Atari started on about $500. Its Pong machine broke, jammed with quarters.
The hit was supposed to go to someone else.
In 1972 Nolan Bushnell and Ted Dabney ran Atari on about $500 of paid-in capital and no investors. The plan was to design games and license them to Bally, the biggest arcade maker, and collect the checks. To see if anyone would play it, they put their engineer's warm-up game, Pong, on a barrel in Andy Capp's Tavern in Sunnyvale.
Within two weeks the bar owner called to say it had stopped working. The engineer who built it recalls opening the coin box: it "gushed out quarters." Bushnell now wanted Atari to build the machines itself. Dabney, by the engineer's account, said no: "we're engineers." Bushnell went ahead anyway. The engineer recalls that the operators who placed the machines in bars paid cash up front for each one.
Atari brought in over $1 million in revenue in its first year and built over 8,000 Pong cabinets by the end of 1974. In November 1976 Warner Communications bought it for $28 million.
True story. AI-generated illustration with narration by an AI voice.
What would make you move from licensing a product to building it yourself?
What the captions say
- This is the story of how Atari's first Pong machine broke in a bar, and how about $500 became a $28 million sale.
- In the summer of 1972, a bar owner in Sunnyvale, California, called Atari. Its new game had stopped working. People were waiting to play it.
- Atari was two engineers, Nolan Bushnell, 29, and Ted Dabney, with about $500 and no investors.
- Bally, the biggest arcade name, was to build their games, and Atari would collect the checks.
- The game was a warm-up job for their young engineer: ping-pong on a $75 TV set, with two knobs and no instructions.
- It sat on a barrel in Andy Capp's Tavern. Pinball there cost ten cents. Pong cost a quarter.
- The engineer recalls going down to fix it. He opened the coin box. It gushed out quarters.
- People were coming just to play. The next day he told Bushnell, who said: "Hmm, that's interesting."
- Now Bushnell wanted Atari to build the machines. Ted Dabney said: "No, I don't want to do that; we're engineers."
- Bushnell went ahead anyway. He talked Bally out of the game, the engineer recalls, and Atari built Pong itself.
- In its first year, Atari's revenue topped $1 million. By the end of 1974, it had built over 8,000 Pong cabinets.
- In November 1976, the entertainment group Warner Communications bought Atari for $28 million. It had started with $500, and a coin box that ran out of room.
