Did the Atari 2600 Start a $137 Billion Industry?

In 2018, The Association for UK Interactive Entertainment estimated that the games industry was worth $137 billion, yet it's an industry that has only existed since the mid-to-late seventies. So where did it all start, and what was the catalyst that started a global billion dollar industry?

From its iconic wood-panel and joystick design, to the astounding library of games, there is just something inherently special about the Atari 2600 which makes it one of the most beloved video game consoles of all time. Launched in 1977, it was to be a huge success and the system’s popularity led to its appearance in movies and television programmes of the day, rendering it the default “first console”. And while for many the Atari is seen as the first, the truth is that there were a few systems that preceded it.

Before the Atari 2600 hit the big time there were many Pong-style video game systems. These would typically feature a few different variations of the 'tennis' game, often called 'football', 'squash' or 'hockey', but all basically along the same lines of game play: a player-manipulated paddle and a moving “ball”. Usually designed for a black and white television, these systems came with transparent coloured overlays which could be attached to the TV screen, giving the illusion of colour in the games.

The first real video game system was the Magnavox Odyssey in 1972 - a full five years before the Atari 2600. While the Odyssey used “cartridges”, they were unlike the cartridges on systems that would follow. Magnavox “cards” didn’t contain any data, instead they acted like jumpers activating different switches inside the system, severely limiting the development of games. Most people also overlook the Fairchild Channel F video game system, which was launched just before the Atari 2600 in August 1976 but made very little impact.

But in 1977 something momentous happened: the Atari 2600 was released and gaming would never be the same again. Full colour arcade-style games had entered the living room. There are a few factors that contribute to the success of the Atari 2600. Atari had spent a considerable amount of money on television adverts promoting the console and the success of arcade machines had raised awareness of gaming in general, but one of the biggest reasons was the wide range of games available for it. As with many computers and game consoles, it is not the hardware that makes them a success but the software ... and many of the game titles could only be played on the Atari.

At first the Atari 2600 actually struggled, requiring a lot of cash to be thrown at it to help survive those early years. The early failures also caused Atari co-founder Nolan Bushnell to leave his job; furthermore, frustrated by their treatment by Atari, a group of talented game designers left the company to create their own studio: Activision. By the time 1979 rolled around it had become one of the hottest selling systems around the world. Atari had become shorthand for video games.

One of the most popular games on the system was Space Invaders. Previously only available to play in the arcades, the Space Invaders phenomenon was huge. The version on the Atari 2600 was certainly a hit too. It would go on to sell millions of copies and for many was a compelling factor in the decision to buy the console. In short Space Invaders was a system seller!

Many popular arcade games were ported to the Atari 2600 and while the quality in many cases was radically downgraded due to the limited capabilities of the console, it was still amazing to be able to play these games in your own home. Games like Pac-Man also helped sell the hardware. Despite the game being far from arcade perfect the game sold well, bolstered by brand recognition and the ongoing arcade craze. By this time games like Pac-Man and Space Invaders had made the Atari 2600 sell in the millions all around the globe.

It is worth noting that it was not just arcade ports that made the 2600 popular. There was also a huge amount of games based on popular licenses such as Spider-Man, Superman, Gremlins, and GhostBusters just to name a few. Many original games also had a big impact on sales. Games like Pitfall, Yar’s Revenge, Adventure, and more; these influential games also regularly appear on Top 100 Games lists.

During the early 80’s the Atari 2600 was still pulling in big money, but behind the scenes Atari made some very strange decisions which would doom them in the end. Despite former founder Nolan Bushnell’s insistence that they render the 2600 obsolete early and create new, more powerful hardware, Atari owners Warner Communications believed the system to be good enough. In 1982 they would release the Atari 5200 as a companion piece and minor step up from the 2600. By this time the quality of games also began to stagnate. With only minor restrictions on who could make games for the 2600, anyone looking to cash in on the popular hardware could bring a game to market. The system had reached its limit and other systems were looking to steal the limelight.

A more significant event would be the final nail in Atari’s coffin. Many gamers will know of the video game crash of 1983 and while the Atari 2600 would live on after the crash, it would never again reach those heights that it had in the years prior. The success of the Atari 2600 opened the door for such consoles as the Nintendo Entertainment System and the Sega Master System.

So was the Atari 2600 the start of a $137 billion industry?
It wouldn’t be too hard to argue that Atari and the 2600 were the instigators of the video game boom. The systems that preceded the 2600 were limited: The Odyssey had a game library hampered by the lack of ROM cartridges; the Fairchild Channel F, while using interchangeable cartridges, had a paucity of games and languished in semi-obscurity lacking the advertising clout of Atari.

Were it not for the Atari 2600 there would be no Activision and no Call Of Duty franchise. Perhaps Nintendo and Sega would have remained Japan-only oddities had the 1983 video game crash never happened. The 2600’s huge software library was also an inspiration and a warning to future hardware makers: keep an eye on who was making what for your machines.

The fact is that even long after the 2600 had been out of production, Atari was still being used interchangeably with video games. The two were synonymous. Constant re-releases of 2600 software bundles and even custom mini-consoles only serve to highlight the impact the system has had on the industry. To this day you can play 2600 games and their variants on any modern hardware, and, inevitably, every generation in the future will in some way pay homage to the system that (may) have started it all- the Atari 2600.

Further Reading: 40 Years of Space Invaders