page_title: Activision
section_title: Founding (1979)
hierarchical_section_title: Activision / History / Founding (1979)
caption_attribution_description: David Crane
context_page_description: Activision Publishing, Inc. is an American video game publisher based in Santa Monica, California. It currently serves as the publishing business for its parent company, Activision Blizzard, and consists of several subsidiary studios. Activision is one of the largest third-party video game publishers in the world and was the top United States publisher in 2016.
  The company was founded as Activision, Inc. in October 1979 in Sunnyvale, California, by former Atari game developers, upset at how they were treated at Atari, to develop their own games for the popular Atari 2600 home video game console. Activision was the first independent, third-party, console video game developer. The 1983 video game crash, in part created by too many new companies trying to follow in Activision's footsteps without the expertise of Activision's founders, hurt Activision's position in console games, forcing them to diversify into games for home computers, including the acquisition of Infocom. After a management shift, with CEO Jim Levy replaced by Bruce Davis, the company renamed itself as Mediagenic and branched out into business software applications.
context_section_description: By 1979, Nolan Bushnell had sold Atari, Inc. to Warner Communications and then left the company over several disagreements with the direction Warner wanted to take the company—particularly with the popular Atari 2600 game console (then known as the Atari Video Game Console or VCS). Bushnell's replacement as CEO, Ray Kassar, showed little respect to developers, giving them no financial compensation for profitable games and refusing them public credit for fear they would be recruited by other game companies. David Crane, one of Atari's programmers, recalled a memo sent by Kassar that listed the best-selling cartridges from the previous year to help guide game ideas; Crane noted that the games he was fully responsible for had brought in over US$20 million for the company but he was still only receiving a US$20,000 salary. Crane, along with Larry Kaplan, Alan Miller and Bob Whitehead, became vocal about the lack of recognition within the company and became known as the "Gang of Four". The group met with Kassar in May 1979 to demand that the company treat developers as record labels treated musicians, with royalties and their names on game boxes. Kaplan, who called the others "the best designers for the [2600] in the world", recalled that Kassar called the four men "towel designers" and claimed that "anybody can do a cartridge".
  The four made the decision to soon leave Atari and start their own business, but were not sure how to go about it. Some developers had already left Atari, only to be hired back as contractors, effectively doubling their pay rate, but the four wanted something more ambitious.  In 1979, the concept of third-party developers did not exist, as software for video game consoles were published exclusively by makers of the systems for which the games were designed. The four decided to create their own independent game development company. They were directed by their attorney to Jim Levy, who was at the time raising venture capital to manufacture cassette tape drives for early home computers. Levy listened to their plans, agreed with its direction, and helped the four to secure about US$1 million in capital from Sutter Hill Ventures. By August, Crane and Miller had left Atari, with Whitehead and Kaplan joining them shortly after. Activision was formally founded on October 1, 1979, with Levy serving as CEO. The company was initially named "Computer Arts, Inc." while they considered a better title. The four founders had thought of the name VSync, Inc., but feared that the public would not understand or known how to say it. Levy suggested combining "active" and "television" to come up with Activision. The four's departure from Atari created a major dent in Atari's developer staff, and Atari pursued legal action from 1980 to 1982 to try to shut Activision down, claiming the four had stolen trade secrets. The lawsuit was settled by 1982, with Activision agreeing to pay royalties to Atari but otherwise legitimizing the third-party development model.
caption: Co-founder David Crane in 2013
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