Former Atari Designer Discusses 'E.T.' Flop - Selling Out Week

By Brian Fencil

Photo courtesy of taylorhatmaker.

Atari was such an influential company in the early ‘70s that it is often credited with creating the home video game market. Though Pong introduced in-home video games to the world, Atari put a game in 17 percent of US homes. In 1975, Atari sales earned $39 million, and by 1982, the company was worth $2 billion. Just a few months later, the company went bankrupt.

Sales ground to a halt during December of ’82; investors panicked–stock prices for parent company Warner Communications plummeted by a third of its original value. By March, domestic manufacturing was closed and 1,700 employees were laid off. By the second quarter, Atari posted a $310 million dollar loss. Promised products were not making it to stores, and poorly made products collected dust. Consumer confidence in the fastest growing company at the time died.

Atari’s downfall was caused by several weaknesses, but the biggest was from management placing more importance on marketing than product quality. Chris Crawford, a former Atari game designer, tells BTR about the company’s early modus operandi.

“Atari had always been an engineering firm. The software people did everything and when a game was finished they presented it to marketing,” Crawford explains. “Marketing didn’t have a design role, they could make minor suggestions, but marketing’s role was to approve or reject a game.”

This model did have some setbacks. Despite the company’s growth and popularity, Atari was not making enough money to keep pace with its expansion. However, seeing profitability in the gaming company, Warner Communications Inc. bought it in 1976. Atari’s methods did not impress Manny Gerard, former CEO of Warner who was sent to oversee the company. To him, the amorphous nature of Atari made the company look like “amateur night in Dixie,” he was quoted saying. To bring Atari up to snuff, Warner sent Ray “The Czar” Kasser, a marketing executive with no experience in gaming, to manage the company.

Kasser didn’t fix Atari’s internal problems, but ran the company like a dictator, unyielding to suggestions from the developers who had previously had such a big role. His strict empire-like style first started causing problems with the VCS version of Pac-Man.

The designers warned about incompatibility issues, but Kasser was unrelenting.

“You couldn’t do a decent version of Pac-Man on VCS,” Crawford tells BTR “[The designers] were absolutely right, but Kassar over-ruled them. He paid a lot of money to get the rights and then he got programmers to work on it. [They] did the best that was technically possible, which was by alternately showing the different ghosts in a sequence, so they flickered really badly. They looked terrible.”

Pac-Man sold well, but its design problems led to the derogatory nickname “Flicker-Man”, and hurt the Atari brand. Undeterred by this setback, Kasser made an infamous mistake with the failed E.T. game.

The E.T. film came out in June of 1982, and Kassar, decided that any game related to the movie would be a big success. Kassar signed a licensing agreement with Steven Spielberg for $22 million that summer and then told the software department to make the game ready by Christmas.

“That was truly an idiotic decision on his part,” Crawford says. “In order for the game to make Christmas…the final software has to be delivered by September First. The software department had nine weeks, at most, to do the complete process of designing, developing, programming, testing, de-bugging and fine-turning the whole game.”

According to Crawford, the average development cycle for a game at the time was about a year. Even though it was an impossible task, Howard Warshaw completed it.

“He made a functional, operational, and de-bugged game in time for the deadline, but he didn’t have time to make it fun,” Crawford explains. “Once it got on the shelves, it didn’t take people long to find out it was garbage.”

This very expensive flop came at a vulnerable time for Atari. In the summer of that year, rival game system,
Commodore 64, entered the market and Atari rushed to compete. They made the 1200XL, which quickly failed partly because of incompatibility issues. Soon, Atari’s game, computer, and arcade game departments were all hemorrhaging money. Problems snowballed, Atari limped around the market, products never got released, store shelves were left empty by a lack of supplies, and competition snuck in. Additionally, surpluses of badly designed games, like E.T. were unsellable and sat in expensive warehouses. Atari never recovered from their blunders, and the once-great company quickly withered away.

Last month, a documentary film crew attempting to cover the rise and fall of Atari went to a New Mexico landfill. Though they wanted to bust the myth that Atari buried 20 truckloads of unsold games in the landfill, the crew found an estimated 700,000 Atari games, including 20 recovered titles.

Crawford’s reaction to the news was, “Well, duh! Everybody knows that.”

In the ’80s, the burial was common knowledge–InfoWorld published the information and newspapers wrote about kids who had found the site. Over the years, however, the story of the E.T. game blurred as people disbanded from Atari and the story scattered.

This often happens, Crawford explains, game designers leave the industry when they are young and are replaced by new talent, fragmenting the history of gaming.

“The game industry doesn’t have much of a collective memory.”