How Four Atari Hackers Turned a $20 Memo into the Multi-Million Game Revolution
A routine marketing memo sat on David Crane's desk in early 1979, and he did something with it nobody expected: he ran the numbers. The games he had personally written had generated more than twenty million dollars for Atari, against a salary of twenty thousand. No independent company had ever published software for someone else's console before — the assumption was that to make console games, you first had to build a console. What happened when four programmers decided to test that assumption?
In this episode, we trace the founding of Activision from a garage in California through a lawsuit, an industry crash, a corporate collapse, and a hostile takeover, asking whether the model four uncredited programmers invented in 1979 could actually survive the industry it created.
Person: David Crane, Larry Kaplan, Alan Miller, and Bob Whitehead
Location: Cambridge Way, Crane's garage, California
Date: October 1, 1979
Case: the founding of activision, the first third-party console game publisher
Status: settled with atari in 1982; later collapsed as mediagenic and was rebuilt by bobby kotick in 1991
- Ray Kassar, installed as Atari CEO in 1978, allegedly called the four programmers "towel designers" during a May 1979 meeting
- Activision was incorporated October 1, 1979, temporarily registered as Computer Arts, Inc., with roughly one million dollars from Sutter Hill Ventures
- Atari filed suit in December 1980 alleging trade secret theft; the case settled in February 1982 with Activision agreeing to pay royalties
- Pitfall!, released by Crane in March 1982, sold more than four million copies; by its June 1983 IPO on NASDAQ (ticker AVSN), Activision reported roughly 157 million dollars in total sales
- Activision's quarterly revenue fell from about 50 million dollars in mid-1983 to 6-7 million by the end of 1984, and Bobby Kotick acquired the near-bankrupt company, then renamed Mediagenic, for approximately 500,000 dollars in 1991
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