Uncle John's Ahh-Inspiring Bathroom Reader (72 page)

One week after the city of Potosi, Missouri, discontinued paying for his health insurance, Judge Ronald Hill announced that he was lowering all municipal fines to $1. Hill insisted that he was just trying to clear up a backlog of nonviolent cases, not retaliating against the city. But at its next meeting, when the board again voted down health insurance for elected officials, an angry Judge Hill reportedly muttered, “It's a good thing I left my gun at home because I might have shot the mayor.” Not long after that, Judge Hill was scheduled to hear a case in which the mayor's daughter was the victim of an assault. He subpoenaed her four days before trial and when she failed to appear, had her arrested. By that time the Missouri Supreme Court had had enough…and removed him from the bench.

In February 1998, the Supreme Court of Texas removed Justice of the Peace Bill Lowry from the bench in Irving. Among the infractions cited: making an ethnic slur against a parking attendant who refused to let the judge park his car for free, and holding court in an auto repair shop (the judge said that since all concerned parties were present, he swore them all in and went to work). The final straw: faking attendance at a course aimed at correcting his behavior.

In 1997 Manhattan Supreme Court justice Salvador Collazo was removed from the bench for covering up an incident that had occurred five years earlier. In 1993 Judge Collazo had written a lurid note about an intern's “knockers” and passed it to a law clerk. Then, when the intern complained about the heat, he suggested she remove her top. The offensive incident might never have come to light except that the law clerk, Ralph Silverman, kept the note… and then gave it to investigators in 1993 after Collazo fired him.

On page 314 we told you the story of how Atari “invented” Pong, the first commercially successful video game. Here's the story of how they came to dominate the American home video game industry…and then lost it all.

From the moment it was introduced in 1972, Atari's arcade game, Pong, was a money maker. Placed in a busy location, a single Pong game could earn more than $300 a week, compared to $50 a week for a typical pinball machine. Atari sold more than 8,000 of the machines at a time when even the most popular pinball machines rarely sold more than 2,500 units.

Atari would have sold a lot more machines, too, if competing game manufacturers hadn't flooded the market with knockoffs. But there was no way that Atari could fight off all the imitators.

Instead, Atari founder Nolan Bushnell managed to stay one step ahead of the competition by inventing one new arcade game after another. (One of these games, Breakout, in which you use a paddle and a ball to knock holes in a brick wall, was created by an Atari programmer named Steve Jobs and his friend Steve Wozniak, an engineer at Hewlett-Packard. Do their names sound familiar? They should—a few years later, they founded Apple Computer.)

In 1975 Atari entered the home video game market by creating a home version of Pong. Selling its games through Sears Roebuck and Co., Atari sold 150,000 games that first season alone.

Bushnell was ready to introduce more home versions of arcade games, and he'd decided to do it by copying an idea from a competing video game system, Channel F. The idea: game cartridges. It was a simple concept: a universal game system in which interchangable game cartridges plugged into a game player, or “console.”

There was just one problem: inventing a video game cartridge
system from scratch and manufacturing it in great enough volume to beat out his competitors was going to cost a fortune. The only way that he could come up with the money was by selling Atari to Warner Communications (today part of AOL Time Warner) for $28 million in 1976. Bushnell stayed on as Atari's chairman and continued to work on the cartridge system.

Introduced in mid-1977, the Atari Video Computer System (VCS)—later renamed the Atari 2600—struggled for more than a year. Atari's competitors didn't do much better, and for a while it seemed that the entire video game industry might be on its last legs—the victim of the public's burnout from playing too much Pong.

Then in early 1979, Atari executives hit on the idea of licensing Space Invaders, an arcade game manufactured by Taito, a Japanese company. The game was so popular in Japan that it actually caused a coin shortage, forcing the national mint to triple its output of 100-yen coins.

Just as it had in Japan, Space Invaders became the most popular arcade game in the United States,
and
the most popular Atari game cartridge. Atari followed up with other blockbuster cartridges like Defender, Missile Command, and Asteroids; by 1980 it commanded a 75% share of the burgeoning home video game market. Thanks in large part to soaring sales of the VCS system, Atari's annual sales grew from $75 million in 1977 to more than $2 billion in 1980, making Atari the fastest growing company in U.S. history. But it wouldn't stay that way for long.

Within months of bringing the VCS to market, Bushnell was already pushing Warner to begin work on a next-generation successor to the system, but Warner rejected the idea out of hand. They had invested more than $100 million in the VCS and weren't about to turn around and build a new product to compete with it. Warner's determination to rest on their laurels was one of the things that led to Bushnell's break with the company.

By the time Space Invaders revived the fortunes of the VCS, Nolan Bushnell was no longer part of the company. Warner Communications
had forced him out following a power struggle in November 1978.

