31:33,750 --> 00:31:36,999
"I'm not going to those
things anymore, OK?!"
641
00:31:37,792 --> 00:31:39,750
Although being
successful as a new
642
00:31:39,792 --> 00:31:43,083
company, Atari was
always chasing money.
643
00:31:43,208 --> 00:31:46,208
When you're growing at
double and sometimes
644
00:31:46,250 --> 00:31:49,125
triple digit rates, you
need a lot of cash.
645
00:31:49,583 --> 00:31:53,750
We were just grabbing
a tiger by the tail.
646
00:31:53,917 --> 00:31:56,167
At the same time,
Nolan's management
647
00:31:56,208 --> 00:31:57,875
skills were on the
learning curve.
648
00:31:58,542 --> 00:32:01,292
in a year and a half I went
through four different
649
00:32:01,292 --> 00:32:03,542
presidents and I fired
every one of them
650
00:32:03,958 --> 00:32:06,833
and finally I said
okay, I am pretty bad,
651
00:32:06,875 --> 00:32:08,792
but I'm better than
any of these yokels.
652
00:32:08,875 --> 00:32:11,542
The unwritten law of the
coin-op business was that
653
00:32:11,542 --> 00:32:14,250
when you've got a distributor
you could not have two.
654
00:32:14,333 --> 00:32:17,208
They took a bunch of Atari
expatriates and said,
655
00:32:17,250 --> 00:32:19,417
"OK, just go into that
building down the street,
656
00:32:19,833 --> 00:32:23,583
and call it Key Games and
make the best games you can."
657
00:32:23,625 --> 00:32:26,333
And Tank, Tank of course
was their masterpiece.
658
00:32:26,667 --> 00:32:28,875
When Atari and Kee
Games merged back
659
00:32:28,917 --> 00:32:31,167
together, Joe Keenan
became president.
660
00:32:31,417 --> 00:32:34,167
Joe Keenan actually came
up through the ranks and
661
00:32:34,167 --> 00:32:36,833
he turned out to be the
president that I needed.
662
00:32:37,083 --> 00:32:39,833
Nolan's attitude towards
competition showed up in
663
00:32:39,875 --> 00:32:42,542
a meeting about the future
of video game industry.
664
00:32:42,750 --> 00:32:45,333
I was not asked to
participate, and it really,
665
00:32:45,417 --> 00:32:49,000
really pissed me off.
I mean, I was fuming.
666
00:32:49,167 --> 00:32:53,833
And so halfway through
I stood up and said,
667
00:32:54,083 --> 00:32:56,708
"You guys are all a
bunch of crooks and
668
00:32:56,875 --> 00:32:59,125
jackals. You wouldn't
know what the future is
669
00:32:59,333 --> 00:33:02,042
because your only talent
is copying things
670
00:33:02,083 --> 00:33:04,833
that I design. You don't
know what's in my lab,
671
00:33:04,958 --> 00:33:07,333
how can you talk about the
future? You're idiots
672
00:33:07,583 --> 00:33:09,917
and thieves. That was fun."
673
00:33:10,000 --> 00:33:11,000
[laughs]
674
00:33:12,333 --> 00:33:15,250
My idea was to make some
box that would plug in to the
675
00:33:15,375 --> 00:33:19,292
terminals of a television
set and cost 25 dollars, right?
676
00:33:19,750 --> 00:33:21,542
Baer's way to
videogaming was still
677
00:33:21,583 --> 00:33:23,125
passing through the households.
678
00:33:23,500 --> 00:33:26,708
You couldn't build a game for
less than 35 or 40 dollars,
679
00:33:26,999 --> 00:33:31,292
which translated to at least
75, 80, 90, 100 dollars
680
00:33:31,417 --> 00:33:32,958
in the final product price.
681
00:33:32,999 --> 00:33:35,917
Baer met a price point that
was going to be commonplace
682
00:33:36,000 --> 00:33:39,458
Even so, as I said,
350,000 were sold.
683
00:33:39,583 --> 00:33:41,667
I remember they went
to homes, so at least
684
00:33:41,708 --> 00:33:44,083
three or four or five or
six people played them,
685
00:33:44,083 --> 00:33:47,000
by the end of '74/'75,
several million
686
00:33:47,042 --> 00:33:49,625
people had played
video games at home.
687
00:33:49,917 --> 00:33:53,083
Odyssey had no future anyway,
but someone else would have.
688
00:33:53,333 --> 00:33:57,250
Pong has continued to
do well in the arcades
689
00:33:57,875 --> 00:34:00,000
and Nolan says,
you know what, we
690
00:34:00,083 --> 00:34:02,042
need to bring this to the home.
691
00:34:02,333 --> 00:34:05,375
We felt that there would
be an interesting
692
00:34:05,417 --> 00:34:09,458
opportunity in the consumer
market. You know, this was 1973.
693
00:34:09,500 --> 00:34:11,708
Atari didn't get back
into the home business
694
00:34:11,708 --> 00:34:15,417
until they saw the Odyssey
and guys like Al Alcorn
695
00:34:15,750 --> 00:34:17,625
and several others
inside said "If
696
00:34:17,667 --> 00:34:19,292
they can do it, we can do it."
697
00:34:19,708 --> 00:34:21,750
Atari was beginning
to think that the
698
00:34:21,792 --> 00:34:24,042
arcade business was
just that big.
699
00:34:24,208 --> 00:34:27,417
Our sales were almost equivalent
to Bally sales in coin-op
700
00:34:27,875 --> 00:34:31,083
and we were selling about as
many games as we could make.
701
00:34:31,167 --> 00:34:33,625
We were limited now by the
size of the market place.
702
00:34:33,792 --> 00:34:37,083
But the drive for a real change
had the name of Nolan Bushnell.
703
00:34:37,125 --> 00:34:41,708
I really didn't allow grass
to grow under our feet.
704
00:34:41,917 --> 00:34:46,583
Nolan defined the model
of Atari was innovative
705
00:34:46,625 --> 00:34:49,292
leisure. It was a very
broad definition.
706
00:34:49,417 --> 00:34:51,250
From day one Nolan
had the idea that
707
00:34:51,250 --> 00:34:52,875
we should be making
a home game.
708
00:34:53,000 --> 00:34:56,125
Actually the idea of entering
the home market came early on.
709
00:34:56,625 --> 00:35:01,708
People are always confused by
the Grass Valley think tank.
710
00:35:01,917 --> 00:35:04,125
First of all they
thought Grass Valley
711
00:35:04,250 --> 00:35:06,875
was a metaphor for
smoking marijuana.
712
00:35:07,167 --> 00:35:09,583
Grass Valley was rural.
713
00:35:09,625 --> 00:35:12,375
It was a good place to
think and be outdoors.
714
00:35:12,625 --> 00:35:14,500
There were a group of
engineers that had
715
00:35:14,542 --> 00:35:16,708
left Ampax about the
same time we did.
716
00:35:17,292 --> 00:35:21,417
and they moved up to a town in
the Sierra called Grass Valley.
717
00:35:21,542 --> 00:35:25,125
Grass Valley, the team, was a
technology consultant business.
718
00:35:25,500 --> 00:35:27,708
Atari liked them
so much that they bought
719
00:35:27,750 --> 00:35:30,042
them out and made
them a subsidiary of Atari.
720
00:35:30,208 --> 00:35:34,917
I said, "I'll fund a research
lab wherever you guys wanna go."
721
00:35:35,167 --> 00:35:37,708
These guys were responsible
for a notable bunch
722
00:35:37,750 --> 00:35:40,167
of breakthroughs during
the 70s and the 80s.
723
00:35:40,333 --> 00:35:43,583
Larry Emmons and Steve Mayer and
Ron Milner were the leaders.
724
00:35:43,833 --> 00:35:45,417
There were only a
dozen people there.
725
00:35:45,625 --> 00:35:48,458
I went out there, there were
twelve people working there.
726
00:35:48,500 --> 00:35:50,999
Ten of the men, all of the
man had beards except
727
00:35:51,083 --> 00:35:53,208
actually I think all
of them had beards.
728
00:35:53,417 --> 00:35:55,417
So I grew my first beard
when I went up to
729
00:35:55,417 --> 00:35:57,333
work there and I have
never shaved it off.
730
00:35:57,792 --> 00:36:01,125
Location also played a role
for these technology monks.
731
00:36:01,458 --> 00:36:03,417
They could really
think and focus
732
00:36:03,417 --> 00:36:05,750
on things six months
to a year out.
733
00:36:05,958 --> 00:36:07,875
All of the really
good innovations
734
00:36:07,875 --> 00:36:09,250
came out of Grass Valley.
735
00:36:09,875 --> 00:36:12,833
Innovation was the core business
at Atari at that point.
736
00:36:12,917 --> 00:36:15,625
We were acting as the advanced
development research firm for
737
00:36:15,667 --> 00:36:17,833
all of the other coin-operated
companies in the world,
738
00:36:18,167 --> 00:36:20,208
so we thought that if
we made a custom chip
739
00:36:20,458 --> 00:36:23,500
that nobody else could buy that
and we would have our propriety.
740
00:36:23,625 --> 00:36:25,167
And innovation was the key to
741
00:36:25,167 --> 00:36:27,042
opening the door
to a new market.
742
00:36:27,250 --> 00:36:28,667
If we could sell
them in the home,
743
00:36:28,708 --> 00:36:30,167
we could sell
millions of machines.
744
00:36:30,500 --> 00:36:32,167
The other coin-op
companies were
745
00:36:32,167 --> 00:36:34,042
very upset with us
because they said
746
00:36:34,208 --> 00:36:36,542
we would steel customers
away from the arcade.
747
00:36:36,875 --> 00:36:38,792
We said "Sure, they will
be buying our stuff."
748
00:36:38,833 --> 00:36:42,167
At that point it was all about
vision: vision and mind-set.
749
00:36:42,750 --> 00:36:45,750
Bally saw themselves as
a coin-operated pinball
750
00:36:45,875 --> 00:36:47,458
and slot machine manufacturer,
751
00:36:47,500 --> 00:36:48,708
they didn't see a
broader picture.
752
00:36:48,958 --> 00:36:51,083
Nolan had a broader vision.
753
00:36:51,208 --> 00:36:53,500
Sears was the first
distributor to put
754
00:36:53,542 --> 00:36:55,792
Home Pong in their
sports catalogue.
755
00:36:55,917 --> 00:36:59,458
Tom Quinn, the
executive at Sears,
756
00:36:59,958 --> 00:37:01,667
was a lot looser,
and he was much
757
00:37:01,708 --> 00:37:03,667
more willing to
adopt our culture
758
00:37:03,750 --> 00:37:06,958
than to force it and he
kind of liked it, actually.
759
00:37:07,125 --> 00:37:09,958
Atari produced
250,000 Home Pong
760
00:37:09,999 --> 00:37:13,083
units for Christmas
'75 and sold out.
761
00:37:13,417 --> 00:37:15,250
After that there was
enough business out
762
00:37:15,292 --> 00:37:17,542
there for Magnavox
to become motivated,
763
00:37:17,917 --> 00:37:20,125
to put people under
licence or sue them.
764
00:37:20,167 --> 00:37:23,542
I met Nolan on the
courtroom steps of the
765
00:37:23,667 --> 00:37:27,000
District Court in Chicago
and we shook hands and
766
00:37:27,042 --> 00:37:31,667
he opted out and got a paid-up
licence. He never went to court.
767
00:37:31,750 --> 00:37:33,542
Nolan Bushnell is probably the
768
00:37:33,542 --> 00:37:35,958
commercial daddy of
an entire industry.
769
00:37:36,125 --> 00:37:37,833
He was surrounded
by good guys, Ted
770
00:37:37,833 --> 00:37:41,625
Dabney, Alan Alcorn,
Steve Bristow,
771
00:37:41,667 --> 00:37:44,333
where Nolan contributed
I don't know. I have
772
00:37:44,333 --> 00:37:47,750
150 patents worldwide,
Nolan's got two or three.
773
00:37:48,083 --> 00:37:50,167
But it's not for me to comment.
774
00:37:56,875 --> 00:38:01,667
The VCS was a big
project, you know,
775
00:38:01,708 --> 00:38:03,083
with the software and
that sort of thing.
776
00:38:03,125 --> 00:38:06,208
We knew that if we could
make a cartridge based game
777
00:38:06,458 --> 00:38:10,417
and have the program on a ROM,
we could sell many more games.
778
00:38:10,625 --> 00:38:13,000
The limit of the Home
Pong game was that
779
00:38:13,042 --> 00:38:15,542
they could only play
Pong, more or less.
780
00:38:15,667 --> 00:38:17,167
They had been building more
781
00:38:17,208 --> 00:38:19,500
complex games in
the arcade space
782
00:38:19,833 --> 00:38:22,542
and they knew they would also
want to bring them home.
783
00:38:22,667 --> 00:38:26,583
The idea for a
programmable unit
784
00:38:26,667 --> 00:38:28,833
was sort of deep
within our mind
785
00:38:28,917 --> 00:38:31,375
before we even did
consumer Pong, but
786
00:38:31,375 --> 00:38:34,375
the technology, it
really took a 6502.
787
00:38:34,917 --> 00:38:37,417
The idea of a general
purpose console leads to
788
00:38:37,458 --> 00:38:40,458
a computer and therefore
to a microprocessor.
789
00:38:40,667 --> 00:38:43,917
We then went to a show
in San Francisco.
790
00:38:44,083 --> 00:38:45,667
There were people
come running up to the
791
00:38:45,708 --> 00:38:47,417
stands saying "I wanna
buy a microprocessor."
792
00:38:47,458 --> 00:38:53,208
In September 1975, I and
coincidentally Steve Wozniak
793
00:38:53,250 --> 00:38:55,417
and coincidentally the
people from Atari
794
00:38:55,750 --> 00:38:58,833
went to the Wescon
show in San Francisco,
795
00:38:58,917 --> 00:39:01,917
where Chuck Peddle
introduced the 6502.
796
00:39:02,042 --> 00:39:03,208
And we all fell
in love with it.
797
00:39:03,250 --> 00:39:05,000
The Atari people
went off and started
798
00:39:05,292 --> 00:39:07,792
thinking about using
it for this machine.
799
00:39:07,875 --> 00:39:09,542
Grass Valley was
willing to use the
800
00:39:09,583 --> 00:39:12,833
6502 for the new
programmable game.
801
00:39:13,500 --> 00:39:16,417
We had had a call from
a place called Grass
802
00:39:16,458 --> 00:39:18,792
Valley California: it
turned out it was the
803
00:39:18,999 --> 00:39:20,750
secret place for Atari.
804
00:39:20,917 --> 00:39:25,208
So we went up to Grass
Valley and in about a day
805
00:39:25,583 --> 00:39:28,500
we basically made a
decision that they
806
00:39:28,500 --> 00:39:31,708
could build this product
around our 6502.
807
00:39:31,792 --> 00:39:35,833
The most important reasons had
to do with architectural speed.
808
00:39:35,917 --> 00:39:38,250
How many memory cycles
it would take for
809
00:39:38,292 --> 00:39:40,125
the processor to
accomplish something.
810
00:39:40,458 --> 00:39:42,417
The 6502 would have
been at the heart
811
00:39:42,458 --> 00:39:44,792
of many video games
and home computers
812
00:39:44,875 --> 00:39:45,667
during the 80s.
813
00:39:45,999 --> 00:39:48,625
Once the microprocessor
was strong enough,
814
00:39:48,667 --> 00:39:51,083
which we were pretty
sure that it was,
815
00:39:51,708 --> 00:39:53,917
it was obvious that that
was the way to do it,
816
00:39:54,167 --> 00:39:59,500
The VCS was conceived
thinking about the 6502.
817
00:39:59,792 --> 00:40:01,375
The most important
thing in a game
818
00:40:01,417 --> 00:40:02,958
system is how you
run the screen.
819
00:40:03,125 --> 00:40:08,375
We built a machine that
had only a line buffer
820
00:40:08,625 --> 00:40:11,917
and that means that the
microprocessor is busy
821
00:40:11,958 --> 00:40:15,000
rewriting the screen all
the way down the screen.
822
00:40:15,125 --> 00:40:16,667
It is following the beam.
823
00:40:16,750 --> 00:40:19,999
You have to have a fast,
efficient processor
824
00:40:20,000 --> 00:40:21,999
to be able to keep
up with that beam.
825
00:40:22,458 --> 00:40:24,250
But they had to invent
a new video chip.
826
00:40:24,458 --> 00:40:28,417
Another chip was necessary to
relieve the burden on the 6502.
827
00:40:28,750 --> 00:40:32,292
The TIA, the Stella, did not
execute instructions of its own.
828
00:40:32,500 --> 00:40:35,333
It could keep track
of five moving
829
00:40:35,375 --> 00:40:37,458
objects, and move
them horizontally.
830
00:40:37,667 --> 00:40:41,542
It was the job of the
main processor to
831
00:40:41,667 --> 00:40:43,917
first of all write the
correct things to the chip.
832
00:40:44,083 --> 00:40:46,000
It had to keep track
of when it was
833
00:40:46,000 --> 00:40:47,667
time to stop displaying things
834
00:40:47,875 --> 00:40:49,833
and begin writing
graphics again.
835
00:40:50,000 --> 00:40:52,250
Grass Valley developed
this chip on their own.
836
00:40:52,500 --> 00:40:55,667
The basic architecture
was laid down by
837
00:40:55,708 --> 00:40:58,292
Steve Mayer, Jay Miner
and Ron Milner.
838
00:40:58,583 --> 00:41:00,708
My first job when I
went up to Grass
839
00:41:00,750 --> 00:41:02,875
Valley was to debug it
and get it to work.
840
00:41:03,083 --> 00:41:05,000
The code name for
the video chip led
841
00:41:05,000 --> 00:41:07,167
to a long lasting
misinterpretation.
842
00:41:07,417 --> 00:41:08,875
I looked at my
bicycle and said,
843
00:41:08,875 --> 00:41:11,625
"OK, I'll use Stella
as my password."
844
00:41:11,999 --> 00:41:15,708
Jay said "That's a nice name.
Let's call the chip Stella."
845
00:41:15,833 --> 00:41:18,333
He told his boss Bob
Brown who said "That's
846
00:41:18,375 --> 00:41:20,999
a nice name, let's call
the system Stella,"
847
00:41:21,250 --> 00:41:23,583
and Jay said "Oh, that means
we have to rename the chip,"
848
00:41:23,833 --> 00:41:25,458
so we renamed the chip the
849
00:41:25,458 --> 00:41:27,958
Television Interface
Adaptor or TIA.
