In that same year, Warner Communications sold a large portion of their interests in Atari, their former money maker, to ex-Commodore executive and founder, Jack Tramiel, who had no desire to pursue the stagnant videogame market.

Tramiel shelved both an unreleased 2600 redesign and its backward-compatible next-generation successor, the 7800 ProSystem (7800), in favor of new Atari computers.

Existing 2600 and 5200 inventory remained in the various sales channels and continued to sell, but two years passed before Atari attempted to reclaim their dominance in the home videogame market.

By this time, the Nintendo Entertainment System (NES) had established itself in America, and Atari was forced to play catch-up. Ironically, Atari could have distributed an earlier version of the NES if a prior agreement hadn't fallen through.

A few new 2600 cartridges were made available in 1985 by companies such as Activision, but there were no new Atari systems to go with them. However, after the NES revived America's passion for videogames, Atari firmly reestablished its presence in 1986 with the long-awaited releases of the mothballed Atari 2600 Jr. and 7800.

The Jr. was Atari's most significant design departure from the original heavy sixer, featuring a small and thin, black and silver enclosure, which mimicked the styling of the larger 7800. Pushed as a budget-friendly option in comparison with other systems, the 2600 continued to sell fairly well in what had become a very different market.

The Jr., with cosmetic revisions, continued to represent the VCS line until production was stopped completely by the early 1990s. Atari itself ceased to exist as a company in 1996. The name and intellectual assets have been sold and bought several times since.

In 2003, to take advantage of the well-known name, France's Infogrames Entertainment SA, itself a software development and publishing company dating from the 1980s, rebranded its global operations as "Atari." It acquired the rights to the name after purchasing Hasbro Interactive. This new entity established itself as a major software publisher for consoles, portables, and computers.

Finally, after about four years of other manufacturers releasing TV Games of variable quality based on classic Atari VCS games, the new Atari got it right. Its second attempt in 2005, the Atari Flashback 2, featured accurate renditions of 40 old and new VCS games. In fact, internally, right to its compatible controller interfaces, the Atari Flashback 2 so accurately recreates the original VCS hardware that it can even be hacked to incorporate a cartridge port, continuing a home videogame legacy that began almost 30 years earlier.