For Bushnell, Deal With Atari Is Just New Twist on an Old Game
The Tramiel family credo--”Business is War”-- helped turn Commodore International into a major force in the home computer industry and, more recently, rescued Atari from the brink of bankruptcy.
Now the Tramiels, whose reputation for squeezing competitors and suppliers is widespread, are hooking up with another Silicon Valley legend--and one whose motto is a bit more mellow.
“Business is a game,” laughed Nolan Bushnell, the irrepressible founder of Atari, whose current company, Axlon, agreed on Wednesday to develop a series of video games for Atari.
“Some people play chess,” continued Bushnell, whose invention of the Pong video game sparked a craze that is currently enjoying its second wind. “I play business. You keep score with money.”
Financial details of the deal were not disclosed. But in an interview at his Lion & Compass restaurant here, Bushnell said he expects to score between $3 million and $5 million in royalties from Atari.
“I don’t think I left a lot on the table,” said the entrepreneur, whose other ventures have included the ill-fated Pizza Time Theater. “The Tramiels are good businessmen, tough but fair.” He paused, reflected for a moment and added: “See what I say a year from now.”
For Bushnell, it is especially satisfying to team up with the company he founded in 1972 and sold four years later to Warner Communications for $28 million. Said the father of six: “You feel like your child has grown up, gone through a rocky adolescence and become a responsible adult.”
Sam Tramiel, who became president and chief operating officer of Atari when his father, Jack, took the company off Warner’s hands in 1984, was happy to let Bushnell bask in the media attention at Wednesday’s news conference.
Atari is still struggling to get its merchandise carried by such heavy-duty chains as K mart, Target and Wal-Mart, which were badly burned four years ago when video game demand--and prices--plummeted, leaving them stuck with near-worthless merchandise.
“It’s been a fighting back process for us,” acknowledged Michael Katz, president of Atari’s Entertainment Electronics division. “A lot of retailers never wanted to hear the word ‘video game’ again.”
Atari was clearly hoping that the Bushnell announcement, a few days before the Consumer Electronics Show in Chicago, would create enough excitement to pressure the holdouts to join Toys ‘R’ Us in stocking Atari’s game machines and cartridges.
In any case, Atari, which has sold by far more video game machines than anyone else--including about 25 million model 2600 units--is trumpeting the word that video games are back. The company plans to ship 10 million game cartridges this year, up from 4 million in 1987, Katz said.
The entire video game industry will generate retail revenues of $2 billion this year, double last year’s outlays, he added.
To thrive, the business needs a steady stream of new and exciting products, hence the emphasis on the Bushnell deal. Bushnell said he will come up with the concepts and “storyboards” for the games but farm out much of the the programming work to employees.
” Bushnell said he hopes his first four games will be available before Christmas.
His firm, Axlon, has recently gone through a painful period, losing $5.5 million last year on revenue of about $7.5 million. The firm, which used to manufacture toys, will now concentrate on licensing its ideas and concepts to more established manufacturers.
Atari posted net income of $5.7 million in the first quarter on sales of $169.2 million.