850
00:41:28,000 --> 00:41:31,083
The marketing people thought
it must be some woman we know
851
00:41:31,792 --> 00:41:33,500
and so they started
naming everything
852
00:41:33,500 --> 00:41:34,958
after some woman they knew.
853
00:41:35,333 --> 00:41:37,125
The new console
had very limited
854
00:41:37,125 --> 00:41:39,542
hardware to keep it
feasible cost wise.
855
00:41:39,625 --> 00:41:43,999
The VCS had one custom
chip, a microprocessor
856
00:41:44,208 --> 00:41:47,917
and an off the shelf chip with
128 bytes of memory in it,
857
00:41:48,167 --> 00:41:51,250
and a cartridge on a read-only
memory which was 2000 bytes.
858
00:41:51,333 --> 00:41:54,583
The core technology
happened very quickly.
859
00:41:54,833 --> 00:41:57,958
In less than six months,
maybe as little as three.
860
00:41:58,333 --> 00:42:00,375
Atari was going
for the greatest
861
00:42:00,417 --> 00:42:02,792
innovation of its
entire company life.
862
00:42:03,042 --> 00:42:05,708
We were finished with
the chip design and
863
00:42:05,708 --> 00:42:09,833
the system design by
the fall of 1976.
864
00:42:09,958 --> 00:42:11,875
When management came
up they were quite
865
00:42:11,917 --> 00:42:14,083
pleased. I'm sure there
was beer involved.
866
00:42:14,167 --> 00:42:17,542
Manufacturing happened
in the fall of 1977.
867
00:42:17,833 --> 00:42:20,708
We introduced it at
the 1977 Consumer
868
00:42:20,708 --> 00:42:23,417
Electronic Show. It
was a smash hit.
869
00:42:23,458 --> 00:42:26,125
One of the best experiences
in my professional career.
870
00:42:26,250 --> 00:42:27,333
It took over the whole show and
871
00:42:27,375 --> 00:42:28,833
it was the talk of
the whole show.
872
00:42:28,917 --> 00:42:31,792
Price point followed the
same destiny of Odyssey's.
873
00:42:32,042 --> 00:42:35,375
We knew that we couldn't sell
it for more than 200 dollars.
874
00:42:36,292 --> 00:42:38,708
We kept trying to get
it so that we could
875
00:42:38,708 --> 00:42:41,292
build it for under 100.
We failed at that.
876
00:42:41,667 --> 00:42:43,625
They realized that
most of the money was
877
00:42:43,625 --> 00:42:46,792
in the cartridges, not
in the main console,
878
00:42:47,000 --> 00:42:49,999
and ever since then
makers of game consoles
879
00:42:50,000 --> 00:42:53,583
sell those consoles at the
lowest price they can afford.
880
00:42:53,792 --> 00:42:57,833
Consumer products that
sold more than 200 dollars
881
00:42:58,417 --> 00:43:02,625
grabbed a different
part of your brain.
882
00:43:02,958 --> 00:43:06,667
Under 200 dollars they said, "Oh
yeah, we can kinda afford that."
883
00:43:06,875 --> 00:43:09,708
Keeping cost down was not
without consequences.
884
00:43:09,958 --> 00:43:12,792
Because it was so simple
and so stripped down
885
00:43:12,833 --> 00:43:14,542
it was hard as hell
to program but
886
00:43:14,583 --> 00:43:16,208
you could program
anything on it.
887
00:43:16,500 --> 00:43:20,583
The 6502 processor was modified
to further reduce costs,
888
00:43:20,708 --> 00:43:23,375
and it could only
address 4k of memory.
889
00:43:23,999 --> 00:43:25,708
There were only so many
things you could do.
890
00:43:25,792 --> 00:43:28,458
I would first put that object on
the screen by writing a program,
891
00:43:28,750 --> 00:43:30,958
and then I would stare at
that and say, you know
892
00:43:30,999 --> 00:43:33,167
if I moved it to left, and
I moved it to the right
893
00:43:33,333 --> 00:43:34,792
it could become a video game.
894
00:43:34,875 --> 00:43:38,375
Although the VCS was designed to
be a general purpose machine,
895
00:43:38,750 --> 00:43:41,583
it was best suited to handle
something that already existed.
896
00:43:41,625 --> 00:43:45,625
The Atari 2600
was designed to play
897
00:43:45,708 --> 00:43:49,125
two kinds of
game: Tank and Pong.
898
00:43:49,833 --> 00:43:52,917
So whenever we set out to make
a video game, we had to say,
899
00:43:53,000 --> 00:43:56,583
"How do we take
these two Tank players
900
00:43:56,625 --> 00:43:57,917
and turn them into
something else?"
901
00:43:58,000 --> 00:44:00,417
Programmers were able
to stretch those limits
902
00:44:00,458 --> 00:44:01,792
to the unbelievable.
903
00:44:02,167 --> 00:44:04,917
There were thousands of games
made for the Atari 2600,
904
00:44:05,042 --> 00:44:08,167
and each was just some technical
trick that we came up with.
905
00:44:08,292 --> 00:44:11,250
The chip designer of the Atari
2600 would just shake his head.
906
00:44:11,833 --> 00:44:13,500
I have no idea that
the hardware that
907
00:44:13,500 --> 00:44:15,500
I designed could
be used that way.
908
00:44:16,792 --> 00:44:18,250
[phone rings]
909
00:44:19,042 --> 00:44:22,792
I got a call one day from a
large investor in Warner,
910
00:44:22,958 --> 00:44:26,625
and as it turned out, were a
large venture investor in Atari.
911
00:44:26,708 --> 00:44:28,208
I can remember the question. He
912
00:44:28,208 --> 00:44:29,917
said, "Would you
have any interest
913
00:44:30,167 --> 00:44:32,250
in a fast growing
technologically
914
00:44:32,292 --> 00:44:34,125
based entertainment company?"
915
00:44:35,125 --> 00:44:38,250
And I said yes, not knowing
what I was answering yes to.
916
00:44:38,292 --> 00:44:40,625
Manufacturing the VCS
for mass market was
917
00:44:40,667 --> 00:44:42,875
even more challenging
than Home Pong.
918
00:44:42,999 --> 00:44:46,750
The VCS, no matter
which way I ran the
919
00:44:46,792 --> 00:44:50,125
numbers, required more
capital than we had.
920
00:44:50,167 --> 00:44:53,625
You have to buy all your
inventory: plastic, chips.
921
00:44:53,667 --> 00:44:56,833
And so we needed
millions of dollars.
922
00:44:56,917 --> 00:44:59,500
Atari needed cash.
Now more than ever.
923
00:44:59,708 --> 00:45:02,667
We were starting to
explore the idea of
924
00:45:02,708 --> 00:45:05,167
taking the company
public to raise capital.
925
00:45:05,292 --> 00:45:07,083
And we tried that.
We actually had
926
00:45:07,125 --> 00:45:09,042
a prospectus and
we almost did it.
927
00:45:09,083 --> 00:45:13,500
The stock market was not
real strong at the time.
928
00:45:13,542 --> 00:45:15,667
Nolan Bushnell came
back to the old idea
929
00:45:15,708 --> 00:45:17,750
that brought him to
Nutting Associates.
930
00:45:18,000 --> 00:45:20,875
We thought, "Well, maybe we
need a strategic partner,"
931
00:45:21,125 --> 00:45:22,958
and one of the
strategic partners
932
00:45:22,999 --> 00:45:24,792
that we were introduced
to was Warner.
933
00:45:24,875 --> 00:45:26,917
Manny Gerard was at
the time one of the
934
00:45:26,958 --> 00:45:29,625
smartest entertainment
analysts in the country.
935
00:45:29,750 --> 00:45:31,999
I wrote a memo to the
people at Warner
936
00:45:32,000 --> 00:45:33,958
that said I have
seen the future
937
00:45:34,292 --> 00:45:35,792
and it is called Stella.
938
00:45:36,167 --> 00:45:39,792
Stella was the... Atari
people named every chipset
939
00:45:40,000 --> 00:45:43,042
for one of the pretty girls
on the production line,
940
00:45:43,083 --> 00:45:46,167
and the chipset for the
2600 was called Stella.
941
00:45:46,208 --> 00:45:49,500
Impacting on the Atari world was
somewhat shocking for Manny.
942
00:45:49,750 --> 00:45:51,958
I think the first
time they saw Nolan he
943
00:45:51,999 --> 00:45:54,792
was surfing on a
conveyor belt in a box.
944
00:45:55,000 --> 00:45:57,708
I liked Nolan. He
had lots of energy,
945
00:45:57,750 --> 00:45:59,125
he was a wonderful
story teller.
946
00:45:59,208 --> 00:46:01,000
On the other hand
the whole Atari
947
00:46:01,000 --> 00:46:03,000
environment was wild at least.
948
00:46:03,125 --> 00:46:05,208
The rumour is at
least you could get
949
00:46:05,250 --> 00:46:07,333
stoned just walking
passed the air vents.
950
00:46:07,458 --> 00:46:10,875
You have these buttoned-down
East Coast executives
951
00:46:11,042 --> 00:46:12,583
who are very stiff,
952
00:46:12,750 --> 00:46:17,708
very refined and they're
dealing with Nolan Bushnell,
953
00:46:17,750 --> 00:46:20,208
who sees himself as one
of the world's great
954
00:46:20,250 --> 00:46:23,292
ladies' men. He's a West
Coast cowboy millionaire.
955
00:46:23,750 --> 00:46:28,958
Energetic, sort of larger than
life, big, gregarious guy.
956
00:46:29,125 --> 00:46:31,792
My first impression
of Nolan was good.
957
00:46:33,999 --> 00:46:35,833
Warner immediately
went beyond the
958
00:46:35,875 --> 00:46:37,958
idea of being a partner
for those guys.
959
00:46:38,083 --> 00:46:39,999
This wasn't the movie world.
960
00:46:40,000 --> 00:46:42,542
This wasn't the
communications world.
961
00:46:42,583 --> 00:46:44,750
This was the high tech world.
And they
962
00:46:44,792 --> 00:46:46,917
knew that Nolan knew
what he was doing.
963
00:46:47,083 --> 00:46:48,958
They said "Why don't we
buy the whole company?"
964
00:46:48,999 --> 00:46:51,667
I thought we were supposed
to gather resources.
965
00:46:51,708 --> 00:46:53,333
This was going to be
the first marriage
966
00:46:53,333 --> 00:46:55,083
between old analogue
entertainment
967
00:46:55,458 --> 00:46:57,083
and the new digital domain.
968
00:46:57,750 --> 00:46:59,708
They understood the
hit record business,
969
00:46:59,792 --> 00:47:02,250
movies, and they
understood as a company
970
00:47:02,583 --> 00:47:05,583
that you might fail,
and fail and then succeed.
971
00:47:05,792 --> 00:47:07,750
Warner was an
entertainment company
972
00:47:07,875 --> 00:47:09,792
thinking about the
future of entertainment.
973
00:47:09,958 --> 00:47:12,292
The reason we bought
Atari was because
974
00:47:12,333 --> 00:47:14,708
we had seen the
prototypes of the 2600.
975
00:47:14,792 --> 00:47:18,542
Nolan Bushnell resolved to
sell his baby. Maybe too fast.
976
00:47:18,833 --> 00:47:23,708
It had been a very, very
stressful five years
977
00:47:23,833 --> 00:47:28,292
and there was a part of
me that said, "Yeah,
978
00:47:28,333 --> 00:47:32,042
maybe this is a good time
to sell: it was more
979
00:47:32,083 --> 00:47:33,875
money than I ever thought
I was going to make.
980
00:47:33,958 --> 00:47:35,542
Warner put a big
deal of money on
981
00:47:35,542 --> 00:47:37,458
the table, or so
it looked like.
982
00:47:37,708 --> 00:47:40,292
They bought the company
for 28-30 million.
983
00:47:40,500 --> 00:47:42,583
The venture capitalists were
given 100 per cent cash.
984
00:47:42,792 --> 00:47:46,417
The insiders were given 10 per
cent of their proceeds in cash
985
00:47:46,625 --> 00:47:50,583
and the rest in subordinated
debentures of Atari.
986
00:47:51,999 --> 00:47:54,042
Warner was very much
concerned about
987
00:47:54,083 --> 00:47:56,250
keeping the skills
within the company.
988
00:47:57,292 --> 00:47:59,292
The problem with Atari
from our standpoint,
989
00:47:59,333 --> 00:48:01,250
is you had too
many young people
990
00:48:01,333 --> 00:48:03,167
who were going to get
too rich, too fast.
991
00:48:04,250 --> 00:48:05,625
My theory was that
you would give them
992
00:48:05,625 --> 00:48:06,708
the money and they
would all disappear.
993
00:48:06,917 --> 00:48:09,667
They resolved to buy them
out one step at a time.
994
00:48:09,875 --> 00:48:11,250
And I said to them at the time,
995
00:48:11,333 --> 00:48:13,708
"If it really gets bad,
we can walk away from
996
00:48:13,750 --> 00:48:15,417
these debentures and you
don't get anything."
997
00:48:15,458 --> 00:48:18,750
Despite money, Nolan soon began
to have second thoughts.
998
00:48:18,875 --> 00:48:20,917
Nolan owned 50 per
cent of the company.
999
00:48:20,958 --> 00:48:23,000
I think Nolan got 1 million
dollars on the closing.
1000
00:48:23,125 --> 00:48:27,417
I regretted it probably six
months in after the sale.
1001
00:48:27,917 --> 00:48:30,917
I've often thought that
if I had just taken a
1002
00:48:30,917 --> 00:48:35,667
good two-week vacation,
I might not have sold.
1003
00:48:35,917 --> 00:48:38,083
Nolan used to say he had
told people he was a
1004
00:48:38,125 --> 00:48:41,042
millionaire for a long time
and now he really was.
1005
00:48:41,208 --> 00:48:42,250
The problem was
1006
00:48:42,333 --> 00:48:44,500
the first time he had a million
dollars in his pocket,
1007
00:48:44,583 --> 00:48:46,625
Nolan went off and started
to buy real estate
1008
00:48:46,667 --> 00:48:48,792
and got very distracted
for a period of time.
1009
00:48:49,292 --> 00:48:51,417
Probably he was the
first Silicon Valley
1010
00:48:51,417 --> 00:48:54,042
Age of Aquarius geek
turned into a tycoon.
1011
00:48:54,083 --> 00:48:57,542
He would come breezing through
and check the screens
1012
00:48:57,583 --> 00:48:59,875
and see how was going on and
pat everybody on the back,
1013
00:49:00,000 --> 00:49:01,208
and that was a real issue.
1014
00:49:01,458 --> 00:49:04,875
It's very different
running a division of
1015
00:49:04,875 --> 00:49:08,083
a big company and
running your own shop.
1016
00:49:08,542 --> 00:49:12,083
In Christmas 1977, and
with Warner money,
1017
00:49:12,083 --> 00:49:15,500
the VCS came out to a
lukewarm reception at best.
1018
00:49:15,708 --> 00:49:17,417
The VCS comes out
1019
00:49:17,625 --> 00:49:19,458
and you know, I mean
it's a new toy.
1020
00:49:19,500 --> 00:49:21,583
People really didn't know what
to think about it really.
1021
00:49:21,667 --> 00:49:26,500
They were kind of "Well OK, why?
What's different about this?"
1022
00:49:26,708 --> 00:49:30,750
In 1978, Space Invaders
hits in America
1023
00:49:30,917 --> 00:49:33,542
and now people are starting
to understand why.
1024
00:49:35,625 --> 00:49:37,542
People have always asked
me what percentage
1025
00:49:37,583 --> 00:49:40,417
of the profits we
put into research,
1026
00:49:40,458 --> 00:49:42,417
and I like to say 150 per cent.
1027
00:49:42,542 --> 00:49:46,292
Two good years had passed since
the first VCS conception.
1028
00:49:46,708 --> 00:49:48,500
Too long for Nolan Bushnell.
1029
00:49:48,667 --> 00:49:51,708
Nolan and my instinct would
be to design a new product,
1030
00:49:51,750 --> 00:49:55,375
just do a new product.
And Warner said no,
1031
00:49:55,458 --> 00:49:58,667
so they put 100 million dollars
into advertising that we
1032
00:49:58,708 --> 00:50:00,417
never would have done
and they were right.
1033
00:50:00,458 --> 00:50:01,417
We were wrong.
1034
00:50:01,708 --> 00:50:04,333
For the first time,
Nolan had to negotiate
1035
00:50:04,333 --> 00:50:06,625
his ideas with his
employer: Warner.
1036
00:50:07,167 --> 00:50:10,999
My vision about
Atari was to be the
1037
00:50:11,000 --> 00:50:12,667
best game company in the world,
1038
00:50:13,167 --> 00:50:18,333
to really create, innovate,
and to, in some ways,
1039
00:50:18,375 --> 00:50:20,208
be more than just a
video game company,
1040
00:50:20,333 --> 00:50:22,667
to be a technology driver.
1041
00:50:23,583 --> 00:50:26,875
A company that had some
innovation, a lot of innovation.
1042
00:50:27,000 --> 00:50:29,375
Nolan has 1000 ideas a minute.
1043
00:50:29,417 --> 00:50:31,875
Some of which are wonderful,
but he loves them all equally.
1044
00:50:32,000 --> 00:50:34,792
Nolan definitely
wanted the VCS 2.
1045
00:50:35,125 --> 00:50:37,542
Barely had they hired
Nolan, when he turns around
1046
00:50:37,583 --> 00:50:40,167
and says "You know what,
the VCS is old technology.
1047
00:50:40,208 --> 00:50:42,542
We need to get rid of it and
move on to the next one."
1048
00:50:42,708 --> 00:50:44,667
I think Warner
became uncomfortable
1049
00:50:44,792 --> 00:50:46,708
with this crazy
California company.
1050
00:50:46,750 --> 00:50:47,750
[laughs]
1051
00:50:47,875 --> 00:50:51,458
Manny Gerard didn't actually put
much stake in the hardware.
1052
00:50:51,583 --> 00:50:52,917
They were marketeers.
1053
00:50:52,999 --> 00:50:53,667
We, well...
