In December 1982 the magazine Video Games opened its history of Atari with a food fight. Leftovers were flying across a room full of Atari executives, and the chief executive’s temper seemed to be rising. When he finally had everyone’s attention, he said, “Nolan would be proud,” smiled, and the food fight carried on. The chief executive was Ray Kassar, and the joke was that he had spent three years replacing Nolan Bushnell’s famously loose Atari with a company of pinstriped suits and eight o’clock starts. “No company has ever grown this fast,” one of his vice-presidents told the magazine. Within a year Kassar had resigned and Atari was losing hundreds of millions of dollars.
Fast facts
- Before Atari: executive vice-president of Burlington Industries, a textile company.
- At Atari: president of the consumer division from the start of 1978; president of Atari from late 1978; later chairman and chief executive.
- Growth: Video Games put Atari’s revenue at $165 million in 1979 and its projection for 1982 at $2 billion.
- Left: resigned in July 1983; James Morgan of Philip Morris replaced him.
- Stock sale: the Securities and Exchange Commission (SEC) charged him in September 1983 over Warner shares sold on 8 December 1982. He settled, repaying $81,875 without admitting or denying the charge.
From Burlington to Atari
Warner Communications bought Atari in 1976, and in 1978 it put money into the Video Computer System, later called the Atari 2600. Kassar, a former executive vice-president at Burlington Industries, was installed as president of the consumer division at the beginning of that year. Atari built 800,000 consoles and was left with about 400,000 in its warehouse. At Warner’s budget meeting that November, Bushnell was demoted from chairman to director, Joe Keenan gave up the presidency to become chairman, and Kassar became president. “Ray could have been the scapegoat,” Keenan said later.
Kassar set out to sell the VCS all year round, not just at Christmas, and to change how Atari worked. “Kassar never had to send out a memo detailing work hours, a dress code and so on,” Video Games wrote. “Gradually, people got the message.” Frank Ballouz, who had worked in the coin-op division, remembered coming to work in jeans and boots, then slacks, then a tie. Keenan had a sharper verdict: “Ray Kassar doesn’t interface very far down. He couldn’t even if he wanted to. That’s just the way he is.”
The approach sold consoles. Under Kassar, Atari secured the home rights to Taito’s Space Invaders. Retro Gamer later called the deal “a canny manoeuvre that quadrupled the sales of the VCS”. Kassar’s background also shaped Atari’s computers. Retro Gamer writes that he believed his years selling towels and carpets at Burlington gave him a feel for consumers, and that he wanted the Atari 400 and 800 marketed as easy consumer products.
The towel designers
Atari’s programmers saw it differently. The engineer Joe Decuir, who worked on the VCS and the 400 and 800, recalled a meeting at which Kassar talked of selling the computers in designer colours so that women would buy them. “One of the VCS programmers asked him how he was going to deal with the creative talent — the game designers. He said he knew about creative types from dealing with towel designers at Burlington Mills, his previous company. A core of programmers were disgusted, and formed Activision.” ANALOG Computing told a similar story in 1984, citing the San Jose Mercury: programmers who asked for royalties were told they were no more important than “towel designers”.
The four who left in 1979 were David Crane, Alan Miller, Bob Whitehead and Larry Kaplan. They had worked out from an internal memo that their games made up a large share of Atari’s cartridge sales, while they earned salaries of about $30,000. Miller asked for his name on his games. “Management said ‘No, no recognition’,” he told Retro Gamer. “And that was pretty much the end of my time there.” Two lines are often attributed to Kassar from these meetings, “you programmers are a dime a dozen” and that they were no more important than the man on the assembly line; Retro Gamer reported them only as “reputedly” said. Miller himself later gave another reason for leaving: Atari “had lost their striving for technical excellence”.
Activision sold its own 2600 cartridges from 1980. Atari sued it for $20 million, alleging a conspiracy to take trade secrets, and the case was settled in December 1981, with Activision agreeing to make games under a technology licence from Atari. Other programmers followed the Activision four, and by 1982 more than a dozen outside companies were making 2600 cartridges.
Kassar left a mark on the games themselves. Howard Scott Warshaw named Yars’ Revenge, which he wrote in 1981 and Atari released in May 1982, after Kassar spelled backwards: “Yar” is Ray, and the game’s full title referred to the Razak solar system. A year later a call from Kassar’s office sent Warshaw to write E.T. the Extra-Terrestrial: “Spielberg wants you … fast!”
The stock sale
On 8 December 1982 Warner warned that Atari’s profits for the last quarter of the year would be far below forecast, and its share price fell sharply. It soon emerged that executives had sold Warner shares before the announcement. Vidiot reported in spring 1983 that shareholders had sued Warner, and that “Atari Chairman Raymond Kassar” was among those said to have sold. InfoWorld’s guide to Atari, published in 1984, recorded that the SEC had started an investigation and that “Kassar denied any wrongdoing.”
