page_title: Atari, Inc.
section_title: Founding of Atari
hierarchical_section_title: Atari, Inc. / Origins / Founding of Atari
caption_attribution_description: English: Pong cabinet signed by Pong creator Allan Alcorn in the 'Golden Age of Video Games' exhibit at Neville Public Museum in Green Bay, Wisconsin.
context_page_description: Atari, Inc. was an American video game developer and home computer company founded in 1972 by Nolan Bushnell and Ted Dabney. Primarily responsible for the formation of the video arcade and modern video game industry, the company was closed and its assets split in 1984 as a direct result of the video game crash of 1983.
context_section_description: Bushnell began seeking other partners outside of Nutting, and approached pinball game manufacturer Bally Manufacturing, who indicated interest in funding future efforts in arcade games by Bushnell and Dabney if Nutting was not involved. The two quit Nutting and established offices for Syzygy in Sunnyvale; at that point not taking a salary yet since they had no products. Bally then offered them a US$4,000 a month for six months to design a new video game and a new pinball machine. With those funds, they hired Al Alcorn as their first design engineer. Initially wanting to start Syzygy off with a driving game, Bushnell had concerns that it might be too complicated for the young Alcorn's first game. In May 1972, Bushnell had seen a demonstration of the Magnavox Odyssey, which included a tennis game. According to Alcorn, Bushnell decided to have him produce an arcade version of the Odyssey's Tennis game, which would go on to be named Pong. Bushnell had Alcorn use Dabney's video circuit concepts to help develop the game, believing it would be a first prototype, but Alcorn's success impressed both Bushnell and Dabney, leading them to believe they had a major success on hand and prepared to offer the game to Bally as part of the contract. In anticipation, Bushnell and Dabney went to incorporate the firm, but found that Syzygy (an astronomical term) already existed in California. Bushnell wrote down several words from Go, eventually choosing atari, a term that in the context of the game means a state where a stone or group of stones is imminently in danger of being taken by one's opponent. Atari was incorporated in the state of California on June 27, 1972.
  Bushnell and Dabney offered to license Pong to Bally, but the company had no idea what to do with the game, and did not immediately take the license. Instead, Bushnell and Dabney opted to create a test unit themselves and see how it was received at a local establishment. By August 1972, the first Pong was completed. It consisted of a black and white television from Walgreens, the special game hardware, and a coin mechanism from a laundromat on the side which featured a milk carton inside to catch coins. It was placed in a Sunnyvale tavern by the name of Andy Capp's to test its viability. The Andy Capp test was extremely successful, so the company created twelve more test units, ten which were distributed across other local bars. They found that the machines were averaging around US$400 a week each; in several cases, when bar owners reported that the machines were malfunctioning, Alcorn found that it was due to the coin collector had been overflowing with quarters, shorting out the coin slot mechanism. They reported these numbers to Bally, who still had not decided on taking the license. Bushnell and Dabney realized that they needed to expand on the game but formally needed to get out of their contract with Bally. Bushnell told Bally that they could offer to make another game for them, but only if they rejected Pong; Bally agreed, letting Atari off the hook for the pinball machine design as well.
  After talks to release Pong through Nutting and several other companies broke down, Bushnell and Dabney decided to release Pong on their own, and Atari, Inc. was established as a coin-op design and production company.
caption: The original Pong upright cabinet
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