1054
00:50:53,750 --> 00:50:55,875
The total focus was on
1055
00:50:55,999 --> 00:50:58,792
the software and selling
the software.
1056
00:50:58,875 --> 00:51:00,875
Your success was based on
how good your games were.
1057
00:51:00,958 --> 00:51:05,167
Warner didn't understand the
engineering side of it.
1058
00:51:05,375 --> 00:51:08,458
I think you can get yourself
confused in getting
1059
00:51:08,500 --> 00:51:10,208
into the fact that it
had a technology base.
1060
00:51:10,250 --> 00:51:11,083
They viewed
1061
00:51:11,250 --> 00:51:11,999
Atari
1062
00:51:12,500 --> 00:51:14,375
basically as a
software business,
1063
00:51:14,583 --> 00:51:15,999
as an entertainment media.
1064
00:51:16,167 --> 00:51:18,625
More like a record company.
1065
00:51:18,708 --> 00:51:20,375
Is it that different
from the music
1066
00:51:20,375 --> 00:51:22,208
business or the movie business?
1067
00:51:22,292 --> 00:51:25,375
Or even the publishing business?
The answer is probably not.
1068
00:51:25,833 --> 00:51:29,500
To be honest, vinyl and film
are less prone to Moore's law.
1069
00:51:29,792 --> 00:51:32,917
Memory cost had dropped
by a factor of 10.
1070
00:51:33,167 --> 00:51:36,000
Once you can see that,
you say "This game is
1071
00:51:36,042 --> 00:51:39,000
crappy, we got to replace
it as soon as we can."
1072
00:51:39,083 --> 00:51:41,583
And they said "We just
barely bought this company."
1073
00:51:43,333 --> 00:51:46,917
On top of that, different
working habits began to show.
1074
00:51:47,750 --> 00:51:49,917
Manny would come in at
nine o'clock to the
1075
00:51:49,917 --> 00:51:52,333
engineering lab and there
would be nobody there.
1076
00:51:53,458 --> 00:51:55,583
And he was horrified
"We got deadlines!"
1077
00:51:56,042 --> 00:51:59,792
The culture clash between
Atari and Warner
1078
00:52:00,458 --> 00:52:06,167
was a clash between California
and New York management styles.
1079
00:52:06,583 --> 00:52:08,458
Silicon Valley was rather new.
1080
00:52:08,500 --> 00:52:10,625
Warner didn't see the
point in opting for
1081
00:52:10,625 --> 00:52:13,000
a specific management
style with Atari.
1082
00:52:13,333 --> 00:52:15,542
We were used to dealing
with creative cultures.
1083
00:52:15,792 --> 00:52:18,542
What we were not used to
dealing with, to be honest,
1084
00:52:18,958 --> 00:52:22,875
was quite the culture
of Silicon Valley.
1085
00:52:22,917 --> 00:52:24,875
It didn't take long
until it became
1086
00:52:24,917 --> 00:52:27,167
clear that Nolan
was the problem.
1087
00:52:27,250 --> 00:52:29,542
I think it made them
very, very nervous
1088
00:52:29,625 --> 00:52:31,667
to see Nolan making
these rapid moves.
1089
00:52:31,792 --> 00:52:34,542
We can't run a company based
on your instincts solely.
1090
00:52:34,708 --> 00:52:35,958
Now all of a sudden
he's sold his
1091
00:52:36,000 --> 00:52:37,667
business for 28
million dollars,
1092
00:52:37,833 --> 00:52:39,375
he's playing tennis
in the morning
1093
00:52:39,375 --> 00:52:41,208
instead of coming
directly to work,
1094
00:52:41,250 --> 00:52:43,625
and he wants to
cut off the VCS.
1095
00:52:43,750 --> 00:52:45,708
Manny Gerard wanted
budget planning,
1096
00:52:45,833 --> 00:52:48,250
marketing campaigns
and sales goals.
1097
00:52:48,542 --> 00:52:50,417
You cannot disappear
for six months,
1098
00:52:50,583 --> 00:52:51,833
walk in to a meeting and say,
1099
00:52:51,999 --> 00:52:54,000
"We're going to do it
this way, because I say so."
1100
00:52:54,542 --> 00:52:57,500
You've got to bring somebody
in with business discipline
1101
00:52:57,583 --> 00:52:59,833
because this thing is growing,
it's growing too fast,
1102
00:52:59,999 --> 00:53:01,292
and it's going to
go out of control.
1103
00:53:01,417 --> 00:53:04,917
Manny started to look outside
of Atari and word spread.
1104
00:53:05,000 --> 00:53:07,042
I was having lunch
with a classmate
1105
00:53:07,083 --> 00:53:08,375
of mine from Harvard
business school,
1106
00:53:08,625 --> 00:53:10,250
and he asked me if I
would be interested in
1107
00:53:10,292 --> 00:53:13,042
working for a company in
California named Atari.
1108
00:53:13,250 --> 00:53:15,542
I laughed when he
asked because I love my job
1109
00:53:16,250 --> 00:53:20,917
and I've no interest in living
in California, I'm a New Yorker.
1110
00:53:21,292 --> 00:53:23,375
Ray Kassar was a
vice president at
1111
00:53:23,417 --> 00:53:26,333
Burlington Industries,
a textile giant.
1112
00:53:26,625 --> 00:53:30,833
I met Manny, what was supposed
to be a very short interview
1113
00:53:30,999 --> 00:53:33,792
was about three to four hours
because Manny likes to talk,
1114
00:53:33,958 --> 00:53:38,417
so finally I said, "Look, I'll
go out there for a weekend
1115
00:53:38,667 --> 00:53:41,708
and check the place but
that's all I will do."
1116
00:53:41,750 --> 00:53:46,458
Ray, the New Yorker, let himself
be courted by the VCS idea.
1117
00:53:46,542 --> 00:53:49,667
I went to California.
I met Nolan Bushnell
1118
00:53:50,250 --> 00:53:52,833
and I was very intrigued
with the product.
1119
00:53:53,167 --> 00:53:56,333
I thought it lacked everything.
There was no marketing,
1120
00:53:56,458 --> 00:53:59,833
there was no infrastructure,
there was no
1121
00:54:00,292 --> 00:54:03,250
manufacturing guy, there
was no financial guy,
1122
00:54:03,292 --> 00:54:03,958
there was nothing.
1123
00:54:04,250 --> 00:54:07,500
A few days later Manny
asked me to come to
1124
00:54:07,708 --> 00:54:09,958
have a meeting with
him and Steve Ross.
1125
00:54:10,042 --> 00:54:12,500
They made me an offer
I couldn't refuse,
1126
00:54:12,542 --> 00:54:14,917
so I said "I'll go
there for six months,
1127
00:54:15,125 --> 00:54:17,708
I'll start the process
of reorganizing the
1128
00:54:17,750 --> 00:54:20,458
company, then I'm coming
back to New York."
1129
00:54:20,792 --> 00:54:22,375
I stayed for 8 years, I guess.
1130
00:54:22,667 --> 00:54:26,292
It was pretty obvious to us that
he was there to replace Nolan.
1131
00:54:26,333 --> 00:54:28,458
Manny was feeling more
and more confident
1132
00:54:28,500 --> 00:54:29,999
about getting rid of Nolan.
1133
00:54:30,167 --> 00:54:34,167
The showdown between Nolan and
Manny Gerard came early on.
1134
00:54:34,250 --> 00:54:37,917
He said "We're going to
put Ray Kassar in the CEO
1135
00:54:37,917 --> 00:54:41,625
and you can stay as consultant
if you want or not,"
1136
00:54:41,999 --> 00:54:44,500
and I said "You know, this
isn't my company anymore."
1137
00:54:45,750 --> 00:54:47,999
What occurred at that
point was an incident.
1138
00:54:48,167 --> 00:54:52,083
Nolan came into the budget
meeting in December '79,
1139
00:54:52,292 --> 00:54:54,417
and just looked up
and said, "Sell off
1140
00:54:54,417 --> 00:54:57,042
all your inventory of 2600.
It's over."
1141
00:54:57,333 --> 00:54:58,708
Forget the Warner people,
1142
00:54:59,208 --> 00:55:00,875
the Atari people
didn't know what he
1143
00:55:00,917 --> 00:55:02,458
was talking about.
They just gasped.
1144
00:55:02,750 --> 00:55:04,625
The chairman of the
company board, the guy
1145
00:55:04,667 --> 00:55:06,417
who invented it,
says its all over.
1146
00:55:06,458 --> 00:55:08,250
At that point there wasn't much
1147
00:55:08,250 --> 00:55:10,542
Nolan could do to
avoid Game Over.
1148
00:55:10,875 --> 00:55:13,708
Manny said, "If you keep on
going around undermining
1149
00:55:13,708 --> 00:55:16,375
me, that's gonna be
bad for the company."
1150
00:55:16,583 --> 00:55:18,792
Nolan said "Then get
rid of me, you know,
1151
00:55:18,792 --> 00:55:20,708
buy me out," and they did.
1152
00:55:21,125 --> 00:55:24,625
There were certain elements
of my contract that
1153
00:55:24,667 --> 00:55:26,875
were better off if they
fired me than if I quit.
1154
00:55:27,917 --> 00:55:30,708
So I decided to be
such a pain in the ass
1155
00:55:30,708 --> 00:55:34,000
that they would fire
me...and that worked.
1156
00:55:34,125 --> 00:55:37,500
Getting fired was the easiest
task for Nolan in years.
1157
00:55:37,750 --> 00:55:40,625
Nolan was wearing a T-shirt
which said "I love to fuck."
1158
00:55:41,750 --> 00:55:44,750
He was walking around the
company wearing this T-shirt.
1159
00:55:45,333 --> 00:55:48,167
OK, I thought they are a
little crazy out here,
1160
00:55:48,333 --> 00:55:51,042
and then he invited me
to a staff meeting.
1161
00:55:51,083 --> 00:55:53,125
Al Alcorn and all
the key engineers
1162
00:55:53,125 --> 00:55:55,875
were there: about six
or seven people,
1163
00:55:56,000 --> 00:55:59,458
and all drinking beer
and smoking joints
1164
00:56:03,042 --> 00:56:05,000
One guy poked me
and said "Here,"
1165
00:56:05,042 --> 00:56:06,250
and I said "No, I don't smoke,"
1166
00:56:07,125 --> 00:56:10,250
and they said, "Oh, lighten
up, you're such a stiff
1167
00:56:10,292 --> 00:56:12,208
New Yorker, now this
is California."
1168
00:56:12,292 --> 00:56:13,917
I said, "Nolan if
you're going to conduct
1169
00:56:13,958 --> 00:56:15,750
business, fine,
otherwise I'm busy."
1170
00:56:16,000 --> 00:56:17,292
I got up and left.
1171
00:56:17,417 --> 00:56:18,875
Thank you very much, Harold!
1172
00:56:20,667 --> 00:56:22,375
Oh, Jesus Christ.
1173
00:56:22,583 --> 00:56:25,000
Ray Kassar had
wanted to be CEO of
1174
00:56:25,042 --> 00:56:27,333
Atari, maybe from
the very start.
1175
00:56:27,542 --> 00:56:30,625
I realized I couldn't
function with this
1176
00:56:30,667 --> 00:56:33,999
environment unless I
was running the show.
1177
00:56:34,250 --> 00:56:36,750
So I went back and and said
to Manny "I have to be
1178
00:56:36,792 --> 00:56:39,333
in charge otherwise I can't
do anything for you.
1179
00:56:40,042 --> 00:56:40,958
I'm coming home."
1180
00:56:41,292 --> 00:56:43,167
With Nolan Bushnell
they applied
1181
00:56:43,208 --> 00:56:45,000
what they called the
"beach clause."
1182
00:56:45,292 --> 00:56:47,542
We removed him. He eventually
came to me and asked
1183
00:56:47,583 --> 00:56:50,042
to be relieved of his contract.
Which we did.
1184
00:56:50,958 --> 00:56:53,375
He said "Will you buy
back my debentures?"
1185
00:56:53,625 --> 00:56:54,667
We bought them back.
1186
00:56:54,875 --> 00:56:56,375
Warner had bought out the
1187
00:56:56,375 --> 00:56:58,500
shareholders in a
very clever way.
1188
00:56:58,792 --> 00:57:03,917
Warner, Manny, probably figured
that we would piss the
1189
00:57:03,958 --> 00:57:07,167
money away and kill ourselves
with cocaine or something.
1190
00:57:07,417 --> 00:57:08,875
We've got to figure
out where we were.
1191
00:57:08,917 --> 00:57:12,167
They structured the
buyout, it was a
1192
00:57:12,292 --> 00:57:15,083
seven year payout of money.
1193
00:57:15,292 --> 00:57:18,583
And he took his money
and he left, and then
1194
00:57:18,625 --> 00:57:20,917
when the explosion
at Atari occurred
1195
00:57:21,792 --> 00:57:25,542
he had this very small residual
position in the bonus pool
1196
00:57:25,750 --> 00:57:27,167
that would have been worth
1197
00:57:27,333 --> 00:57:28,958
millions and
millions of dollars.
1198
00:57:29,708 --> 00:57:32,708
It's a whole complicated
story about
1199
00:57:32,917 --> 00:57:35,208
individuals and corporations.
1200
00:57:35,458 --> 00:57:39,792
I said I wouldn't stay
unless I was in charge.
1201
00:57:40,375 --> 00:57:44,542
I'm sure he was asked to leave.
He resigned.
1202
00:57:45,000 --> 00:57:47,875
Without Nolan, the Atari
identity was at risk.
1203
00:57:48,000 --> 00:57:50,375
I really liked Nolan,
1204
00:57:50,750 --> 00:57:54,625
so I was hoping that
Atari would replace him
1205
00:57:54,833 --> 00:57:56,292
with somebody
else who understood
1206
00:57:56,375 --> 00:57:58,042
technology and marketing,
1207
00:57:58,500 --> 00:58:00,708
but I don't think Ray
was a technologist.
1208
00:58:01,000 --> 00:58:04,083
Ray imprinted Atari with
his own management style.
1209
00:58:04,333 --> 00:58:05,999
The corporate offices changed.
1210
00:58:06,750 --> 00:58:08,542
Ray didn't play video games,
1211
00:58:08,583 --> 00:58:10,375
the office was very
simple and bare.
1212
00:58:10,417 --> 00:58:13,333
We always had the next secret
great video game in the office.
1213
00:58:13,500 --> 00:58:15,375
Did you think it
was significant?
1214
00:58:15,500 --> 00:58:17,125
Why would I want to
have a game there
1215
00:58:17,167 --> 00:58:19,000
too, unless I was
gonna play with it?
1216
00:58:19,625 --> 00:58:23,292
I wanted to focus on the
work, let people know
1217
00:58:23,333 --> 00:58:25,500
I'm not there playing
games in my office,
1218
00:58:25,999 --> 00:58:29,375
but I had them in my
house. Had a whole room.
1219
00:58:29,542 --> 00:58:33,792
Our coin-op products and every
consumer video game we had.
1220
00:58:33,917 --> 00:58:38,083
Surprisingly enough, Al Alcorn
attempted to stay within Atari.
1221
00:58:39,333 --> 00:58:41,125
I didn't leave. Nolan
left, I wanted
1222
00:58:41,167 --> 00:58:43,083
to stay around it.
Atari was my baby.
1223
00:58:43,250 --> 00:58:45,417
Soon the true reasons
behind Nolan's
1224
00:58:45,458 --> 00:58:48,042
departure started
to become apparent.
1225
00:58:48,417 --> 00:58:51,750
Atari became a little bit
less technology focused.
1226
00:58:51,917 --> 00:58:54,250
They became much
better at managing
1227
00:58:54,292 --> 00:58:56,292
things and managing inventory.
1228
00:58:56,542 --> 00:58:59,999
I didn't realize how serious
it was when I got there.
1229
00:59:01,500 --> 00:59:03,750
They were losing money, the
company was losing money.
1230
00:59:04,917 --> 00:59:08,500
The focus was on making
the VCS a successful
1231
00:59:08,542 --> 00:59:11,292
product, and that's where
I devoted my energies.
1232
00:59:11,833 --> 00:59:14,583
But the Age of Aquarius
company was fading away,
1233
00:59:14,625 --> 00:59:15,958
once and for all.
1234
00:59:16,167 --> 00:59:16,999
Culture clash.
1235
00:59:17,083 --> 00:59:20,999
It was very formal,
very hierarchical.
1236
00:59:21,083 --> 00:59:23,833
He instituted an
executive dining room
1237
00:59:23,999 --> 00:59:26,083
so that the
executives didn't have to
1238
00:59:26,125 --> 00:59:28,542
work with the
engineers or touch them.
1239
00:59:29,292 --> 00:59:30,999
In a while the new
management was
1240
00:59:31,000 --> 00:59:32,917
going to learn that
in Silicon Valley
1241
00:59:33,083 --> 00:59:35,958
technology and creativity
are one and the same.
1242
00:59:37,292 --> 00:59:39,917
I think they missed
something creatively.
1243
00:59:40,083 --> 00:59:42,125
If you have a
successful product,
1244
00:59:42,167 --> 00:59:44,458
it's incumbent on
you to figure out
1245
00:59:44,458 --> 00:59:46,792
what to replace it with
before your competitors do.
1246
00:59:47,792 --> 00:59:52,708
The one insight we didn't
have was that you have
1247
00:59:52,750 --> 00:59:54,917
to obsolete your own
products as fast as you can.
1248
00:59:57,999 --> 01:00:02,833
I found that Ray was so
much different than me.
1249
01:00:03,042 --> 01:00:06,167
I mean, the idea of
having a car and a
1250
01:00:06,208 --> 01:00:08,125
driver bringing me
to work every day
1251
01:00:08,167 --> 01:00:10,625
was so foreign to
everything I stood for.
1252
01:00:10,750 --> 01:00:12,500
No, it wasn't a
limousine, it was my car.
1253
01:00:12,958 --> 01:00:14,000
There's a little difference.
1254
01:00:14,667 --> 01:00:17,542
I had a driver, it was
one thing I insisted on,
1255
01:00:17,625 --> 01:00:19,292
I said, "I'm not a
very good driver
1256
01:00:19,708 --> 01:00:21,875
I didn't want to drive on 101,
1257
01:00:22,000 --> 01:00:24,458
I would need a driver". And
they said, "No problem."
1258
01:00:24,667 --> 01:00:26,250
It was not a limousine.