In September 1983 the SEC filed civil fraud suits against Kassar and Atari’s executive vice-president, Dennis Groth. It alleged that Kassar had sold 5,000 Warner shares on 8 December, half an hour before the announcement. UPI reported that Kassar settled at once, without admitting or denying the charge, by agreeing to repay $81,875 in profits. He said he had sold the shares to pay for a year-end tax shelter, and called the timing “ill-advised”, creating “a clear appearance of impropriety”. Magazines of the time gave different details: Videogaming Illustrated spoke of Atari shares rather than Warner’s, and ANALOG Computing put the sale at $250,000 and a day before the news.
Resignation
1983 went badly. In July Atari reported an operating loss of $310.5 million for the second quarter, and Kassar resigned. Atari Age, Atari’s own club magazine, reported that he had been chairman for five and a half years and would stay on as a consultant, and that James J. Morgan had been named chairman and chief executive. Videogaming Illustrated put the word “resigned” in quotation marks, since a replacement had been announced almost at once. Morgan, a marketing executive from the tobacco company Philip Morris, took over in September. A year later Warner sold Atari’s home business to Jack Tramiel, and the story of that collapse is told in the 1983 crash.
Kassar died in Vero Beach, Florida, on 10 December 2017.
Sources
- Steve Bloom, “The incredible, incredible story of Atari”, Video Games, vol. 1 no. 3, December 1982, pp. 36–50: the food fight and “Nolan would be proud”; Don Osborne’s “No company has ever grown this fast”; Gene Lipkin on the new Atari; revenue of $165 million in 1979 and $2 billion projected for 1982; Kassar as “a former executive vice-president at Burlington Industries” and president of the consumer division from the start of 1978; the 800,000 consoles; the November 1978 meeting and Keenan’s “scapegoat”; selling the VCS year-round; the dress code; Frank Ballouz; Keenan’s “doesn’t interface very far down”; the four designers who formed Activision.
- Retro Gamer, The Atari Book (2012): p. 19, Kassar’s Burlington background and his view of the 400 and 800 as consumer products; p. 75, Joe Decuir’s recollection of the “towel designers” meeting.
- ANALOG Computing issue 19, June 1984: the “towel designers” remark as reported in the San Jose Mercury; the stock sale “a day before”; the resignation after the second-quarter losses.
- Mat Allen, Activision feature, Retro Gamer issue 25, 2006, p. 32: the four founders, the memo and the $30,000 salaries, Miller’s “No, no recognition”, the quotes Kassar “reputedly” used.
- Computer Gaming World issue 32, November 1986: interview with Alan Miller on leaving Atari.
- Video Games Player, vol. 1 no. 1, September 1982: Atari’s $20 million trade-secrets suit and its settlement in December with a technology licence. Computer & Video Games issue 5, March 1982: Activision “recently settled its differences with Atari”.
- Retro Gamer issue 117, August 2013: Kassar securing the home rights to Space Invaders, and its effect on VCS sales.
- Howard Scott Warshaw, Wireframe issue 9, March 2019, pp. 28–29, and ClassicGamer Magazine vol. 1 no. 2, Winter 2000: Yars’ Revenge named after Kassar backwards.
- Atari Age vol. 1 no. 4, November–December 1982: checklist of 1982 cartridges, Yars’ Revenge released in May.
- Video Games vol. 1 no. 5, February 1983, p. 34: Warshaw and “Spielberg wants you … fast!”
- Vidiot vol. 1 no. 3, April/May 1983, p. 8: shareholder suits and the reported sale by “Atari Chairman Raymond Kassar”.
- InfoWorld’s Essential Guide to Atari (1984): the SEC investigation; “Kassar denied any wrongdoing”.
- UPI, “SEC accuses two Atari execs of fraud”, 27 September 1983 (web, secondary): the SEC suits, the 5,000 shares, the half hour, the $81,875 settlement and Kassar’s statement. https://www.upi.com/Archives/1983/09/27/SEC-accuses-two-Atari-execs-of-fraud/8246433483200/
- Videogaming Illustrated, September 1983, p. 10: “resigned” in quotation marks; Morgan as replacement; the share sale “now being investigated by the S.E.C.”.
- Atari Age, vol. 2 no. 3, September 1983: Kassar’s resignation in July after five and a half years as chairman; consultant; Morgan named chairman and chief executive.
- Retro Gamer issue 100, March 2012, pp. 90–95: the $310.5 million second-quarter operating loss and Morgan replacing Kassar.
- Compute! issue 50, July 1984: Morgan replaced Kassar in September 1983.
- Game Developer, obituary, December 2017 (web, secondary): his death in Vero Beach on 10 December 2017.