Atari Hits it Big
Named the Atari VCS (Video Computer System), it barely arrives in stores in time for the 1977 Christmas
season. It comes with the pack-in cartridge Combat, designed by initial Stella programmer Larry Kaplan,
along with DeCuir and Larry Wagner. It retails for US$249.95, nine cartridges are introduced along with the
system. While there is very little mark-up on the machines due to the high price of the components, the
carts cost very little to produce, and sell for around US $40 each. But for two years the VCS struggles to
find a niche in the marketplace, and Atari loses millions, substantially dragging down Warner's stock price.
Between 1979-1980, 12 new games are released for the VCS, but the company is about to make a move that will blow the lid off the home videogame industry. In 1980 Atari becomes the first videogame company to license an arcade game. Space Invaders, originally made by Japanese game maker Taito and then licensed for North American release by Midway, becomes the killer app for the VCS. People rush out and buy the system just to play the game. There are 112 different variations on gameplay available, including invisible aliens, moving bunkers and simultaneous two-player action. Raking in $100 million for Atari.
Over the next two years, the Atari VCS completely dominates the home videogame market, its only rival of any significance being Mattel's Intellivision unit. Over 25 million VCS (later remodelled and named the 2600) systems are sold, grossing over five billion dollars for Atari. It also smashes the tradition of seasonal toy sales; Atari begins pushing the machine all through the year. Over the course of its production run, over 200 games are produced for the system by 40 manufacturers. Approximately 120 million cartridges are sold, and there are 55 different compatible videogame systems eventually released world-wide. The company that had shrunk Warner Communication's market share during the early days of the VCS was now responsible for half of the mother corporation's profits.
Intellivision
Intellivision, or Intelligent Television, due to a "soon to be released" keyboard and memory storage device
goes into wide release in 1980, the entire run of 175,000 systems sell out. The initial price is $250 USD,
higher than the VCS by that time, but the capability of the machine is far superior to its Atari rival,
offering 16 available on-screen colours and three channel sound.