1259
01:00:26,333 --> 01:00:29,958
It was just the wrong way to run
an Age of Aquarius company.
1260
01:00:29,999 --> 01:00:32,750
The controversy between
Bushnell and Kassar
1261
01:00:32,792 --> 01:00:35,333
went on even when Nolan
was no longer there.
1262
01:00:35,542 --> 01:00:37,958
He's a very creative
individual,
1263
01:00:38,042 --> 01:00:40,958
he's the idea man
and he's brilliant.
1264
01:00:41,083 --> 01:00:42,000
[laughs]
1265
01:00:42,083 --> 01:00:45,667
But he's not a guy,
in my opinion,
1266
01:00:45,875 --> 01:00:47,375
capable of running a business.
1267
01:00:47,542 --> 01:00:49,917
What about Ray Kassar?
1268
01:00:50,042 --> 01:00:54,375
I think their strategy under
Kassar, if one existed, was
1269
01:00:54,542 --> 01:00:56,417
"Sell as many of these
things as we can."
1270
01:00:56,625 --> 01:00:58,292
They saw them as widgets.
1271
01:00:58,500 --> 01:00:59,500
That's so wrong.
1272
01:00:59,667 --> 01:01:01,833
They didn't see a
pathway to the future.
1273
01:01:01,917 --> 01:01:03,875
In fact, Warner was
trying to move
1274
01:01:03,875 --> 01:01:06,500
away from the usual
cash nightmare.
1275
01:01:06,708 --> 01:01:09,250
What this company needed
more than anything else
1276
01:01:09,458 --> 01:01:11,917
was just somebody
who understood how
1277
01:01:11,917 --> 01:01:13,500
to manage a decent
sized business
1278
01:01:13,542 --> 01:01:15,167
and had sound
business principles.
1279
01:01:15,167 --> 01:01:17,000
There was no marketing
to speak of,
1280
01:01:17,417 --> 01:01:19,417
they weren't even calling
on the chains like
1281
01:01:19,458 --> 01:01:21,833
Sears, Penny, there
was nothing.
1282
01:01:21,999 --> 01:01:23,917
The coin-op division
was the only one
1283
01:01:23,917 --> 01:01:25,999
which seemed to be
working properly.
1284
01:01:26,083 --> 01:01:28,125
We had a very strong
coin-op position
1285
01:01:28,125 --> 01:01:30,375
as opposed to what
we had in consumer.
1286
01:01:30,417 --> 01:01:32,833
We really tried to keep that
1287
01:01:32,833 --> 01:01:36,792
building as an
island of creativity
1288
01:01:36,875 --> 01:01:40,125
amidst all of the big company
culture that was growing up.
1289
01:01:40,250 --> 01:01:44,000
Soon after Ray began working at
Atari, things started to change.
1290
01:01:44,417 --> 01:01:45,750
We were beginning to get the
1291
01:01:45,750 --> 01:01:47,667
distribution, we were
beginning to sell
1292
01:01:47,875 --> 01:01:50,958
Sears and other major, we
finally got it to Walmart.
1293
01:01:52,000 --> 01:01:54,000
That's what we needed,
we didn't have that.
1294
01:01:55,000 --> 01:01:56,875
I would say advertising was
1295
01:01:56,999 --> 01:01:58,417
probably the most
important thing.
1296
01:01:58,792 --> 01:02:01,125
We went to Doyle Dane which was
1297
01:02:01,167 --> 01:02:04,833
at that point the top
advertising agency.
1298
01:02:05,750 --> 01:02:08,417
In 1978, Atari was basically
1299
01:02:08,458 --> 01:02:10,292
turning into a
different company.
1300
01:02:10,542 --> 01:02:14,083
We went from a small,
engineering-driven company
1301
01:02:14,125 --> 01:02:16,792
to a very large
marketing-driven company.
1302
01:02:16,958 --> 01:02:19,625
Ray Kassar came into
direct conflict
1303
01:02:19,667 --> 01:02:22,625
with the engineering style
1304
01:02:22,750 --> 01:02:25,042
that had been established
at Atari for many years.
1305
01:02:25,250 --> 01:02:27,125
The relationship between
Ray and the hippie
1306
01:02:27,167 --> 01:02:29,458
techs from the bay
area never took off.
1307
01:02:29,667 --> 01:02:32,542
Ray came from a very
stable fabric industry.
1308
01:02:32,750 --> 01:02:34,417
I think he figured
he had a product,
1309
01:02:34,417 --> 01:02:36,417
VCS, that was going
to last forever.
1310
01:02:36,833 --> 01:02:38,667
High-tech is changing
all the time.
1311
01:02:38,792 --> 01:02:40,208
In one of the very
first meetings
1312
01:02:40,250 --> 01:02:42,625
he held, Ray sounded
pretty weird.
1313
01:02:42,750 --> 01:02:44,375
He said that we
were gonna start
1314
01:02:44,417 --> 01:02:46,292
selling computers
in designer colours
1315
01:02:46,292 --> 01:02:47,583
so that women would buy them.
1316
01:02:47,792 --> 01:02:50,000
He was 16 years
ahead of the iMac.
1317
01:02:54,083 --> 01:02:56,542
We in engineering
were appalled.
1318
01:02:56,792 --> 01:02:59,250
We thought "Yes, he gets
merchandising and marketing
1319
01:02:59,250 --> 01:03:01,625
but he doesn't understand
the technology at all."
1320
01:03:01,667 --> 01:03:05,542
Christmas 1978 was the moment
of truth for Manny and Ray.
1321
01:03:05,792 --> 01:03:08,000
And I got called into Steve
Ross's office who was
1322
01:03:08,042 --> 01:03:09,917
the chairman of Warner,
and we were alone,
1323
01:03:12,000 --> 01:03:13,542
and he said "What are
we going to do?"
1324
01:03:13,708 --> 01:03:17,208
Now remember, this is about
December 10th. I said,
1325
01:03:17,333 --> 01:03:20,417
"On December 26th,
there won't be a 2600
1326
01:03:20,458 --> 01:03:22,458
on any shelf in any
store in America.
1327
01:03:23,042 --> 01:03:25,375
If I'm right, we've
got a huge business.
1328
01:03:25,542 --> 01:03:27,500
If I'm wrong, we're in trouble.
But there
1329
01:03:27,542 --> 01:03:29,000
is nothing we can do
in the next 15 days,
1330
01:03:29,042 --> 01:03:31,083
so let's relax and
see what happens."
1331
01:03:31,750 --> 01:03:33,417
And of course, December 26, you
1332
01:03:33,458 --> 01:03:34,917
couldn't get your
hands on a 2600.
1333
01:03:35,042 --> 01:03:37,667
I mean, the thing just
blew through, it was one
1334
01:03:37,708 --> 01:03:39,125
of the biggest products
in the country.
1335
01:03:41,833 --> 01:03:46,208
1979 was the year and
it was Space Invaders.
1336
01:03:46,292 --> 01:03:47,708
This is an interesting story.
1337
01:03:47,792 --> 01:03:50,167
Manny Gerard was the
kind of New Yorker
1338
01:03:50,250 --> 01:03:52,750
that liked to be on the West
Coast most of the time.
1339
01:03:52,792 --> 01:03:53,500
One day
1340
01:03:53,833 --> 01:03:56,000
I went over to coin-operated
engineering with the
1341
01:03:56,042 --> 01:03:57,875
people that made the
games for the arcades.
1342
01:03:58,000 --> 01:03:59,999
And here are all our engineers,
1343
01:04:00,042 --> 01:04:02,792
with coin-operated Space
Invaders, not even our game,
1344
01:04:02,958 --> 01:04:04,458
and they're playing
Space Invaders.
1345
01:04:04,750 --> 01:04:07,083
I went into Ray Kassar's
office and I said "Ray,
1346
01:04:08,583 --> 01:04:10,250
I want to make a Space
Invaders cartridge
1347
01:04:10,375 --> 01:04:11,750
and I want to
license the name."
1348
01:04:11,917 --> 01:04:15,083
Licensing a coin-op title for
the home was rather new:
1349
01:04:15,208 --> 01:04:17,458
more often you simply
stole the technology.
1350
01:04:17,750 --> 01:04:19,500
And I said to him,
"Ray if we can't
1351
01:04:19,542 --> 01:04:21,625
license the name, steal
the technology."
1352
01:04:22,167 --> 01:04:23,500
I said "Duplicate it.
1353
01:04:23,583 --> 01:04:25,750
But I'd rather license
the name," and we did.
1354
01:04:25,750 --> 01:04:29,708
Licensing became reasonable
when video games became brands.
1355
01:04:29,833 --> 01:04:33,583
Through '78 the majority of
things are Pong and racing.
1356
01:04:33,667 --> 01:04:36,333
Space Invaders creates
this relentless world.
1357
01:04:36,708 --> 01:04:38,792
You know you're gonna
die sooner or later,
1358
01:04:38,917 --> 01:04:42,333
those Space Invaders, they just
keep on marching back and forth
1359
01:04:42,417 --> 01:04:44,167
and back and forth
and you know, your
1360
01:04:44,167 --> 01:04:45,999
bases are dissolving
around you,
1361
01:04:46,167 --> 01:04:50,000
and it's a pretty good
representation of a nightmare.
1362
01:04:50,083 --> 01:04:51,625
Two things made
Space Invaders a
1363
01:04:51,667 --> 01:04:53,542
breakthrough: one
was the gameplay.
1364
01:04:53,625 --> 01:04:56,167
Space Invaders was
a monster game,
1365
01:04:56,208 --> 01:04:57,583
I mean, it was
such a good game.
1366
01:04:58,333 --> 01:05:02,125
Space Invaders was another
game that had the beauty of
1367
01:05:02,500 --> 01:05:04,333
the "simple to learn,
hard to master,"
1368
01:05:04,417 --> 01:05:07,583
you could see how the game was
getting more difficult as
1369
01:05:07,917 --> 01:05:10,792
the aliens move faster
and drop down lower.
1370
01:05:10,958 --> 01:05:12,917
But Space Invaders
could also convey
1371
01:05:12,958 --> 01:05:14,792
the idea that you
were "there" somehow.
1372
01:05:14,917 --> 01:05:19,042
The game play, the pacing
of the game, the suspense,
1373
01:05:19,083 --> 01:05:22,917
the theme, was, you know,
just completely captivating.
1374
01:05:23,333 --> 01:05:26,042
I think it captured the
entire world really to the
1375
01:05:26,083 --> 01:05:28,708
potential of video games
and where they could go.
1376
01:05:28,917 --> 01:05:30,500
It was clear from
the start that
1377
01:05:30,500 --> 01:05:32,417
Space Invaders could
start a craze.
1378
01:05:32,542 --> 01:05:35,542
When Space Invaders
started in Japan,
1379
01:05:35,542 --> 01:05:38,125
many thousands of
arcades opened up
1380
01:05:38,708 --> 01:05:40,833
just to be able to
play Space Invaders.
1381
01:05:40,917 --> 01:05:42,875
They were called
Invader Houses.
1382
01:05:43,542 --> 01:05:47,250
This caused a shortage of the
hundred yen coin in Japan.
1383
01:05:47,250 --> 01:05:49,917
Manny Gerard move proved
to be the right one.
1384
01:05:50,000 --> 01:05:51,875
We licensed Space Invaders,
1385
01:05:53,417 --> 01:05:57,667
and the game was introduced
in September of '79,
1386
01:05:57,875 --> 01:05:59,999
and it was an
instant phenomenon.
1387
01:06:00,208 --> 01:06:03,417
Suddenly the 2600 was the most
1388
01:06:03,458 --> 01:06:05,833
exciting product
anybody had ever seen.
1389
01:06:07,792 --> 01:06:11,000
This was more a brand
licence than anything else.
1390
01:06:11,083 --> 01:06:15,250
The Atari VCS technically could
not actually do Space Invaders.
1391
01:06:15,500 --> 01:06:18,417
You were not supposed
to be able to have rows
1392
01:06:18,667 --> 01:06:21,500
full of enemies that could
be individually shot.
1393
01:06:21,750 --> 01:06:24,333
So they would tell
it to draw that same
1394
01:06:24,375 --> 01:06:25,625
sprite over and over
and over again.
1395
01:06:25,833 --> 01:06:27,917
It didn't quite look
like the arcade version,
1396
01:06:28,042 --> 01:06:29,999
but it was unmistakably
Space Invaders,
1397
01:06:30,167 --> 01:06:33,125
and it was a big,
big hit for Atari.
1398
01:06:33,292 --> 01:06:35,167
Space Invaders had
opened a brief
1399
01:06:35,167 --> 01:06:37,333
era, now known as
the Golden Age.
1400
01:06:37,542 --> 01:06:39,542
There was an arcade
golden age that started
1401
01:06:39,583 --> 01:06:43,542
in late '79. It really
lasted through '81.
1402
01:06:43,875 --> 01:06:51,042
In 1981, Americans spent 75,000
man-years playing arcade games.
1403
01:06:51,250 --> 01:06:54,792
They dropped 20 billion
quarters into arcade machines -
1404
01:06:55,208 --> 01:06:56,458
that's a golden age.
1405
01:06:56,583 --> 01:06:58,583
Video game creativity
was probably
1406
01:06:58,583 --> 01:07:00,417
reaching a peak in those days.
1407
01:07:00,542 --> 01:07:03,750
You get Galaxian, Moon Cresta,
1408
01:07:03,792 --> 01:07:06,917
and people are enjoying those,
and then comes Pac-man,
1409
01:07:06,958 --> 01:07:08,958
and no one was ready for that.
1410
01:07:09,250 --> 01:07:12,083
Pac-man was yet another
shift in terms of audience.
1411
01:07:12,208 --> 01:07:15,458
Iwatani wanted to
appeal to women,
1412
01:07:15,500 --> 01:07:17,792
and specifically he wanted
to appeal to couples.
1413
01:07:17,875 --> 01:07:21,458
You know, if I can
get these two people
1414
01:07:21,500 --> 01:07:23,500
on a date to play
this game together,
1415
01:07:23,542 --> 01:07:25,542
then I could really possibly
have a hit on my hands.
1416
01:07:25,750 --> 01:07:28,250
Toru Iwatani had been
doing marketing.
1417
01:07:28,292 --> 01:07:29,792
from the developer's
standpoint.
1418
01:07:30,333 --> 01:07:32,500
Girls love getting
dessert at restaurants,
1419
01:07:32,750 --> 01:07:34,250
so you know, what if
I had a game with
1420
01:07:34,292 --> 01:07:35,542
all these little
food items in it,
1421
01:07:35,583 --> 01:07:38,042
let's make the monsters cute.
Let's not do a
1422
01:07:38,083 --> 01:07:39,999
space game where everything
is black and white,
1423
01:07:40,042 --> 01:07:42,125
let's make very
vibrant colours.
1424
01:07:42,167 --> 01:07:43,833
The girl, who was
probably the one
1425
01:07:43,875 --> 01:07:45,333
dragging the guy to
the bowling alley,
1426
01:07:45,417 --> 01:07:47,125
she would actually
say, "Oh, that's
1427
01:07:47,125 --> 01:07:48,833
so cute, I wanna go
play this game."
1428
01:07:50,417 --> 01:07:53,000
Iwatani's ideas
definitely hit the mark.
1429
01:07:53,125 --> 01:07:57,583
Within a year, Pac-man's on
the cover of Time magazine
1430
01:07:57,625 --> 01:07:59,833
and MAD magazine
in the same year.
1431
01:08:00,333 --> 01:08:01,417
Before Pac-man,
1432
01:08:01,583 --> 01:08:02,999
most of the people
who would hang out there
1433
01:08:02,999 --> 01:08:05,333
would have lots of
tattoos and smoke cigars.
1434
01:08:05,375 --> 01:08:07,833
Pac-man came out, it
started bringing the
1435
01:08:07,875 --> 01:08:09,708
public into the
recreational centres.
1436
01:08:09,750 --> 01:08:12,708
Once again, the gameplay
was pretty easy to learn.
1437
01:08:12,833 --> 01:08:15,000
You are pretty much
guaranteed of making
1438
01:08:15,042 --> 01:08:17,375
progress when you first
start playing it.
1439
01:08:17,500 --> 01:08:19,833
You start eating dots, your
score starts going up,
1440
01:08:19,875 --> 01:08:21,875
I mean it's very,
very easy in Pac-man
1441
01:08:21,958 --> 01:08:24,500
to eat the first energizer dot.
1442
01:08:24,542 --> 01:08:26,708
And it's very easy to
eat your first ghost.
1443
01:08:26,917 --> 01:08:28,500
At the same time Atari was
1444
01:08:28,542 --> 01:08:30,833
experimenting with
vector displays.
1445
01:08:30,958 --> 01:08:32,417
They were very clear: you could
1446
01:08:32,417 --> 01:08:34,917
create Star Wars-looking
spaceships,
1447
01:08:34,999 --> 01:08:37,042
that's what Space Wars had
looked like from the start.
1448
01:08:37,375 --> 01:08:39,583
One of the smartest
engineers in the coin-op
1449
01:08:39,583 --> 01:08:42,208
division was Ed Logg:
the Golden Boy.
1450
01:08:42,250 --> 01:08:46,375
Ed Logg did Asteroids, which was
Atari's all-time biggest game.
1451
01:08:46,667 --> 01:08:49,125
Every time you shoot one
to blow it up and protect
1452
01:08:49,125 --> 01:08:51,292
your ship it breaks
into smaller asteroids.
1453
01:08:51,458 --> 01:08:54,208
I think he wanted to include
elements of the game,
1454
01:08:54,250 --> 01:08:57,208
the 'impending doom' kind of
elements, the self-preservation
1455
01:08:58,167 --> 01:09:00,917
that were found in
Space Invaders.
1456
01:09:01,292 --> 01:09:05,292
Asteroids perfectly applied the
Atari mantra about gameplay.
1457
01:09:05,500 --> 01:09:06,917
If you looked up
"Easy to learn,
1458
01:09:06,958 --> 01:09:09,625
hard to master" in
a book of quotes
1459
01:09:09,708 --> 01:09:11,875
there would be a picture of
Asteroids right next to it.
1460
01:09:12,167 --> 01:09:16,250
Also, Ed Rotberg achieved huge
outcomes with vector displays.
1461
01:09:16,417 --> 01:09:19,833
Ed Rotberg came up
with Battle Zone.
