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"I think they sold 2-3 million copies of the thing... it made 30-40 million dollars... and I got a turkey." cxciv
- Rob Fulop
Atari may have experienced it largest sales ever in 1981, but that did not mean the people responsible for the products saw any of it. Even with huge sales for Missile Command, programmer Rob Fulop saw almost no benefit. He expected some kind of bonus for the millions of Missile Command games sold but he saw almost nothing.
Fulop eyed the success of the "Fantastic Four" who had formed Activision, and he left Atari in late 1981. He joined Asteroids programmer Brad Stewart, plus Atari vets Dennis Koble, Bob Smith, and Bill Grubb in their new third party VCS software venture, Imagic.
"I was considering going out on my own. I had been with Atari for five-and-a-half years, which is a long time in this Valley. The standard dream of every engineer is to start your own company someday and become rich. Hey, this was the opportunity I'd been waiting 11 years for. I knew a lot about engineering, but nothing about marketing. The more Bill and I talked, the more we seemed like a natural match." cxcv
- Dennis Koble
All of a sudden, the programmers who had made some of Atari's biggest hits of 1979-1981 (Adventure, Space Invaders, Night Driver, Missile Command, Asteroids, Breakout) were not only gone, but forming the competition against them.
Added to that, other companies were forming without Atari insider know-how. In December of 1981, Games By Apollo (started in Texas by Pat Roper using the talents of Ed Salvo) released its first 3 games for the VCS: Skeet Shoot, Lost Luggage, and Space Chase. cxcvi
Mattel was still pushing Intellivision as well, and had great success in 1981. It ran commercials showing the Intellivision sports games alongside games of the VCS, making the VCS games looked primitive by comparison. By year's end, Mattel was a serious contender nipping at Atari's heels.
"A $6 million ad campaign touts Intellivision's graphic superiority over Atari 2600. News media take note, start covering video game 'war', raising profile of entire industry. Although the $300 Intellivision is twice as expensive as the 2600, sales soar, reaching 850,000 consoles by year's end." cxcvii
- Intellivision Lives
Activision had not rested on its original game line-up in 1981 either, and blasted out a bunch of new games for the January CES show. However, by that time, Atari had taken notice of Activision's games and moved to protect the VCS system from these "outsiders". Atari filed a lawsuit early in 1981 to stop Activision.
"They stole our programs, we're suing them, of course." cxcviii
- Ray Kassar
However, Activision had no intention of stopping its work. In fact, all the lawsuit did was bolster its cause.
"...the lawsuit was timed perfectly. It was front page news at the January CES in Las Vegas and catapulted the unknown Activision to a big player and our sales skyrocketed and we never looked back." cxcix
- Larry Kaplan
In the end, Atari efforts were for nothing. The multiple lawsuits were thrown out of court, and they set the precedent for multiple third party vendors to start up by the end of 1981.
"After we started Activision, they sued us three times, every six months, both personally and as a corporation. Their total damage claim as I recall eventually stood at $26 million. It was sheer harassment. There was no basis for their claims and it was eventually settled for nothing. Activision was funded by one of Silicon Valley's most prominent and experienced venture capital companies. In starting the company, we did everything perfectly properly, under the strict guidance of our attorneys and investors." cc
- Alan Miller
Activision backed-up its premier third party status with a host of great games for the VCS: Tennis and Skiing were two of the most realistic sports games ever to grace the VCS, Laser Blast was a hypnotic twitch shooter. Kaboom! Was Larry Kaplan's version of Atari's Avalanche coin-op, while Freeway was a unique take on Frogger starring a chicken.
While these were not coin-op conversions, gameplay and visuals were some of the best the VCS had ever seen, and their screenshots looked great in print.
Which was fortunate -- because at about the same time, the flurry of activity in the video game sector had solidified into a fan base large enough to support a dedicated magazine about video games. On October 29, 1981, the first issue of Electronic Games magazine was published. The magazine started by stating the size of the fledgling industry.
"Nearly four million homes now have programmable videogame systems.This year alone, Americans will buy two million videogame systems -- and 20 million cartridges to use with them." cci
- Frank Laney Jr. (Arnie Katz), Electronic Games Magazine
Arnie Katz and Bill Kunkel started the magazine on the heels of a column they had written for a video magazine named Arcade Alley. Two of the most popular sections of Electronic Games were the letters sections -- "Reader Reply" and the Game Doctor's "Q&A" column. The simple back-and-forth between the editors and the readers in these sections over the course of multiple issues formed the basis for all video game fan/press interactions to follow.
"I think it gave the readers a sense of community. It was the only way they could really interact with us and with one another. And Q&A was, at that point, the nexus for all fan information on the world of gaming." ccii
- Bill Kunkel
There had never been a real consumer advocate for video games prior to Electronic Games. While this was good news for consumers, it was a mixed bag for video game companies. On one hand, there was a place to preview and advertise games long in advance of their release.
On the other hand, journalists could not necessarily be controlled, and thus they could also not be trusted to deliver the exact message that marketing heavy companies like Atari had been crafting to lure the public for several years. Electronic Games marked the beginning of true video game criticism. No longer would the public have to subsist on marketing messages and box-art alone to make their choices for new video games.
[For further Gamasutra-posted reading on the subject, in addition to Fulton's piece on Atari from 1971 to 1977, please refer to Bill Loguidice and Matt Barton's look at the Atari 2600 (VCS) and Atari 800/400 series of computers.]