If Bushnell had been the only person to leave the company, Atari's problems probably wouldn't have gotten so bad. But he wasn't—Warner also managed to alienate nearly all of Atari's best programmers. While Atari made millions of dollars, Warner paid the programmers less than $30,000 a year, didn't share the profits the games generated, and wouldn't even allow them to see sales figures.

The programmers didn't receive any public credit for their work, either. Outside of the company, few people even knew who had designed classic games like Asteroids and Missile Command; Warner was afraid that if it made the names public, the programmers would be hired away by other video game companies.

So Atari's top programmers quit and formed their own video game company, called Activision, then turned around and began selling VCS-compatible games that competed directly against Atari's own titles.

Activision dealt a huge blow to Atari, and not just because Activision's games were better. Atari's entire marketing strategy was based around pricing the VCS console as cheaply as possible—$199—then reaping huge profits from sales of its high-priced game cartridges. Now the best games were being made by Activision.

Atari sued Activision several times to try to block it from making games for the VCS but lost every time, and Activision kept cranking out hit after hit. By 1982 Activision was selling $150 million worth of cartridges a year and had replaced Atari as the fastest growing company in the United States.

Activision's spectacular success encouraged other Atari programmers to defect and form
their
own video game companies, and it also prompted dozens of other companies—even Quaker Oats—to begin making games for the VCS.

Many of these games were terrible, and most of the companies that made them soon went out business. But that only made things worse for Atari, because when the bad companies went out
of business, their game cartridges were dumped on the market for as little as $9.99 apiece. If people wanted good games, they bought them from Activision. If they wanted cheap games, they pulled them out of the discount bin. Not many people bought Atari's games, and when the cheap games proved disappointing, consumers blamed Atari.

Meanwhile, just as Bushnell had feared, over the next few years, new game systems like Mattel's Intellivision and Coleco's ColecoVision came on the market and began chiseling away at Atari's market share. With state-of-the-art hardware and computer chips, these game systems had higher-resolution graphics and offered animation and sound that were nearly as good as arcade video games…and vastly superior to the VCS. Adding insult to injury, both ColecoVision and Intellivision offered adapters that would let buyers play the entire library of VCS games, which meant that if consumers wanted to jump ship to Atari's competitors, they could take their old games with them.

But what really finished Atari off was Pac-Man. In April 1982, Atari released the home version of Pac-Man in what was probably the most anticipated video game release in history. At the time, there were about 10 million VCS systems on the market, but Atari manufactured 12 million cartridges, assuming that new consumers would buy the VCS just to play Pac-Man.

Big mistake—Atari's Pac-Man didn't live up to its hype. It was a flickering piece of junk that didn't look or sound anything like the arcade version. It wasn't worth the wait. Atari ended up selling only 7 million cartridges, and many of these were returned by outraged customers demanding refunds.

Then Atari followed its big bomb with an even bigger bomb: E.T., The Extra-Terrestrial. Atari guaranteed Steven Spielberg a $25 million royalty for the game, then rushed it out in only six weeks so that it would be in stores in time for Christmas (video games typically took at least six
months
to develop). Then they manufatured five million cartridges without knowing if consumers would take any interest in the game.

They didn't. The slap-dash E.T. was probably the worst product Atari had ever made, worse even than Pac-Man. Nearly all of the cartridges were returned by consumers and retailers. Atari ended up dumping millions of Pac-Man and E.T. game cartridges in a New Mexico landfill and then having them crushed with steamrollers and buried under tons of cement.

That same year Atari finally got around to doing what Nolan Bushnell had wanted to do since 1978: they released a new game system, the Atari 5200.

But in the face of stiff competition from ColecoVision, which came out with Donkey Kong (the 5200 didn't) and had better graphics and animation, it bombed. Staggering from the failures of Pac-Man, E.T., and the 5200, Atari went on to lose more than $536 million in 1983.

In 1983 Atari had what in retrospect might have been a chance to revive its sagging fortunes…but it blew that opportunity, too. Nintendo, creators of Donkey Kong, decided to bring its popular Famicom (short for Family Computer) game system to the United States. The Famicom was Nintendo's first attempt to enter the American home video game market, and rather than go it alone, the company wanted help. It offered Atari a license not just to sell the Famicom in every country of the world except Nintendo's home market of Japan, but also to sell it under the Atari brand name. Consumers would never even know that the game was a Nintendo. In return, Nintendo would receive a royalty for each unit sold and would have unrestricted rights to create games for the system.

Atari and Nintendo negotiated for three days, but nothing ever came of it. Nintendo decided to go it alone—and it was a good choice.

Free replay. Turn to page 499 for more video game history: “Let's Play Nintendo!”

“When things go wrong…don't go with them.”
—Anonymous