1462
01:09:19,875 --> 01:09:25,583
The game was based upon taking
the original Tank game idea
1463
01:09:25,667 --> 01:09:31,875
and making a first-person 3-D
game using the vector graphics.
1464
01:09:31,999 --> 01:09:34,999
Battlezone was a step forward
to an immersive environment.
1465
01:09:35,167 --> 01:09:37,250
This was the first game
that let you freely
1466
01:09:37,292 --> 01:09:39,458
move around in a
three-dimensional world.
1467
01:09:39,625 --> 01:09:41,792
That was new, that
was not something
1468
01:09:41,833 --> 01:09:43,500
that most people experienced.
1469
01:09:43,958 --> 01:09:47,542
The arcade games had progressed
to the point where they were
1470
01:09:47,750 --> 01:09:50,958
more like a computer that
you might recognize today.
1471
01:09:54,292 --> 01:09:55,667
You should design your business
1472
01:09:55,708 --> 01:09:57,208
on the assumption
that not all of the
1473
01:09:57,208 --> 01:09:58,875
smart people in the
world work for you.
1474
01:09:58,917 --> 01:10:01,250
By the beginning of
the 1980s the VCS
1475
01:10:01,250 --> 01:10:03,417
was still surprisingly
successful.
1476
01:10:03,750 --> 01:10:06,542
They were doubling their
sales volume every year.
1477
01:10:06,750 --> 01:10:10,125
They went from 30
million, to 60 million,
1478
01:10:10,167 --> 01:10:12,917
to 120 million, to a
quarter of a billion
1479
01:10:12,958 --> 01:10:15,292
to half a billion, to
a billion dollars,
1480
01:10:15,292 --> 01:10:17,750
to 2 billion dollars
in consecutive years.
1481
01:10:17,917 --> 01:10:20,208
In 1982 they grossed
2 billion dollars.
1482
01:10:20,292 --> 01:10:21,667
This was the hardware that
1483
01:10:21,667 --> 01:10:24,583
appeared severely
limited in 1977.
1484
01:10:24,667 --> 01:10:27,000
The programmers
continually surprised
1485
01:10:27,000 --> 01:10:28,999
us with how clever they were,
1486
01:10:29,000 --> 01:10:32,000
and it went a lot farther
than anybody expected.
1487
01:10:33,667 --> 01:10:35,875
David Crane from the
consumer division was
1488
01:10:35,875 --> 01:10:38,667
considered to be one of
the wizards of the VCS.
1489
01:10:38,750 --> 01:10:40,250
I actually loved that machine.
1490
01:10:40,333 --> 01:10:42,333
You have the hardware
telling you,
1491
01:10:42,375 --> 01:10:43,999
well this is all you can do.
1492
01:10:44,208 --> 01:10:47,417
The technical boundaries, they
could lead you in a direction.
1493
01:10:47,667 --> 01:10:50,125
Throughout 1978
Mattel had considered
1494
01:10:50,167 --> 01:10:51,542
entering the console market.
1495
01:10:51,875 --> 01:10:54,500
Mattel looked and said,
"You know what, that VCS,
1496
01:10:54,500 --> 01:10:57,625
that's a toy. We should
be doing that too."
1497
01:10:57,833 --> 01:10:59,375
Mattel was saying,
1498
01:10:59,583 --> 01:11:01,208
"Technology is coming
down the pipes
1499
01:11:01,458 --> 01:11:03,958
to do a better job to put up
an entire screen at a time."
1500
01:11:04,292 --> 01:11:07,167
Not so different from
the VCS, Intellivision
1501
01:11:07,208 --> 01:11:09,958
relied on a dedicated
chip for graphics.
1502
01:11:10,083 --> 01:11:12,042
They called it STIC, S-T-I-C.
1503
01:11:12,083 --> 01:11:14,583
Standard Television
Interface Chip,
1504
01:11:15,292 --> 01:11:18,208
which sounds nice and
generic and presumptuous.
1505
01:11:18,250 --> 01:11:21,125
Basically it created
eight positionable
1506
01:11:21,167 --> 01:11:22,708
objects so that freed
up the processor
1507
01:11:22,750 --> 01:11:26,042
to concentrate entirely
on the gameplay.
1508
01:11:27,875 --> 01:11:30,125
Cleverly enough, Dave
Rolfe compiled an
1509
01:11:30,125 --> 01:11:32,458
operating system for
the Intellivision.
1510
01:11:32,625 --> 01:11:33,958
You have to draw the
object, you have to
1511
01:11:33,958 --> 01:11:36,583
put the picture into
the video memory,
1512
01:11:36,667 --> 01:11:39,083
you have to give commands
to the computer hardware.
1513
01:11:39,125 --> 01:11:40,708
A lot of that is very generic,
1514
01:11:41,250 --> 01:11:42,625
so all of the stuff
which is similar,
1515
01:11:42,667 --> 01:11:43,917
common between
games, could be put
1516
01:11:44,167 --> 01:11:45,792
into a common operating system,
1517
01:11:45,958 --> 01:11:47,375
which was another reason
we could do better games.
1518
01:11:47,583 --> 01:11:50,833
In 1981 the console war
was reaching its climax,
1519
01:11:51,000 --> 01:11:53,042
and Nintendo was trying
to benefit from it.
1520
01:11:53,167 --> 01:11:58,292
We were not in home video
game business yet, so
1521
01:11:58,750 --> 01:12:03,667
we decided the successful
Donkey Kong in coin-op
1522
01:12:03,875 --> 01:12:07,125
we should license it to
different companies.
1523
01:12:07,333 --> 01:12:11,333
We looked at Atari and
Coleco and other companies.
1524
01:12:11,583 --> 01:12:15,208
The console war had ignited
another war: the licence war.
1525
01:12:15,292 --> 01:12:19,125
You had kids that were going
to arcades and playing games.
1526
01:12:19,333 --> 01:12:21,542
You knew what the
hits were in advance.
1527
01:12:21,750 --> 01:12:22,833
It's like saying,
1528
01:12:23,125 --> 01:12:25,958
"Gee, I'd like Harry Potter
books to make movies."
1529
01:12:25,999 --> 01:12:28,542
Of course you would. They're
pre-sold. The marketing is done.
1530
01:12:28,750 --> 01:12:33,042
Coleco had entered the video
game market as early as 1976.
1531
01:12:33,208 --> 01:12:35,917
Coleco was short for
Connecticut Leather Company.
1532
01:12:36,667 --> 01:12:39,833
Greenberg, the guy who owned
Coleco, had big ideas.
1533
01:12:39,917 --> 01:12:42,667
He's like Nolan. He
doesn't wanna stay
1534
01:12:42,708 --> 01:12:45,958
small. And so he expanded
into video games.
1535
01:12:46,042 --> 01:12:48,625
The Coleco Telstar had
been the competitor
1536
01:12:48,667 --> 01:12:51,875
of the Atari Home
Pong back in 1976.
1537
01:12:51,917 --> 01:12:55,750
Coleco made a pretty good
splash with the Telstar,
1538
01:12:55,833 --> 01:12:57,917
and their early
Pong competition.
1539
01:12:58,125 --> 01:13:01,667
Made a much bigger splash,
years later in '81
1540
01:13:01,708 --> 01:13:03,833
when they came out with
the Coleco Vision.
1541
01:13:03,875 --> 01:13:06,417
In 1982, Coleco
hardware could beat
1542
01:13:06,458 --> 01:13:08,583
the VCS by an order
of magnitude.
1543
01:13:08,625 --> 01:13:11,000
We decided Coleco Vision is
1544
01:13:11,125 --> 01:13:13,999
probably the best
quality hardware.
1545
01:13:14,250 --> 01:13:18,083
Coleco doesn't have
many hot games,
1546
01:13:18,083 --> 01:13:21,999
so they will really
push Donkey Kong
1547
01:13:22,250 --> 01:13:23,917
in order to sell the hardware.
1548
01:13:24,083 --> 01:13:27,292
So Coleco started marketing
1549
01:13:27,458 --> 01:13:29,833
Coleco Vision together
with Donkey Kong.
1550
01:13:29,958 --> 01:13:31,708
Donkey Kong on Coleco Vision
1551
01:13:31,750 --> 01:13:33,750
looked just like
the arcade game.
1552
01:13:33,875 --> 01:13:35,542
Manny Gerard was the strongest
1553
01:13:35,583 --> 01:13:37,708
supporter of a
Donkey Kong licence.
1554
01:13:37,833 --> 01:13:43,292
I said to Ray Kassar, "Why
didn't we license Donkey Kong?"
1555
01:13:43,667 --> 01:13:47,333
And he said, and this
one's burned in my brain,
1556
01:13:47,958 --> 01:13:49,958
he said, "Because they
wanted two dollars a
1557
01:13:49,999 --> 01:13:52,375
cartridge for it". We
still paid 50-60 cents
1558
01:13:52,583 --> 01:13:57,333
"Ray, we got 88 per cent gross
margins on these cartridges.
1559
01:13:57,417 --> 01:14:00,333
A year from now, Ray,
we will collectively
1560
01:14:01,250 --> 01:14:03,708
crawl through shards
of broken glass
1561
01:14:03,792 --> 01:14:05,999
to pay 2 dollars a cartridge."
1562
01:14:06,542 --> 01:14:09,708
I don't remember any
serious discussion
1563
01:14:09,750 --> 01:14:11,667
about Donkey Kong,
quite frankly.
1564
01:14:11,917 --> 01:14:14,917
At that moment licensing
coin-op brands, or any
1565
01:14:14,917 --> 01:14:18,125
other brand or concept,
was the key to success.
1566
01:14:18,500 --> 01:14:21,833
The business was outrageously
profitable and what
1567
01:14:21,875 --> 01:14:25,667
was driving the business
was the coin-op title.
1568
01:14:25,917 --> 01:14:27,999
Mattel was interested
in licensing product,
1569
01:14:27,999 --> 01:14:30,000
Coleco was interested
in licensing product,
1570
01:14:30,208 --> 01:14:31,542
everybody wanted to license.
1571
01:14:31,583 --> 01:14:34,458
Mattel had found a decent
market share in sports games.
1572
01:14:34,542 --> 01:14:37,125
Mattel was very big on
buying company logos.
1573
01:14:37,167 --> 01:14:39,000
It wasn't baseball,
it was Major-League
1574
01:14:39,042 --> 01:14:40,250
Baseball. They had the logo.
1575
01:14:40,333 --> 01:14:42,083
Blackjack and Poker
wasn't Blackjack and
1576
01:14:42,125 --> 01:14:44,333
Poker, it was Las Vegas
Blackjack and Poker.
1577
01:14:44,375 --> 01:14:46,875
They paid, I think, the city
of Las Vegas for that logo.
1578
01:14:46,958 --> 01:14:49,042
Colecovision was
indisputably more
1579
01:14:49,083 --> 01:14:51,625
powerful than any
other console around.
1580
01:14:51,708 --> 01:14:53,708
And their whole thing
was arcade fidelity.
1581
01:14:53,792 --> 01:14:56,333
They look so much more like
the arcade counterparts
1582
01:14:56,417 --> 01:14:58,458
than anything you're
gonna get on the Atari,
1583
01:14:58,583 --> 01:15:00,250
anything you're gonna get
on the Intellivision.
1584
01:15:00,458 --> 01:15:02,167
Most popular home video game!
1585
01:15:02,250 --> 01:15:04,833
More and more, the
consumer division at Atari
1586
01:15:04,833 --> 01:15:06,958
was relying on third
party properties.
1587
01:15:07,042 --> 01:15:09,917
Strategically it
was very smart.
1588
01:15:09,999 --> 01:15:13,083
The execution was not
always very good.
1589
01:15:13,125 --> 01:15:14,917
In fact, it was
poor in some cases.
1590
01:15:19,167 --> 01:15:20,999
The downside of
licensing a brand
1591
01:15:20,999 --> 01:15:22,917
is that you have a
promise to honour.
1592
01:15:23,083 --> 01:15:26,500
You know, people were
expecting to see, you know,
1593
01:15:26,500 --> 01:15:29,542
the detailed graphics of
the arcade machines, but
1594
01:15:29,792 --> 01:15:31,208
they would end up
seeing the simple
1595
01:15:31,208 --> 01:15:33,250
graphics of the,
the VCS machine.
1596
01:15:33,667 --> 01:15:36,333
Most of the conversions
of the arcade games
1597
01:15:36,333 --> 01:15:38,250
into the VCS turned out
to be quite challenging.
1598
01:15:41,292 --> 01:15:43,667
The explosion in
software created what I
1599
01:15:43,708 --> 01:15:45,875
like to call the
intellectual blue collar.
1600
01:15:45,999 --> 01:15:48,542
One day Atari
programmers understood
1601
01:15:48,583 --> 01:15:50,667
their actual role
in the business.
1602
01:15:50,750 --> 01:15:53,292
The marketing department
sent out a memo.
1603
01:15:53,542 --> 01:15:55,292
What they were saying was,
1604
01:15:55,500 --> 01:15:58,000
"Do more that sold a lot
of games, instead of
1605
01:15:58,250 --> 01:15:59,999
the kind that sold
a few games."
1606
01:16:00,125 --> 01:16:01,792
The memo, for the sake of
1607
01:16:01,792 --> 01:16:04,458
exactitude, reported
some numbers.
1608
01:16:04,583 --> 01:16:06,625
We added them up,
and the four of us
1609
01:16:06,833 --> 01:16:09,917
were responsible for 60 per
cent of Atari's sales.
1610
01:16:10,125 --> 01:16:11,958
So the four of us
were responsible
1611
01:16:12,000 --> 01:16:14,167
for 60 million
dollars in one year.
1612
01:16:14,417 --> 01:16:17,750
Needless to say, those engineers
were very good at maths.
1613
01:16:17,917 --> 01:16:19,417
In the software
industry, the people
1614
01:16:19,417 --> 01:16:20,875
at the bottom of the org chart
1615
01:16:20,917 --> 01:16:23,083
were just as smart,
if not smarter,
1616
01:16:23,167 --> 01:16:24,875
than the people who
were managing them.
1617
01:16:25,083 --> 01:16:27,708
Which was OK, as long
as the people who were
1618
01:16:27,708 --> 01:16:30,333
managing them didn't try
to manipulate them.
1619
01:16:30,458 --> 01:16:32,292
Ray's relation with
game designers
1620
01:16:32,333 --> 01:16:34,708
was not ideal from
the very start.
1621
01:16:34,958 --> 01:16:39,208
Ray famously held a meeting
when he first got in
1622
01:16:39,583 --> 01:16:44,792
and he said, you know, "I want
to put everyone's fears to rest.
1623
01:16:44,958 --> 01:16:48,292
I've worked with designers
for years in my career."
1624
01:16:48,458 --> 01:16:50,208
and somebody thought
"Oh my Lord,
1625
01:16:50,250 --> 01:16:52,250
he's talking about
towel designers."
1626
01:16:52,375 --> 01:16:55,250
Bob Whitehead, Alan
Miller, Larry Kaplan and
1627
01:16:55,250 --> 01:16:58,167
David Crane decided
to go see Ray Kassar.
1628
01:16:58,542 --> 01:17:00,917
We took that memo and
we went to Ray Kassar,
1629
01:17:01,042 --> 01:17:05,875
we said "You know, we're good
company men. We love Atari."
1630
01:17:05,999 --> 01:17:09,875
A lot of these, these games,
they were created by one guy.
1631
01:17:10,917 --> 01:17:13,250
If there's music in the game,
the guy did the music.
1632
01:17:13,333 --> 01:17:15,208
If there' s art in the
game, the guy did the art.
1633
01:17:15,458 --> 01:17:18,500
They made a proposal which
saw royalties involved.
1634
01:17:19,750 --> 01:17:22,583
Can you just take 10
cents out of every
1635
01:17:22,625 --> 01:17:25,417
cartridge and put it
into a bonus pool
1636
01:17:25,500 --> 01:17:27,667
and you know, divide
it up so that those
1637
01:17:27,667 --> 01:17:30,500
people who do better
games make more money?
1638
01:17:30,750 --> 01:17:32,417
They can't put
their names on the
1639
01:17:32,500 --> 01:17:34,417
games. They can take no credit.
1640
01:17:34,542 --> 01:17:36,292
They're not even really
supposed to go home and say,
1641
01:17:36,333 --> 01:17:39,125
"Hey I worked on this game," if
they see someone playing it.
1642
01:17:39,333 --> 01:17:42,792
This was not the business model
that Kassar had in mind.
1643
01:17:42,917 --> 01:17:46,792
Ray Kassar looked
us in the eye and said,
1644
01:17:46,958 --> 01:17:50,417
"You are no more important
to Atari than the person
1645
01:17:50,458 --> 01:17:52,042
on the assembly line who
puts them together."
1646
01:17:53,083 --> 01:17:56,667
I don't remember, they were
coming to me asking for a bonus.
1647
01:17:57,083 --> 01:17:59,375
The engineers started
to think seriously
1648
01:17:59,375 --> 01:18:01,375
that Kassar didn't
like them at all.
1649
01:18:01,667 --> 01:18:04,292
He was quoted in, I
think, Fortune magazine
1650
01:18:04,542 --> 01:18:07,500
calling our engineers as a bunch
of high strung prima Donnas
1651
01:18:07,750 --> 01:18:08,833
that are a dime-a-dozen.
1652
01:18:08,875 --> 01:18:11,958
They are prima donnas, they
were, but they were great.
1653
01:18:12,250 --> 01:18:14,042
Within a week we
had a T-shirt made
1654
01:18:14,125 --> 01:18:15,250
that said "I'm
just a high-strung
1655
01:18:15,292 --> 01:18:16,833
prima donna engineer
from Atari."
1656
01:18:16,999 --> 01:18:18,542
The four programmers left Ray's
1657
01:18:18,583 --> 01:18:21,125
office with a precise
idea in mind.
1658
01:18:21,417 --> 01:18:23,417
We were escorted
out of his office
1659
01:18:23,458 --> 01:18:25,292
by one of his senior
vice presidents.
1660
01:18:25,542 --> 01:18:26,167
He said,
1661
01:18:26,583 --> 01:18:28,000
"It's pretty clear you
guys are going to
1662
01:18:28,042 --> 01:18:30,458
be leaving, good luck,
I wish you well.
1663
01:18:30,542 --> 01:18:31,833
There's nothing we can do."
1664
01:18:31,917 --> 01:18:34,042
The initial idea
behind Activision
1665
01:18:34,083 --> 01:18:35,999
was still very
corporate indeed.
