Nolan Bushnell and Ted Dabney formed a company they called 'Syzygy' in 1971 (with $500) and created a video game called 'Computer Space', which was itself a clone of a game called 'Spacewar' for the PDP-1. Computer Space was manufactured and distributed by Nutting Associates, and while it was the first arcade-style coin-operated video game, it was a commercial failure.
They incorporated in 1972 and changed their name to 'Atari'. They then designed and manufactured the first successful arcade game 'PONG' after seeing a demonstration of Ralph Baer's 'Odyssey' home video game system. Magnavox later sued Atari on behalf of Baer for infringement of several patents, but it was settled with an acceptable license agreement before it went to court. Unfortunately for Atari, many other companies also cloned PONG, so most of the machines out there were actually bootlegs of the originally "stolen" idea.
In the mid-1970's, Atari went on to create many more original arcade titles and also created versions of PONG and related games for the home market.
Bushnell later bought out Dabney, and in 1976 he sold the company to Time Warner, Inc for $28 million, which isn't bad for 5 years of work. He was forced out of the company in November of 1978, allegedly over a dispute over the direction of the company regarding the VCS. Bushnell wanted to discontinue the product and develop a new one, but the board disagreed. The VCS was a huge success that Christmas (and for many more years), and Bushnell was gone from Atari.
Bushnell purchased the 'Chuck E. Cheese Pizza Time Theater' franchise from Atari, which he had previously developed before the buyout.
Bob Brock acquires franchise rights to develop Pizza Time Theatres. Before exercising these rights, Brock meets Aaron Fechter of Creative Engineering, who he finds had already attempted negotiations with Bushnell. Brock instead decides to start a new restaurant chain called "Showbiz" with more sophisticated animatronic animals from Creative Engineering and compete directly with Bushnell.Brock's son says the reason for the split is that Bushnell was dishonest during the negotiations and failed to disclose the failed dealings with Creative that would have surely resulted in a competitor with better animatronics- which is exactly what happened.
Bushnell's Chuck E. Cheese fails by 1984 and is purchased by Brock/Showbiz, which merges the two similar franchises.
Time Warner split Atari into two companies in 1984.
Warner sold the console/computer divisions to Jack Tramiel (who was freshly outed from his former company, Commodore, which he founded) and it became Atari Corp.
Warner retained Atari Games, which included the arcade operations, as well as AtariTel, which was developing electronics for the communications industry including a device that could transmit video on a 3" screen over normal telephone lines. The AtariTel division of Atari Games was soon sold off to Mitsubishi.
The Atari Games division of Atari Games Inc. was sold to Namco, with Warner renaming their remaining slice Atari Holdings, which had one division. That division, Atari Adventure, was sold to Adventure Properties, and Atari Holdings remained an official division of Warner but had no assets or operations.
Atari Games became independent of Namco and formed Tengen (for console games) and Atari Operations (operations of actual arcades). Namco bought Atari Operations from Atari Games which they had previously owned, and it was renamed/merged a few times with other Namco arcade operations, now called Cybertainment. Atari Games was bought by Time Warner and renamed TWI, then bought by Midway and renamed Atari Games again, and then re-renamed Midway Games West, and eventually shut down.
Atari Corp. merged with JTS, shut down operations, sold its IP sold to Hasbro, and then Hasbro sold the entire Hasbro Interactive division to Infogrames, who renamed GT Interactive as Atari Inc.
So, technically, what is now called Atari should own the consoles and computers and games for them, and Midway should own the arcade hardware and games.
