The Memo

When David Crane joined Atari in 1977, the company was maturing from a feisty Silicon Valley start-up to a mass-market entertainment company. “Nolan Bushnell had recently sold to Warner but he was still around offering creative guidance. Most of the drug culture was a thing of the past and the days of hot-tubbing in the office were over,” Crane recalled.

The sale to Warner Communications had given Atari the much-needed financial stability required to push into the home market with its new VCS console. Despite an uncertain start, the VCS soon became a retail sensation, bringing in hundreds of millions in profits for Atari. “It was a great place to work because we were creating cutting-edge home video games, and helping to define a new industry,” Crane remembered.

“But it wasn’t all roses as the California culture of creativity was being pushed out in favor of traditional corporate structure,” Crane noted. Bushnell clashed with Warner’s board of directors and in 1978 he was forced out of the company that he had founded. To replace Bushnell, Warner installed former Burlington executive Ray Kassar as the company’s new CEO, a man who had little in common with the creative programmers at Atari. “In spite of Warner’s management, Atari was still doing very well financially, and middle management made promises of profit sharing and other bonuses.

Unfortunately, when it came time to distribute these windfalls, senior management denied ever making such promises,” Crane remembered. “Creative people don’t like to be lied to, and there was a revolt with many people leaving and others threatening to go. Job satisfaction in the whole engineering department was at an all time low,” he said. “At the same time, a memo was circulated from the marketing department showing the prior year’s cartridge sales, broken down by game as a percentage of sales. The intent of the memo was to alert the game development staff to what types of games were selling well,” Crane recalled.

“This memo backfired however, as it demonstrated the value of the game designer individually. Video game design in those days was a one-man process with one person doing the creative design, the storyboards, the graphics, the music, the sound effects, every line of programming, and final play testing. So when I saw a memo that the games for which I was 100 percent responsible had generated over $20 million in revenues, I was one of the people wondering why I was working in complete anonymity for a $20,000 salary,” Crane said.

The Gang of Four

Crane wasn’t the only programmer who was dissatisfied with Atari’s management. Alan Miller had approached Atari’s executives with a contract proposal that would provide programmers with design credit and royalties on games only to be rejected by management. Larry Kaplan and Bob Whitehead were also looking for more recognition and fair compensation. Together they became known as the “Gang of Four”.

“When we looked closely at that memo, we saw that as a group we were responsible for 60 percent of their $100 million in cartridge sales for a single year,” Crane recalled. “With concrete evidence that our contribution to the company was of great value, we went to the president of Atari to ask for a little recognition and fair compensation. Ray Kassar looked us in the eye and said, ‘You are no more important to Atari than the person on the assembly line who puts the cartridges in the box.’ After that it was a pretty easy decision to leave.”