1666
01:18:36,042 --> 01:18:39,375
We should either go out and
form just a small company
1667
01:18:39,417 --> 01:18:41,875
to develop games and
sell them back to Atari.
1668
01:18:41,917 --> 01:18:46,875
We weren't ready to work
with an outside group like that.
1669
01:18:47,000 --> 01:18:51,583
Or maybe we just go all the way
and create a publishing company.
1670
01:18:51,792 --> 01:18:54,292
Activision was the
first third party
1671
01:18:54,333 --> 01:18:55,917
developer of video
game software.
1672
01:18:56,042 --> 01:18:58,708
Manny Gerard had known
from the very start that
1673
01:18:58,708 --> 01:19:01,875
Atari was just another form of
the entertainment industry.
1674
01:19:01,917 --> 01:19:03,333
Let's be straight about this.
1675
01:19:03,625 --> 01:19:06,250
Forget the superstars, the
superstars always reach
1676
01:19:06,292 --> 01:19:08,250
a place where they can
get whatever they want,
1677
01:19:08,667 --> 01:19:11,999
but in the main, as you go
through any creative industry.
1678
01:19:11,999 --> 01:19:15,708
I don't care if it is movies,
or music, or video games,
1679
01:19:15,875 --> 01:19:19,125
the creators of great success,
1680
01:19:19,333 --> 01:19:21,167
frequently feel, and
maybe correctly,
1681
01:19:21,417 --> 01:19:22,833
but the business
model doesn't allow,
1682
01:19:22,999 --> 01:19:24,167
that they don't
get enough money
1683
01:19:24,417 --> 01:19:26,250
because you don't know
what a great success is.
1684
01:19:26,458 --> 01:19:28,208
You don't know until
after it happens.
1685
01:19:28,792 --> 01:19:31,500
Interest about the new
company was rising high.
1686
01:19:31,667 --> 01:19:34,083
Activision went to
its first trade show
1687
01:19:34,250 --> 01:19:36,375
with four games for sale:
1688
01:19:36,458 --> 01:19:39,583
Dragster, Boxing, Checkers
and Fishing Derby.
1689
01:19:39,792 --> 01:19:44,792
Activision was, it was the hit
of the show, I have to say.
1690
01:19:44,875 --> 01:19:48,708
Initially Atari wasn't that much
concerned about the competition.
1691
01:19:48,875 --> 01:19:50,708
They thought they were safe
1692
01:19:50,750 --> 01:19:53,375
because they had trade secrets
that weren't published
1693
01:19:53,625 --> 01:19:55,917
on a machine that was
difficult to program.
1694
01:19:56,083 --> 01:19:59,167
We tried to stop them by suing
them and that didn't work.
1695
01:19:59,333 --> 01:20:02,083
In court Activision
easily demonstrated
1696
01:20:02,167 --> 01:20:03,875
that they didn't
steal any secrets.
1697
01:20:04,000 --> 01:20:07,750
It was possible to reverse
engineer how it was programmed
1698
01:20:07,917 --> 01:20:10,917
so that they could
do business without
1699
01:20:11,083 --> 01:20:14,125
being subject to a theft of
trade secrets prosecution.
1700
01:20:14,250 --> 01:20:16,625
I think Atari actually
tried to sue them
1701
01:20:16,667 --> 01:20:19,375
to find out how they'd done some
of the things they were doing.
1702
01:20:19,500 --> 01:20:21,042
Activision's games actually had
1703
01:20:21,083 --> 01:20:23,167
something that the
Atari ones lacked.
1704
01:20:23,250 --> 01:20:25,042
We used a number of techniques.
1705
01:20:25,125 --> 01:20:27,917
They were doing 2 or 3 times
the number of colours
1706
01:20:27,958 --> 01:20:29,958
that the system was supposed
to be able to show.
1707
01:20:30,000 --> 01:20:33,333
We would only use the greenest
grass and the bluest sky.
1708
01:20:33,417 --> 01:20:35,583
You would say, "Wow,
that looks better
1709
01:20:35,792 --> 01:20:37,875
than the games that
Atari was doing,"
1710
01:20:38,000 --> 01:20:39,917
and nobody understood why.
1711
01:20:44,417 --> 01:20:46,583
David Crane went on
to design one of
1712
01:20:46,667 --> 01:20:49,000
the best known VCS
games of all time.
1713
01:20:49,083 --> 01:20:52,625
I figured out a way to
draw a little running man.
1714
01:20:52,792 --> 01:20:55,667
So I asked myself, "All
right, he's running...
1715
01:20:56,833 --> 01:20:57,750
Where is he running?"
1716
01:20:57,917 --> 01:21:00,625
So I made a path, now
he's running on a path.
1717
01:21:00,875 --> 01:21:02,792
Where is the path?
Let's put the path
1718
01:21:02,792 --> 01:21:04,667
in a jungle. I drew
a couple of trees.
1719
01:21:04,750 --> 01:21:07,708
Why is he running? I
put some treasures
1720
01:21:07,750 --> 01:21:10,042
and, you know, the scorpions.
1721
01:21:10,083 --> 01:21:12,000
Pitfall urged the
player to explore a
1722
01:21:12,042 --> 01:21:14,083
whole new world
within the machine.
1723
01:21:14,250 --> 01:21:18,083
I used a special binary
counter to define the screens
1724
01:21:18,167 --> 01:21:21,208
instead of making every
screen a block of data.
1725
01:21:21,333 --> 01:21:25,750
There were 254 screens, I
think, in the Pitfall world.
1726
01:21:25,833 --> 01:21:29,792
Technically, Pitfall inspired
thousands of games yet to come.
1727
01:21:29,917 --> 01:21:33,333
What it did do is it created an
entire genre of video games.
1728
01:21:33,750 --> 01:21:36,167
What are called the
platform games.
1729
01:21:36,292 --> 01:21:41,500
There were maybe 600 platformer
games made after Pitfall.
1730
01:21:41,667 --> 01:21:43,958
Unfortunately,
Activision's success
1731
01:21:43,999 --> 01:21:46,583
inspired emulation
in the Atari ranks.
1732
01:21:46,875 --> 01:21:47,958
Most of the people
1733
01:21:47,999 --> 01:21:50,042
didn't particularly like
the guys at Activision.
1734
01:21:50,542 --> 01:21:52,208
They kind of looked
down on everyone
1735
01:21:52,250 --> 01:21:53,875
else, according to
everyone else at least.
1736
01:21:53,917 --> 01:21:55,625
Especially Dave
Crane, who has that
1737
01:21:55,667 --> 01:21:57,750
side of inherent
personality anyway.
1738
01:21:57,833 --> 01:21:59,417
Activision's success
1739
01:22:00,375 --> 01:22:02,750
made people say, "Well
gee, all I have to do is
1740
01:22:02,792 --> 01:22:04,667
borrow some money from
a venture capitalist,
1741
01:22:04,833 --> 01:22:06,708
put some programmers
in a room and
1742
01:22:06,750 --> 01:22:08,667
tell them to design
video games."
1743
01:22:08,792 --> 01:22:10,500
Other key people
in the consumer
1744
01:22:10,500 --> 01:22:12,583
division were thinking
about leaving.
1745
01:22:12,667 --> 01:22:15,875
About that time I had decided
1746
01:22:16,000 --> 01:22:19,958
that the five thousand
person, multi-billion-dollar
1747
01:22:19,999 --> 01:22:22,167
company environment
wasn't for me anymore.
1748
01:22:22,417 --> 01:22:24,458
I called my good friend
Bill Grub who was
1749
01:22:24,458 --> 01:22:26,583
the vice-president
of sales at Atari
1750
01:22:26,708 --> 01:22:27,833
for the consumer division.
1751
01:22:27,917 --> 01:22:29,917
Two weeks later,
Imagic was born.
1752
01:22:29,958 --> 01:22:31,083
We went out and raised a couple
1753
01:22:31,083 --> 01:22:32,667
million dollars in
a couple of days.
1754
01:22:32,750 --> 01:22:34,542
The game developers
were becoming
1755
01:22:34,542 --> 01:22:36,625
something closer to
an entertainment star
1756
01:22:36,667 --> 01:22:38,333
than some weird engineer.
1757
01:22:38,375 --> 01:22:41,000
It's easy to say it
wasn't only the money.
1758
01:22:41,042 --> 01:22:44,750
Atari wanted the programmers
to remain anonymous,
1759
01:22:45,083 --> 01:22:49,042
and we made it a
point to identify
1760
01:22:49,083 --> 01:22:50,833
the programmers
and the artists.
1761
01:22:50,958 --> 01:22:54,208
Competition brought better
games, at least initially.
1762
01:22:54,333 --> 01:22:56,917
We as programmers took
it upon ourselves
1763
01:22:56,958 --> 01:22:59,375
to continually
challenge Activision.
1764
01:22:59,500 --> 01:23:02,417
Our biggest hit out of
the chute was a product
1765
01:23:02,458 --> 01:23:04,833
called Demon Attack, which
was done by Rob Fulop.
1766
01:23:04,917 --> 01:23:08,333
That was a big hit for Imagic,
we sold many millions of those.
1767
01:23:08,375 --> 01:23:10,292
As entertainment
stars, programmers
1768
01:23:10,292 --> 01:23:12,250
started to behave accordingly.
1769
01:23:12,375 --> 01:23:14,458
Programmer egos were
much larger than
1770
01:23:14,458 --> 01:23:17,000
what would have
fitted in 128 bytes.
1771
01:23:17,083 --> 01:23:20,583
I used to drive, at that
time, a Porsche 928,
1772
01:23:20,625 --> 01:23:24,125
David Crane had a BMW 7 series.
1773
01:23:24,250 --> 01:23:26,250
We all drove, you
know, fancy fast
1774
01:23:26,292 --> 01:23:28,208
cars, we all made
a lot of money.
1775
01:23:28,375 --> 01:23:30,542
Behaving as stars
had its upsides
1776
01:23:30,583 --> 01:23:32,292
as well as the downsides.
1777
01:23:32,292 --> 01:23:35,458
They were very sensitive,
very sensitive,
1778
01:23:35,458 --> 01:23:38,708
very creative, like children,
1779
01:23:38,917 --> 01:23:41,458
so I spent a lot of
time trying to reassure
1780
01:23:41,458 --> 01:23:43,583
them that I wasn't
really a bad guy.
1781
01:23:43,625 --> 01:23:46,000
I remember we had this
one guy, he stayed with
1782
01:23:46,042 --> 01:23:48,875
me for three hours telling
me about his poetry,
1783
01:23:49,333 --> 01:23:51,083
and that he came to
work at midnight
1784
01:23:51,083 --> 01:23:52,792
'cos he couldn't
work during the day.
1785
01:23:53,333 --> 01:23:55,458
He told me all his
idiosyncrasies and
1786
01:23:55,500 --> 01:23:57,333
I had to be a very
good listener.
1787
01:23:59,417 --> 01:24:02,500
Kassar's concessions came
too late, and too little.
1788
01:24:02,500 --> 01:24:05,458
All the good engineers, all the
good programmers left Atari.
1789
01:24:05,583 --> 01:24:07,750
Even though Ray raised
the salaries, he didn't
1790
01:24:07,750 --> 01:24:09,833
even know how to hire
the best engineers.
1791
01:24:09,917 --> 01:24:11,333
He couldn't tell the good
ones from the bad ones.
1792
01:24:11,542 --> 01:24:13,625
Kassar avoided
disaster just a few
1793
01:24:13,625 --> 01:24:16,042
seconds before all of
the programmers left.
1794
01:24:16,167 --> 01:24:19,417
I was about to leave
on the third round
1795
01:24:20,208 --> 01:24:22,083
of company formations
1796
01:24:22,292 --> 01:24:24,958
that Atari came up with their
own competitive bonus plan.
1797
01:24:29,417 --> 01:24:31,875
1980 had been the
year of Pac-man.
1798
01:24:31,999 --> 01:24:33,667
We concluded that
nobody was ever
1799
01:24:33,708 --> 01:24:35,208
gonna make a better
game than Pac-man.
1800
01:24:38,292 --> 01:24:41,708
Atari reacted rapidly in the
wave of the licence war.
1801
01:24:41,792 --> 01:24:45,958
It was a big hit in Japan. And
we did make a deal with Namco.
1802
01:24:46,125 --> 01:24:49,292
The 2600 was limited in
its technology, and the
1803
01:24:49,333 --> 01:24:51,833
technology got pushed
and pushed and pushed
1804
01:24:51,999 --> 01:24:53,750
until you couldn't
push it anymore
1805
01:24:53,750 --> 01:24:55,625
and you couldn't
do anymore with it.
1806
01:24:55,792 --> 01:24:57,875
Despite hardware
constraints, Atari
1807
01:24:57,917 --> 01:24:59,792
put out tons of
their own Pac-man.
1808
01:24:59,875 --> 01:25:01,875
They made more
games than there were
1809
01:25:01,875 --> 01:25:03,750
consoles out there
in use at that time.
1810
01:25:03,958 --> 01:25:07,292
They'd figured people would
be so excited to buy Pac-man
1811
01:25:07,667 --> 01:25:09,667
that they'd buy a console
just to play the game.
1812
01:25:09,917 --> 01:25:12,000
But hardware
constraints backlashed
1813
01:25:12,042 --> 01:25:13,708
against the Pac-man conversion.
1814
01:25:13,917 --> 01:25:16,667
Converting coin-op
games to the VCS
1815
01:25:16,833 --> 01:25:18,417
was never really a
good thing to do
1816
01:25:18,500 --> 01:25:20,583
'cause the VCS was a
static technology, and
1817
01:25:20,583 --> 01:25:22,583
coin-op games kept getting
better and better.
1818
01:25:22,583 --> 01:25:24,875
Pac-man had too many
objects on the screen,
1819
01:25:24,958 --> 01:25:27,417
moving too fast and
too independently.
1820
01:25:27,542 --> 01:25:29,708
Pac-man kind of flickered
back and forth.
1821
01:25:29,833 --> 01:25:33,708
The system only
supports two 8-bit sprites.
1822
01:25:33,833 --> 01:25:36,250
The designer of
Pac-man cartridge
1823
01:25:36,500 --> 01:25:38,083
uses one of them for
the little eater
1824
01:25:38,125 --> 01:25:39,375
thing that runs
around the screen
1825
01:25:39,583 --> 01:25:41,917
and he uses one of them
for all the other ghosts.
1826
01:25:42,042 --> 01:25:44,875
Now, there are four of them on
the screen at any given time,
1827
01:25:45,042 --> 01:25:48,042
so he's basically
displaying each
1828
01:25:48,083 --> 01:25:50,125
ghost one quarter of the time.
1829
01:25:50,333 --> 01:25:51,625
Now that makes it flicker.
1830
01:25:51,708 --> 01:25:54,208
Only some executives
at Atari were taking
1831
01:25:54,208 --> 01:25:56,708
the technical
limitation of the VCS
1832
01:25:56,792 --> 01:25:58,042
in the proper account.
1833
01:25:58,083 --> 01:26:00,458
It sold zillions of
copies, just because
1834
01:26:00,500 --> 01:26:02,167
the name was powerful
enough to carry.
1835
01:26:02,667 --> 01:26:04,333
I may not be proud
of the cartridge
1836
01:26:04,375 --> 01:26:06,375
and the public had a right
to be disappointed.
1837
01:26:06,542 --> 01:26:08,458
Game quality didn't
seem to be a serious
1838
01:26:08,500 --> 01:26:10,542
issue as long as
sales kept going.
1839
01:26:10,708 --> 01:26:12,250
It sold six million copies.
1840
01:26:12,875 --> 01:26:15,000
I don't know what else
I can say to confirm.
1841
01:26:15,167 --> 01:26:18,208
It was probably the
most successful launch
1842
01:26:18,292 --> 01:26:21,542
of a video game or any
product in America.
1843
01:26:21,917 --> 01:26:23,792
The game wasn't bad, it
could've been better.
1844
01:26:24,167 --> 01:26:26,458
It wasn't maybe the
greatest, it was fine.
1845
01:26:26,583 --> 01:26:27,875
At the engineering level,
1846
01:26:27,958 --> 01:26:29,917
the opinions were
much less forgiving.
1847
01:26:32,042 --> 01:26:34,417
They marketed it as
Pac-man and what they
1848
01:26:34,417 --> 01:26:36,792
released had nothing
to do with Pac-man,
1849
01:26:36,999 --> 01:26:41,292
which made the Pac-man
experience look that much worse.
1850
01:26:42,333 --> 01:26:44,875
Disaffection started
to spread like a virus
1851
01:26:44,917 --> 01:26:46,417
among the VCS users.
1852
01:26:46,875 --> 01:26:52,292
When Atari released 10
million Pac-man cartridges,
1853
01:26:53,292 --> 01:26:55,875
that was the beginning
of the end of Atari.
1854
01:26:58,667 --> 01:27:02,542
OK, the ET video
game was a very
1855
01:27:02,583 --> 01:27:04,542
interesting situation
to say the least.
1856
01:27:04,625 --> 01:27:08,625
The Atari collapse was
really the story about ET.
1857
01:27:08,750 --> 01:27:11,792
Steve Ross was once at lunch
with Steven Spielberg,
1858
01:27:11,999 --> 01:27:13,958
and had what he thought
was a great idea.
1859
01:27:14,125 --> 01:27:17,625
Steve Ross cuts a
deal with Steven Spielberg
1860
01:27:17,708 --> 01:27:19,125
for the name ET.
1861
01:27:19,167 --> 01:27:23,125
He said, "We make a video
game out of [his] movie ET,
1862
01:27:23,750 --> 01:27:25,292
and I have guaranteed
a twenty-five
1863
01:27:25,292 --> 01:27:26,333
million dollar payment."
1864
01:27:27,208 --> 01:27:27,999
He said, "What you think?"
1865
01:27:28,167 --> 01:27:29,333
I said, "I think that's is the
1866
01:27:29,333 --> 01:27:30,625
dumbest thing I've ever heard."
1867
01:27:30,708 --> 01:27:33,833
In 1982, the licensing
war seemed to peak.
1868
01:27:33,958 --> 01:27:36,583
Unfortunately,
the 2600 hardware
1869
01:27:36,708 --> 01:27:39,083
couldn't do
just any video game.
