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After the catastrophic failure of the Atari 5200, Atari Inc. immediately attempted to mend the situation by developing a yet another game console. Atari still wanted to build a powerful new console that would outdo its competitors, the Mattel Intellivision and Coleco’s Colecovision. However, a bit more care was taken in order to do it right this time.
Atari released the 8-bit Atari 7800 in 1984 in a trial production as a test market, then shelved until later re-released in 1986. The design was intended to rectify the mistakes made with the 5200. First, the controller was a bit simpler in overall design. The joystick was digital instead of analog, and lacked the mass of buttons on the controller which were unused during the 5200’s short lifespan. But most importantly, it was cheap ($140 US at launch) and was backwards compatible right out of the box, allowing it to use not only Atari 2600 games, but its controllers as well.
To add to the machine’s features, it had a “high score card,” which was simply a detachable battery-back RAM cartridge. This would be the precursor to memory cards seen on the PlayStation and most consoles since. Since home computers were threatening to the game console industry, a computer keyboard was released, and expansion ports for other peripherals like printers and disk drives existed (though the 7800 was incompatible with Atari computer software). Also, in light of the Famicom’s revolutionary control-pad, Atari made a similar two-button “brick” with a directional pad.
Like the Famicom (and the export NES), the 7800 had authorization coding in the operating system. With the mass discontent with the un-licensed and infamous Custer’s Revenge and other pornographic videogames, it was feared that even more detailed games with the same objectionable material would plague the new console (and further hurt Atari’s reputation). Third-party developers were required to acquire licensing rights after meeting certain content guidelines.
Unfortunately for Atari, the 7800 would have a similar fate as the 5200 for 3 main reasons.
The Video Game Crash all but destroyed the American video game industry and lead to the demise of the Atari 5200, Intellivision, Colecovision, Magnavox Odyssey family, Fairchild Channel F, and all the rest. Atari was hurting very badly. Time Warner, the parent company, sold Atari Inc. to Commodore founder Jack Tramiel in 1984. The newly named Atari Corporation would be completely redirected by the former computer tycoon. With the overall market interest diverted to home computers instead of game consoles, Tramiel halted all development of game consoles and focused all the attention to computer development. The unsold inventory would sit on the shelves of warehouses until 1986 after the NES jumpstarted American interest in video games.
Just like the Atari 5200 before it, the 7800’s library was unimpressive. While it did have nearly all of the 2600’s library to start with, games for the 7800 itself were few (barely over 60). To exasperate the situation, Tramiel was unwilling to pay third-party developers to make games for the new console. Lacking attention and development to particular (and growing) genres left little new to be desired (like sports and adventure games). Furthermore, games for the 7800 were simply polished-up re-hashes of arcade games from the late 1970s and early 80s. They were very simple in comparison to NES games and lacked the graphical and audio content shown by the NES (despite being an 8-bit machine).
Finally, and most significantly, Nintendo’s console had captured a disproportionately large market share. The NES by 1986 had already gathered so much interest in the American market in just that first year that no other competitor would ever hope to compete with it (the same being with the Sega Master System’s dominance in Europe). Atari was a largely ignored name by the time Nintendo and Sega made their marks on the game industry. This would be the last game console until the 1993-94 Jaguar released ten years later.
