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By late 1973 the growing competition in the games manufacturing business made Nolan Bushnell’s partner Ted Dabney very nervous. He decided to leave the company.
“We only had so much money and somewhere along the line he said ‘let’s split, I’ll take the operations business’ because at that time operations was making more money than manufacturing” - Nolan Bushnell
Bushnell was not immune to Dabney’s fears, but he still believed in the arcade games business. But instead of quitting, Bushnell decided to expand the business. To do this he had to do something very creative. In October of 1973, Bushnell decided to grab as much market share as possible by signing exclusive contracts with distributors in each geographic area to buy only Atari games.
Because most geographic areas had two distributors, Bushnell separately (and semi-secretly) created Kee Games, named after Bushnell friend Joseph Keenan who became president of the company. Kee would sign exclusive contracts with the second distributor in a geographic area. The games that Kee and Atari produced individually were eventually released by both companies with unique names and some cosmetic differences. Steve Bristow went to work for Kee as their head of engineering.
“Joe Keenan was my next door neighbor. I told him, “I’d like to hire you to set up a company called Kee Games. We’ll make it look like it’s Kee for Keenan, and it will look like you’ve come in and started up a new coin-op manufacturer”xlvi - Nolan Bushnell
After one year of operations, in November 1973, Atari had built and sold 6000 Pong machines, and sales were about $1,000,000 a month, with $15,000,000 in sales expected by the end of the fiscal year (June 1974). xlvii Even though there many competitors, Atari was still tried to push Pong in directions that the competition had never considered. Some of these ideas included prototypes, limited-run and unreleased versions of Pong such as Pong In A Barrel, Doctor Pong, and Puppy Pong. xlviii
At the same time, they worked on new ideas. The November AMOA show that year was quite different from 1972, when no one would give Atari’s Pong a passing glance. This time, Atari generated much interest with a showing of Pong Doubles, and a new game, Gotcha.
“An Amazing Maze Of Fun! Another innovative winner from Atari, the leader in video skill games” xlix - Gotcha flyer
Gotcha showed that Atari's investment in engineering paid off. It was the first ever maze game, and featured a technical marvel for the time: an ever-changing maze. Gotcha was another 2-player game, featuring a scantily-clad woman chased by a man on the side of cabinet, suggesting sexual overtones that could not be conveyed by the rudimentary graphics of the time. Gotcha was another “simple to learn, difficult to master” game aimed at the bar crowd.
In December of 1973, Newsweek published an article that called Bushnell “King Pong”. The name stuck for many years. Bushnell told the magazine (referring to Pong) “We’ve created a whole new market”l Players liked Pong because no luck is involved, and the more you played the more skillful you became. Bushnell described Atari’s successful process for game design thus: “We have to walk a tightrope between reward and frustration”.li At this time, Atari acquired one of their most infamous employees: Steve Jobs as was hired as a wiring technician by Al Alcorn.
Even with all their success, by the end of the year, more well-established competition was winning out. By the end of 1973, Midway has sold 9000 Pong-type machines opposed to Atari’s 6000.lii Atari was now up against the big boys, and they weren’t about to give Atari any credit for their inventions.
“The small companies will be in trouble when the crunch arrives” liii - 1973, Jack Mittel, Vice President of Sales for Williams Electronics
Atari started 1974 on a high note. Pong had sold well in ’73, and they were creating new and innovative games almost every month. In January they released another Pong variant named Superpong.
"An Improvement On a Proven Money Maker From The Originators Of Pong” liv - Superpong Arcade Flyer
Superpong was a one or two player contest, an evolution over Pong that used variable ball speeds, angles, and three paddles (vertically aligned) for each player. To further spice-up the game, the ball was served from random positions on the screen. Atari described Superpong as “not easily mastered.”lv In February, the first sign of Bushnell’s Kee Games ploy arrived in the form of Atari’s Rebound, and Kee’s clone of it, Spike.
“It’s A Whole New Ball Game” lvi - Rebound Arcade Flyer
Rebound was a simple game of volleyball -- in fact the Schematic dated 11/31/73 describes this game as “volleyball”.lvii It's formed from a vertical version of Pong with simulated gravity. Hitting the ball would send it on a parabolic path over 4 short lines that represented a net.
"The Spike-Man Cometh... from Kee" lviii - Spike Arcade Flyer
Spike Was Kee’s copy of Atari’s Rebound. Kee’s products were mostly copies of Atari’s games with innovative features added to differentiate them from their Atari cousins, and create the feeling of a “rivalry” between the two companies. In this case, “the Spike button” was added.
March of 1974 brought another Pong variant named Quadrapong. Quadrapong was a distant cousin of the Atari coin-op to come, Warlords. The game featured 2-4-player action in table-top, look-down cabinet.
"Another Video Action Favorite! Quadrapong is the newest addition to Atari’s Line of unique video skill games." - Quadrapong Arcade flyer
Each player was given four points, and tasked with defending one-side of a diamond-shaped screen. Players lose a point each time one of the others score in his goal, and is eliminated if this happens 4 times. At that point, their goal is sealed, and it becomes a solid wall. Quadrapong was actually an Atari copy of Kee game named Elimination.