1870
01:27:39,542 --> 01:27:44,542
The reason video games that
were done as movie titles
1871
01:27:44,750 --> 01:27:48,417
didn't do very well is because
they couldn't be done very well.
1872
01:27:48,500 --> 01:27:50,708
What was clear from the
very start was that the
1873
01:27:50,750 --> 01:27:53,833
available time was insufficient
for doing anything.
1874
01:27:53,917 --> 01:27:58,208
I said, "It is now August,
Steve," he wanted this product
1875
01:27:58,250 --> 01:28:01,792
created and shipped for
Christmas business.
1876
01:28:01,958 --> 01:28:03,958
I said, "The lead
time just getting the
1877
01:28:03,999 --> 01:28:06,833
semiconductor chips is
longer than six months.
1878
01:28:07,083 --> 01:28:09,250
We are going to have a hard time
getting the chips we need."
1879
01:28:09,292 --> 01:28:11,125
Also, creative concerns arose.
1880
01:28:11,292 --> 01:28:13,417
The character wasn't
basically appealing other
1881
01:28:13,458 --> 01:28:16,500
than in the movie. It
was this ugly creature.
1882
01:28:16,583 --> 01:28:17,999
I didn't know if we can make an
1883
01:28:18,000 --> 01:28:21,375
action game out
of a story like ET.
1884
01:28:21,500 --> 01:28:24,417
Atari had gone through these
kind of operations before.
1885
01:28:24,500 --> 01:28:26,292
Atari had negotiated
with Steven Spielberg to
1886
01:28:26,333 --> 01:28:28,000
get the rights for
Raiders of the Lost Ark.
1887
01:28:28,042 --> 01:28:31,042
Inevitably, movies had
an emotional component
1888
01:28:31,167 --> 01:28:33,667
that no one had ever
explored in games.
1889
01:28:33,708 --> 01:28:34,375
I sat down
1890
01:28:34,417 --> 01:28:38,042
ten and a half to eleven months
of solid work doing that game.
1891
01:28:38,917 --> 01:28:40,042
It was a million-seller.
1892
01:28:40,125 --> 01:28:42,250
Ray Kassar was still
very sceptical
1893
01:28:42,333 --> 01:28:44,042
about going through
the process.
1894
01:28:44,250 --> 01:28:47,708
I tried to convince Steve
that it doesn't make sense.
1895
01:28:47,917 --> 01:28:50,708
He said, "Do the best you can."
We did the best we could.
1896
01:28:51,417 --> 01:28:53,500
The schedule was
extremely tight.
1897
01:28:53,708 --> 01:28:58,958
The movie was in the spring, and
then by Christmas the same year
1898
01:28:59,125 --> 01:29:01,417
Atari wanted to come
up with an ET game.
1899
01:29:01,667 --> 01:29:05,083
That leaves about five and a
half weeks to do the game.
1900
01:29:05,208 --> 01:29:07,042
At that point, the
notorious Howard
1901
01:29:07,083 --> 01:29:08,583
Warshaw entered the picture.
1902
01:29:08,792 --> 01:29:10,542
They called up our
department and said,
1903
01:29:10,542 --> 01:29:12,875
"Who can do the ET game in
five and a half weeks?"
1904
01:29:13,000 --> 01:29:17,000
And my boss's boss told
Ray Kassar, "No one!"
1905
01:29:17,167 --> 01:29:18,083
But Ray Kassar
1906
01:29:18,125 --> 01:29:19,667
decided it was worth
calling me anyway,
1907
01:29:19,708 --> 01:29:22,625
"You know, Howard, we just
got the rights to ET,
1908
01:29:22,667 --> 01:29:25,500
can you do the ET video
game in five weeks?"
1909
01:29:26,125 --> 01:29:29,375
I said, "I absolutely can
do the game in 5 weeks,
1910
01:29:29,500 --> 01:29:32,542
provided we reach the right
deal." And he said OK.
1911
01:29:32,667 --> 01:29:35,458
Kassar thought Warshaw was the
only one who could make it.
1912
01:29:35,833 --> 01:29:37,999
Actually he was the only
one that didn't say no.
1913
01:29:38,083 --> 01:29:39,999
The deal was that I
got an additional
1914
01:29:39,999 --> 01:29:41,999
bonus, and I got an
additional advance,
1915
01:29:42,167 --> 01:29:43,875
and they signed it off,
and they gave me a
1916
01:29:43,875 --> 01:29:45,958
cheque and I did the game.
1917
01:29:46,042 --> 01:29:48,583
Warshaw got his deal
and went back to work.
1918
01:29:57,375 --> 01:30:00,167
They came out with an ET
game that was a real bummer.
1919
01:30:00,292 --> 01:30:02,667
The ET was a truly
terrible game.
1920
01:30:02,917 --> 01:30:06,375
I mean ET kept on falling
into all those little ditches
1921
01:30:06,458 --> 01:30:09,750
and then you had to float
him out and the game stunk.
1922
01:30:09,917 --> 01:30:12,167
Warshaw had to meet
with Steven Spielberg
1923
01:30:12,208 --> 01:30:13,750
to discuss the concept.
1924
01:30:13,833 --> 01:30:16,167
The secret to doing a
game in five weeks is to
1925
01:30:16,167 --> 01:30:19,333
design a game that can
be done in five weeks.
1926
01:30:19,500 --> 01:30:22,792
I had a couple of days to design
the game and then we flew to LA
1927
01:30:22,833 --> 01:30:24,250
to present the design
to Steven Spielberg.
1928
01:30:24,500 --> 01:30:26,625
Mr. Spielberg proved
once again to
1929
01:30:26,667 --> 01:30:29,250
understand the entertainment
business very well.
1930
01:30:29,625 --> 01:30:31,542
"Pretty cool," he goes,
"I kind of like that, but
1931
01:30:32,125 --> 01:30:35,042
couldn't you do something a
little more like Pac-man?"
1932
01:30:35,167 --> 01:30:35,999
I looked at him and what I
1933
01:30:35,999 --> 01:30:38,208
wanted to say to him was,
"Gee Steven, you know.
1934
01:30:38,458 --> 01:30:40,125
couldn't you do
something a little more
1935
01:30:40,125 --> 01:30:41,917
like the Day the
Earth Stood Still?"
1936
01:30:42,042 --> 01:30:43,833
But I didn't say
that, because it was
1937
01:30:43,833 --> 01:30:45,500
Steven Spielberg,
and I was just me.
1938
01:30:45,583 --> 01:30:47,375
At that time Warshaw
thought he would
1939
01:30:47,375 --> 01:30:49,292
just stuck with
his ditches idea.
1940
01:30:49,542 --> 01:30:50,833
Maybe he was right.
Maybe we should have
1941
01:30:50,833 --> 01:30:52,833
done something a little
more like Pac-man.
1942
01:30:52,958 --> 01:30:55,833
Atari pushed the game like
they never had before.
1943
01:30:58,042 --> 01:31:01,999
It didn't take long until people
find it's not a good game.
1944
01:31:02,667 --> 01:31:05,667
So people returned
it to the store
1945
01:31:05,833 --> 01:31:08,917
and retailers tried to
return it to Atari,
1946
01:31:09,667 --> 01:31:12,667
and it was chaos.
1947
01:31:12,833 --> 01:31:16,999
Once a toy goes into the closet,
it never comes out again.
1948
01:31:17,167 --> 01:31:20,792
The ET flop triggered a domino
effect on the whole business.
1949
01:31:21,167 --> 01:31:22,292
One of the reasons
it's known as
1950
01:31:22,333 --> 01:31:23,583
one of the worst
games of all time
1951
01:31:23,625 --> 01:31:25,500
is not even because
of the gameplay.
1952
01:31:25,875 --> 01:31:27,542
One of the reasons it's
known is because of the
1953
01:31:27,542 --> 01:31:29,958
financial disaster that it
seems to have generated.
1954
01:31:30,042 --> 01:31:33,042
We produced four million and
four million came back.
1955
01:31:33,250 --> 01:31:35,000
I knew we were going to
have a terrible quarter.
1956
01:31:35,625 --> 01:31:36,708
There were a lot of returns
1957
01:31:36,792 --> 01:31:38,500
along with millions
and millions of
1958
01:31:38,500 --> 01:31:40,417
other cartridges that
weren't selling.
1959
01:31:40,583 --> 01:31:43,292
A sense of panic started to
spread through the ranks.
1960
01:31:43,375 --> 01:31:45,625
Movies are going to fail,
records are going to fail,
1961
01:31:45,750 --> 01:31:47,625
and the minute you
get a management
1962
01:31:48,125 --> 01:31:49,583
that gets beat up
the minute they
1963
01:31:49,583 --> 01:31:51,375
have something that
fails, you're dead,
1964
01:31:51,625 --> 01:31:53,333
because they no
longer think clearly.
1965
01:31:53,542 --> 01:31:55,083
Ray Kassar felt he
couldn't really
1966
01:31:55,125 --> 01:31:57,542
rely on his team the
way he used to do.
1967
01:31:57,625 --> 01:31:59,500
There was a lack of
really good product.
1968
01:31:59,542 --> 01:32:02,375
No one was very creative,
suddenly something happened.
1969
01:32:02,625 --> 01:32:03,833
We all got depressed.
1970
01:32:04,208 --> 01:32:06,333
We were doing so well
and all of a sudden,
1971
01:32:06,375 --> 01:32:08,167
because of something
we had to do,
1972
01:32:08,667 --> 01:32:10,250
we had this failure and it was
1973
01:32:10,333 --> 01:32:13,250
tough, was very
tough on all of us.
1974
01:32:13,500 --> 01:32:16,083
Worse than that, gamers
all over the country
1975
01:32:16,083 --> 01:32:19,417
started to be less enthusiastic
about video games.
1976
01:32:19,500 --> 01:32:21,333
Pac-man was a failure
in delivering the
1977
01:32:21,375 --> 01:32:23,250
most popular video
game at the time,
1978
01:32:23,542 --> 01:32:25,167
and then ET was a
failure in delivering
1979
01:32:25,208 --> 01:32:26,917
the most popular
movie of the time.
1980
01:32:26,999 --> 01:32:29,917
A lot of people said, "You know
what? I'm done with this."
1981
01:32:30,125 --> 01:32:31,875
Howard Warshaw took
the money home
1982
01:32:31,917 --> 01:32:33,667
and is still thinking about it.
1983
01:32:33,750 --> 01:32:35,292
Was it the worst
game ever made?
1984
01:32:35,500 --> 01:32:36,875
I've also done Yar's Revenge,
1985
01:32:36,958 --> 01:32:38,750
which frequently, on a
lot of lists, is known
1986
01:32:38,792 --> 01:32:40,917
as the best game of
all time on the VCS.
1987
01:32:41,750 --> 01:32:43,333
So having done the
best and the worst
1988
01:32:43,417 --> 01:32:45,292
I figure, I have
the greatest range
1989
01:32:45,375 --> 01:32:46,875
of any game designer
in history.
1990
01:32:47,625 --> 01:32:48,875
I'm very proud of that fact.
1991
01:32:52,542 --> 01:32:55,292
On December 7th 1982,
1992
01:32:55,875 --> 01:32:57,542
we had to make an announcement
1993
01:32:57,917 --> 01:32:58,999
about the fact that
our earnings were
1994
01:32:59,000 --> 01:33:01,167
going to be well
below expectation.
1995
01:33:01,333 --> 01:33:03,833
For several days Manny
Gerard had tried to
1996
01:33:03,833 --> 01:33:06,750
understand what his
intuition was telling him.
1997
01:33:06,999 --> 01:33:08,042
I remember it well.
1998
01:33:08,417 --> 01:33:12,292
It all started because I
kept asking questions
1999
01:33:12,708 --> 01:33:17,125
of the salespeople about the
sales of the ET cartridge.
2000
01:33:17,250 --> 01:33:18,958
"How are they selling?
Was Pac-man there?"
2001
01:33:19,000 --> 01:33:20,208
"Oh they're selling
great, we're going to
2002
01:33:20,208 --> 01:33:21,667
meet the projections,
everything's fine."
2003
01:33:21,792 --> 01:33:24,625
Unfortunately, one of the
most difficult things at
2004
01:33:24,625 --> 01:33:27,417
Atari seemed to be obtaining
the numbers easily.
2005
01:33:27,500 --> 01:33:31,250
They had created such a
stratified management that
2006
01:33:31,458 --> 01:33:34,333
top management was unaware of
what was going on in the field,
2007
01:33:34,458 --> 01:33:36,750
and by the time they realized
2008
01:33:36,792 --> 01:33:38,333
nothing was selling
it was too late.
2009
01:33:38,583 --> 01:33:40,583
Apparently, Manny
was the only one
2010
01:33:40,625 --> 01:33:42,000
to feel something
was going wrong.
2011
01:33:42,042 --> 01:33:45,333
I didn't believe it. My gut told
me it wasn't going to happen.
2012
01:33:45,458 --> 01:33:48,500
I was nervous. So I had
called up Dennis Groth,
2013
01:33:48,542 --> 01:33:51,208
who was the CFO of Atari,
Chief Financial Officer,
2014
01:33:51,500 --> 01:33:53,667
and I said, "Dennis, I want
you to go through the numbers
2015
01:33:53,792 --> 01:33:55,542
and I want you to tell
me what is happening."
2016
01:33:55,833 --> 01:33:59,000
And the night of December
6th, I got a call.
2017
01:34:00,708 --> 01:34:02,500
And he said, "I've been
through the numbers Manny,
2018
01:34:02,500 --> 01:34:05,042
we're not going to make
the numbers at all."
2019
01:34:05,167 --> 01:34:08,667
Not meeting projections was not
appreciated on Wall Street.
2020
01:34:08,792 --> 01:34:13,542
Atari was making, I think, over
between 1-2 billion a year.
2021
01:34:13,792 --> 01:34:15,250
We were the largest
revenue producer
2022
01:34:15,292 --> 01:34:16,625
for all of Warner
Communication.
2023
01:34:16,833 --> 01:34:18,833
After Atari was
making lots of money
2024
01:34:19,083 --> 01:34:21,958
we got T-shirts that said,
"Warner: An Atari company."
2025
01:34:22,458 --> 01:34:24,458
Obviously, Warner
had to be crystal
2026
01:34:24,500 --> 01:34:25,917
clear about the situation.
2027
01:34:26,083 --> 01:34:27,917
We waited for Steve
Ross to come in,
2028
01:34:28,167 --> 01:34:29,999
and we sat down in
the room and we all
2029
01:34:29,999 --> 01:34:31,625
came to the same
obvious conclusion,
2030
01:34:31,875 --> 01:34:34,000
and we put out that
announcement, and
2031
01:34:34,000 --> 01:34:36,500
as you know, the
stock got murdered.
2032
01:34:37,042 --> 01:34:38,875
They were not going
to go in the red,
2033
01:34:39,125 --> 01:34:42,375
but they were going to grow 15
per cent instead of 50 per cent,
2034
01:34:42,708 --> 01:34:44,125
which was not appreciated.
2035
01:34:44,333 --> 01:34:46,792
By the end of the day,
Warner Communications'
2036
01:34:46,833 --> 01:34:48,750
stock had dropped by a third.
2037
01:34:48,917 --> 01:34:51,458
It was not the fun
day, I will tell you.
2038
01:34:51,750 --> 01:34:53,500
The reason why Atari
didn't meet the
2039
01:34:53,500 --> 01:34:55,667
projections was a whole
different matter.
2040
01:34:55,875 --> 01:34:59,958
They'd sold as many 2600s
to anybody who wanted them,
2041
01:35:00,542 --> 01:35:03,375
and to try to push
another 10-15
2042
01:35:03,417 --> 01:35:05,917
million units into
the marketplace...
2043
01:35:05,999 --> 01:35:06,917
It was too much,
2044
01:35:06,999 --> 01:35:09,625
and you had a lot of retailers
getting very scared.
2045
01:35:09,833 --> 01:35:13,833
One undeniable fact was the
Atari VCS obsolescence.
2046
01:35:13,917 --> 01:35:17,542
Coleco comes along and
Intellivision is there,
2047
01:35:17,833 --> 01:35:19,417
and Atari realizes that
2048
01:35:19,833 --> 01:35:21,917
way too late, that they
need to step it up.
2049
01:35:22,208 --> 01:35:24,875
If I had been running Atari
2050
01:35:25,417 --> 01:35:26,917
the VCS2
2051
01:35:27,042 --> 01:35:30,125
would've been out in 1980,
2052
01:35:30,999 --> 01:35:35,250
and the people who had
grown tired of the 2600
2053
01:35:35,292 --> 01:35:37,792
would've started to buy
the next generation,
2054
01:35:37,958 --> 01:35:39,167
which is what we see today.
2055
01:35:39,417 --> 01:35:41,208
Engineers blamed the management
2056
01:35:41,375 --> 01:35:43,625
for not understanding
videogaming at all.
2057
01:35:43,667 --> 01:35:44,833
It takes more than
one person to
2058
01:35:44,833 --> 01:35:46,333
create a failure
of this magnitude.
2059
01:35:46,333 --> 01:35:48,833
Atari was the fastest
growing company
2060
01:35:48,875 --> 01:35:50,250
in the history of
American business.
2061
01:35:50,417 --> 01:35:53,250
Nolan Bushnell sold it
for 22 million, and like
2062
01:35:53,292 --> 01:35:55,583
two years later it had
a billion in sales.
2063
01:35:55,792 --> 01:35:57,583
The video game
industry was still at
2064
01:35:57,583 --> 01:35:59,833
that point quite a
mysterious object.
2065
01:35:59,917 --> 01:36:01,875
There were plenty of
games that hadn't
2066
01:36:01,875 --> 01:36:03,917
sold well before
Pac-man and ET,
2067
01:36:04,167 --> 01:36:05,667
but they didn't
create the kind of
2068
01:36:05,708 --> 01:36:08,208
financial crisis and
the kind of consumer
2069
01:36:08,417 --> 01:36:11,333
confidence crisis that
Pac-man and ET did.
2070
01:36:11,417 --> 01:36:13,875
The business model
at Atari was still
2071
01:36:13,917 --> 01:36:16,250
a trial and error
learning process -
2072
01:36:16,500 --> 01:36:17,999
a billion dollars a shot.
2073
01:36:18,208 --> 01:36:20,292
All of the business
models subsequently have
2074
01:36:20,333 --> 01:36:22,292
built up on the
fact that I have complete
2075
01:36:22,500 --> 01:36:25,250
control over the software
that goes on my system.
