With a successful holiday season behind them, both Atari and Nintendo showed up to the CES with new entertainment, hopeful for what the new year will bring. Martha Groves of the Los Angeles Times noted the resurrection of the video game industry in her piece below.
LAS VEGAS — Perhaps the most overused analogy at last week’s Consumer Electronics Show was the old chestnut about a “Phoenix-like rise from the ashes.”
But in the case of at least two video game companies that embraced this image of rekindled strength–Atari and Nintendo–they can be excused. With their industry once again on the upswing, they do have some things to crow about, after all.
Having staged a spectacular financial turnaround and successful public offering last year, Atari is back in a position of strength after having been nearly written off not long ago.
The Sunnyvale, Calif., company’s history is well-documented, from its 1972 founding by the innovative Nolan Bushnell, to its 1976 purchase by Warner Communications and its subsequent dive into red ink. The company hit $2 billion in sales in 1982, but was nearly brought down by its freewheeling ways, which resulted in a 1983 loss of $500 million.
Along came hard-nosed Jack Tramiel, who emerged from a power struggle at Commodore International and bought Atari for $240 million in notes 2 1/2 years ago. Since then, the family-run company’s fortunes have, indeed, soared. For the nine months ended Sept. 30, Atari made about $21 million on sales of $165 million. Defying skeptical industry analysts, the company went public in November. Its two video game systems were sellouts in 1986, cementing its lead in the category.
“My philosophy in my previous life and now at Atari was always to give the most for the buck,” Tramiel said at a press briefing where the company introduced a promising personal computer compatible with the IBM ($499, or $699 with monitor), a laser printer and a new line of video games. “We feel that 1987 will be a very, very exciting year.”
Having become a top seller of computers in Europe, the company said it is now poised to “attack” the U.S. market for home and business computers, with punchy ads and competitively priced products.
Key to long-term profitability will be the ST line, for which Atari this year will begin an aggressive U.S. marketing push. At the Consumer Electronics Show, the company rolled out a Mega ST model for business users. With laser printer, it is expected to cost less than $3,000, which the company said is about half the cost of comparable units.
“Cleaning up the old Atari mess took time, (but) the suppliers got their money, every single cent, and are ecstatic,” said Jack’s oldest son, Sam, who is Atari president. “Now we have time to attack this giant (U.S.) market.”
Said father Jack, who introduced the first personal computer at the show 10 years ago: “I intend to be a big player in the U.S. market in the consumer and the business end.”
With all this good news to report, the Tramiels seemed scarcely fazed by a glitch in their presentation. A videotape about Atari had just started rolling, and the announcer had just said, “The new Atari has risen like a Phoenix from the ashes,” when the screen turned to snow.
Quipped a spokesman: “Even computer companies can experience technical difficulties.” The audience laughed, and, for the first time in a while, Atari could laugh with them.
KNIT ONE, NINTENDO: Atari’s booth may have been the most bustling in the Convention Center’s West Hall, but Japanese video game maker Nintendo was drawing a crowd at an offbeat knitting demonstration.
Knitting by computer? Yes, knitters can throw away those needles. By draping yarn across a loom-like affair that interacts with the company’s home entertainment system, the user can knit sweaters, mittens, socks–you name it–complete with patterns. And no more counting rows. The computer does it all.
“We’re showing this for business feedback,” said Gail D. Tilden, advertising manager. “We’re using entertainment technology to appeal to a broader base.”
Perhaps best known for its arcade game Donkey Kong, Nintendo since 1983 has sold its home entertainment systems to 25% of Japanese households and is making serious headway in this country. To quote the company’s materials: “Like the fabled Phoenix, the video game industry is rising from the ashes.”
There’s something to the notion. Video game sales peaked in 1983 at $3 billion then got zapped by sales of videocassette recorders and more versatile home computers, dropping to $800 million in ’84 and then below that. While the category is not expected to revisit its glory days any time soon, Atari, Nintendo and Sega Enterprises are enjoying the revitalization for now.
A sign of the times: Computer hardware and software company booths took up 30% more space in the West Hall this year than last.
[Source: Los Angeles Times]