2076
01:36:25,333 --> 01:36:27,292
We spent hours with
lawyers, is there
2077
01:36:27,458 --> 01:36:29,208
any way we can control
the software?
2078
01:36:29,417 --> 01:36:30,250
The answer was no.
2079
01:36:30,583 --> 01:36:33,208
Literally everyone was
publishing video games,
2080
01:36:33,208 --> 01:36:36,083
putting quality and price
point severely at risk.
2081
01:36:36,125 --> 01:36:38,042
The Quaker Oats
company that makes
2082
01:36:38,083 --> 01:36:40,250
breakfast cereals had
a video game company.
2083
01:36:40,750 --> 01:36:42,750
Every one of those
companies built a
2084
01:36:42,833 --> 01:36:45,250
million cartridges
that didn't sell,
2085
01:36:45,542 --> 01:36:48,000
so they end up selling
them for 5 dollars apiece.
2086
01:36:48,083 --> 01:36:49,750
This roller coaster ride filled
2087
01:36:49,750 --> 01:36:51,792
the retailers with
mixed feelings.
2088
01:36:51,875 --> 01:36:54,500
The retailers were
never really sure that this
2089
01:36:54,542 --> 01:36:57,750
whole video games
thing was gonna keep going.
2090
01:36:57,833 --> 01:37:00,042
Atari, on its side,
had the power for
2091
01:37:00,125 --> 01:37:02,042
putting distributors
under pressure.
2092
01:37:02,167 --> 01:37:04,917
When the tide started to turn
2093
01:37:05,083 --> 01:37:07,125
everyone who got the
chance to screw
2094
01:37:07,167 --> 01:37:09,458
Atari screwed them to the wall.
2095
01:37:09,583 --> 01:37:12,667
The dam started to
crack with Pac-man.
2096
01:37:12,792 --> 01:37:15,250
The cracks got a
little wider with ET,
2097
01:37:15,292 --> 01:37:18,125
when the first few major
cracks occurred, Bam!
2098
01:37:18,167 --> 01:37:20,250
Killed the village, it
drowned the whole town.
2099
01:37:20,417 --> 01:37:22,500
The only one to have a
different opinion about
2100
01:37:22,500 --> 01:37:25,250
the quality issue is
Mr. Bushnell himself.
2101
01:37:25,417 --> 01:37:30,458
I believe that controlling
the software has been
2102
01:37:30,458 --> 01:37:35,083
a very, very faulty
analysis of what happened.
2103
01:37:35,250 --> 01:37:38,000
The crappy software story
2104
01:37:38,042 --> 01:37:40,292
had nothing to do with
what was going on.
2105
01:37:40,417 --> 01:37:45,125
Warner did try to
put 15 million VCS
2106
01:37:45,167 --> 01:37:47,208
into a market that
only wanted two.
2107
01:37:47,792 --> 01:37:51,917
And whenever you have that much
supply overhang, markets crash.
2108
01:37:52,333 --> 01:37:54,208
There's little doubt
that the man who pushed
2109
01:37:54,250 --> 01:37:56,333
the market so far
was Ray Kassar.
2110
01:37:56,500 --> 01:38:00,292
Ray was in charge of a
wild runaway train and
2111
01:38:00,333 --> 01:38:01,500
he didn't really know
what was going on.
2112
01:38:01,750 --> 01:38:04,750
Could it be that Atari was
simply not manageable at all?
2113
01:38:04,875 --> 01:38:07,708
When I got there in '78
the company was doing
2114
01:38:07,750 --> 01:38:10,167
about seventy-eight
million dollars in sales.
2115
01:38:10,333 --> 01:38:12,917
Three years later, we were
doing over three billion.
2116
01:38:12,999 --> 01:38:15,167
When Atari was moving
up so rapidly,
2117
01:38:15,292 --> 01:38:16,875
we added a lot of overhead.
2118
01:38:17,458 --> 01:38:20,208
We, for example, went and
built a factory in Hong Kong.
2119
01:38:20,417 --> 01:38:23,000
We decided, now we'll go and
build a plant in Ireland.
2120
01:38:23,583 --> 01:38:25,375
Atari's growth was
one never heard of
2121
01:38:25,458 --> 01:38:27,125
before, and quite astonishing.
2122
01:38:27,708 --> 01:38:30,167
When I got there I don't
remember the exact
2123
01:38:30,208 --> 01:38:33,708
head count, but let's
say maybe it was 150.
2124
01:38:34,333 --> 01:38:36,083
When I left it was 12,000.
2125
01:38:37,208 --> 01:38:41,042
To go from 150 to 12,000.
It's a nightmare.
2126
01:38:41,083 --> 01:38:43,583
When income started to
slow down, Ray Kassar
2127
01:38:43,583 --> 01:38:45,750
was not prepared to
kill his creature.
2128
01:38:45,917 --> 01:38:48,375
I remember I made an effort.
2129
01:38:48,583 --> 01:38:51,750
I came up with a plan to
reorganize the company.
2130
01:38:51,875 --> 01:38:53,917
You've got to go in
and just hack it away
2131
01:38:54,458 --> 01:38:56,167
with incredible
speed, and very few
2132
01:38:56,208 --> 01:38:57,999
people are capable
of doing that.
2133
01:38:58,167 --> 01:38:59,500
Ray and Manny were looking at
2134
01:38:59,542 --> 01:39:01,625
things getting worse
day after day.
2135
01:39:01,833 --> 01:39:05,583
Next year it went down
to 200 million dollars.
2136
01:39:05,999 --> 01:39:11,583
So it's not, it's not like down
10 per cent or down 15 per cent,
2137
01:39:12,000 --> 01:39:16,292
it's like less than one tenth,
or less than one twentieth.
2138
01:39:19,167 --> 01:39:21,083
Nolan Bushnell was
clever enough to
2139
01:39:21,125 --> 01:39:23,292
make a profit from
the bad situation.
2140
01:39:23,292 --> 01:39:26,458
I actually had a big
short on the Warner
2141
01:39:26,500 --> 01:39:28,333
stock, I made a lot of
money when they failed.
2142
01:39:30,750 --> 01:39:34,500
But at the same time
I would've preferred
2143
01:39:34,542 --> 01:39:36,375
to continue to be
running Atari.
2144
01:39:41,167 --> 01:39:43,083
My own opinion, and I
2145
01:39:43,167 --> 01:39:45,458
take some responsibility
for part of this too,
2146
01:39:46,000 --> 01:39:52,042
was Atari became so successful,
so fast, and was so profitable,
2147
01:39:52,625 --> 01:39:54,458
I think it went to
everybody's head.
2148
01:39:56,458 --> 01:39:58,292
And I think that led
to some mistakes.
2149
01:39:58,625 --> 01:40:02,167
Atari had invented an entire
industry from scratch.
2150
01:40:02,250 --> 01:40:05,875
We spent a lot
of time looking at
2151
01:40:05,917 --> 01:40:08,333
the business
and asking ourselves
2152
01:40:10,125 --> 01:40:10,999
"Where can it go?"
2153
01:40:11,125 --> 01:40:13,999
To some extent, in the
short run, it was a fad.
2154
01:40:14,000 --> 01:40:17,583
The inception of Atari had been
coin-operated video games.
2155
01:40:17,999 --> 01:40:20,917
The arcade business has dropped
off the face of the earth.
2156
01:40:21,000 --> 01:40:23,042
People said, "You know,
this year I think
2157
01:40:23,083 --> 01:40:24,167
I'm gonna take up tennis,
2158
01:40:24,417 --> 01:40:26,542
or next time I go to
the bowling alley..."
2159
01:40:26,583 --> 01:40:28,542
Their parents, their mother
and father, suddenly said,
2160
01:40:28,667 --> 01:40:31,625
"I just bought you this home
game system, I'm not going
2161
01:40:31,667 --> 01:40:33,250
to pay for you to go to
the arcade anymore."
2162
01:40:33,333 --> 01:40:36,958
The turning point happened when
Warner bought Atari with cash.
2163
01:40:37,000 --> 01:40:39,250
Just doing a
spreadsheet to show that
2164
01:40:39,250 --> 01:40:41,042
it makes economic
sense isn't enough.
2165
01:40:41,333 --> 01:40:42,750
There's a thing called culture,
2166
01:40:42,958 --> 01:40:45,583
the way people behave,
the way they work.
2167
01:40:45,625 --> 01:40:48,333
Atari was the first
genuine Silicon Valley
2168
01:40:48,375 --> 01:40:49,917
Age of Aquarius company.
2169
01:40:50,208 --> 01:40:53,500
As in many cases,
entrepreneurs who create
2170
01:40:53,542 --> 01:40:55,500
great businesses, were
not meant to run them.
2171
01:40:55,833 --> 01:40:58,417
I see Atari more of a case
of that than anything else.
2172
01:40:58,708 --> 01:41:01,292
As in every Silicon Valley
company from then on,
2173
01:41:01,542 --> 01:41:04,583
handling technology was the
key to success, or failure.
2174
01:41:04,792 --> 01:41:07,083
Atari didn't really
have much of a plan
2175
01:41:07,125 --> 01:41:08,333
for what was going
to happen next year.
2176
01:41:08,708 --> 01:41:12,375
Warner attempted to
make it into a company
2177
01:41:12,417 --> 01:41:14,875
with long term plans,
long term goals.
2178
01:41:14,999 --> 01:41:21,625
It's hard to plan for,
um, you know, brilliant ideas.
2179
01:41:21,750 --> 01:41:25,792
In a single moment, Atari lost
control of its technology core.
2180
01:41:25,875 --> 01:41:28,083
You've got to obsolete your own
products as fast as you can,
2181
01:41:28,125 --> 01:41:29,667
because if you don't someone
else is gonna do it.
2182
01:41:29,958 --> 01:41:33,833
And I don't believe, now,
2183
01:41:33,917 --> 01:41:35,458
that that was our
mindset at the time,
2184
01:41:35,999 --> 01:41:37,875
and I'm partly responsible.
2185
01:41:38,042 --> 01:41:40,583
Surely no one had
envisioned the growing rate
2186
01:41:40,625 --> 01:41:43,500
that Warner would have been
able to give to Atari.
2187
01:41:43,583 --> 01:41:45,708
Nobody, even Nolan
Bushnell, had any idea
2188
01:41:45,708 --> 01:41:47,417
how big Atari was going to be,
2189
01:41:47,500 --> 01:41:49,042
or Bushnell would
never have sold it
2190
01:41:49,083 --> 01:41:50,542
as he did to Warner
for 22 million.
2191
01:41:50,792 --> 01:41:54,167
The fundamentals of the business
were very easy to learn.
2192
01:41:54,250 --> 01:41:58,458
I felt that the nature
of man is to play,
2193
01:41:59,958 --> 01:42:03,292
that there have been
games throughout history
2194
01:42:03,917 --> 01:42:08,542
and games have always taken on
the technology of the time.
2195
01:42:08,708 --> 01:42:12,125
The video game technology
was digital technology and now
2196
01:42:12,917 --> 01:42:19,833
it allowed you to have
unique rules, and motion,
2197
01:42:19,875 --> 01:42:23,417
and dynamics, and
speed, and simulation.
2198
01:42:23,667 --> 01:42:25,833
At one point the
medium itself became
2199
01:42:25,833 --> 01:42:28,000
the drive for the
video game success.
2200
01:42:28,083 --> 01:42:30,833
This exciting new thing to
do is what made it big.
2201
01:42:30,958 --> 01:42:34,250
It was a natural thing, and it
was huge and so it took off.
2202
01:42:34,417 --> 01:42:36,458
And then Warner money,
with Manny Gerard's
2203
01:42:36,500 --> 01:42:38,125
and Ray Kassar's skills,
2204
01:42:38,292 --> 01:42:40,542
made it happen on a
never expected scale.
2205
01:42:40,708 --> 01:42:43,042
While it was a
terrific experience
2206
01:42:43,167 --> 01:42:45,292
for me we all felt
we were doing
2207
01:42:46,167 --> 01:42:48,917
almost something historic and
would go down in history.
2208
01:42:48,999 --> 01:42:51,208
Since he really
didn't understand how
2209
01:42:51,250 --> 01:42:53,917
the success was
made in the first place,
2210
01:42:54,042 --> 01:42:57,958
when it turned around, he had
no idea how to fix it either.
2211
01:42:58,125 --> 01:43:00,750
Sadly, Manny Gerard
can only conclude
2212
01:43:00,833 --> 01:43:02,458
that it was too hard to master.
2213
01:43:02,583 --> 01:43:04,417
It's the nature of
companies that nothing
2214
01:43:04,458 --> 01:43:05,958
grows straight-lines
to the moon.
2215
01:43:06,583 --> 01:43:09,625
The mark of a great management
is not managing the upside.
2216
01:43:09,708 --> 01:43:11,583
Everybody manages
the upside well.
2217
01:43:11,708 --> 01:43:12,999
It's managing the downside,
2218
01:43:13,000 --> 01:43:15,042
and very few people
manage the downside well.
2219
01:43:15,083 --> 01:43:18,375
No one was ever able to cut
overhead enough to survive.
2220
01:43:18,667 --> 01:43:22,625
You've got to really go, and
not cut costs 15 per cent,
2221
01:43:22,833 --> 01:43:25,250
you've got to cut
costs 45 per cent,
2222
01:43:25,292 --> 01:43:26,917
and emotionally it's
impossible to do.
2223
01:43:27,083 --> 01:43:29,875
I'm not envious of Ray Kassar's
position in that thing.
2224
01:43:30,000 --> 01:43:33,708
1982 was the perfect
representation of a nightmare.
2225
01:43:33,792 --> 01:43:35,458
You come in and they say, "OK,
it looks like this," and you
2226
01:43:35,500 --> 01:43:37,875
come in two weeks later and, as
I said, it's down ten percent,
2227
01:43:37,958 --> 01:43:39,750
and two weeks later it's
down another ten percent,
2228
01:43:39,917 --> 01:43:41,792
and it was just chaos.
2229
01:43:41,958 --> 01:43:43,583
There was no fixed
point that stayed
2230
01:43:43,583 --> 01:43:45,500
solid for more
than ten minutes.
2231
01:43:45,542 --> 01:43:47,458
Atari had a fate
that no one from the
2232
01:43:47,458 --> 01:43:49,917
inside could actually
see or avoid.
2233
01:43:50,000 --> 01:43:53,833
The fact is, the industry
which had grown like a rocket
2234
01:43:54,042 --> 01:43:58,917
fell back dramatically, but the
basic business didn't go away.
2235
01:43:59,083 --> 01:44:01,250
Atari's legacy exists
on several levels.
2236
01:44:01,500 --> 01:44:04,292
The people at Atari contributed
dramatically to shape
2237
01:44:04,292 --> 01:44:07,250
the digital revolution
of the 8-bit generation.
2238
01:44:07,417 --> 01:44:09,542
People like to
tell me the story
2239
01:44:09,583 --> 01:44:11,625
about the first
time they saw Pong.
2240
01:44:11,833 --> 01:44:15,083
They like to tell me the
stories about how they
2241
01:44:15,125 --> 01:44:17,958
met their husband or
their wife playing Pong.
2242
01:44:20,750 --> 01:44:24,708
People like to tell me
how excited they were
2243
01:44:24,958 --> 01:44:29,208
when they got the 2600 under
their Christmas tree.
2244
01:44:29,750 --> 01:44:31,542
How it was the most
important thing that
2245
01:44:31,583 --> 01:44:34,000
happened in their childhood,
things like that,
2246
01:44:34,375 --> 01:44:36,542
and it's gratifying, it's fun.
2247
01:44:36,750 --> 01:44:39,292
Atari was also the
testbed for companies
2248
01:44:39,292 --> 01:44:41,917
based on creativity
and technology alike.
2249
01:44:42,042 --> 01:44:44,583
The environment there was
2250
01:44:44,792 --> 01:44:47,583
unique in the freedom that
they gave us to be creative,
2251
01:44:47,792 --> 01:44:49,375
to try different
things, because we were
2252
01:44:49,417 --> 01:44:51,042
doing things no one
else had done before,
2253
01:44:51,208 --> 01:44:54,999
and to this day it
remains the single
2254
01:44:55,167 --> 01:44:56,417
most talented collection of
2255
01:44:56,458 --> 01:44:58,083
individuals I've
ever worked with.
2256
01:44:58,417 --> 01:45:01,208
Nolan Bushnell started the
Aquarium business style
2257
01:45:01,417 --> 01:45:03,458
that rules Silicon
Valley to this day.
2258
01:45:03,750 --> 01:45:06,625
But more than that he
introduced people, all kinds
2259
01:45:06,667 --> 01:45:09,333
of people, well-educated
college professors,
2260
01:45:09,333 --> 01:45:12,208
working class folk,
and legions of kids,
2261
01:45:12,250 --> 01:45:13,958
to the upcoming digital world.
2262
01:45:14,833 --> 01:45:20,750
For some reason that I don't
quite understand is that
2263
01:45:21,125 --> 01:45:26,999
I have been able to be
a business chameleon.
2264
01:45:27,167 --> 01:45:29,958
If I'm dropped in a pond of
2265
01:45:29,999 --> 01:45:31,917
marketing guys I can
talk marketing.
2266
01:45:32,083 --> 01:45:33,375
If I'm dropped in a pond of
2267
01:45:33,375 --> 01:45:35,042
engineers, I can
talk engineering.
2268
01:45:36,125 --> 01:45:39,958
You know, people call
me a visionary but
2269
01:45:41,160 --> 01:45:43,240
I'm not really sure
what that means.
2270
01:45:43,400 --> 01:45:45,317
The Atari ride
stands as one of the
2271
01:45:45,400 --> 01:45:47,080
most unforgettable experiences
2272
01:45:47,292 --> 01:45:49,167
for anyone who was involved.
2273
01:45:49,250 --> 01:45:51,583
The Atari experience
for me, good and
2274
01:45:51,583 --> 01:45:54,042
bad, is not an experience
I would trade.
2275
01:45:54,083 --> 01:45:56,875
It was a great education, it
was one of the great rides up
2276
01:45:56,999 --> 01:45:59,167
and, as we all know, one
of the great rides down.
2277
01:46:01,042 --> 01:46:02,500
Trust me, up is more fun.
2278
01:46:47,833 --> 01:46:49,292
[ominous music]
2279
01:47:11,917 --> 01:47:14,917
[electronic music]
175973
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