Was killing the 5200 early one of the most fatal mistakes Atari ever made?

[JaguarVision]

We already know some of the story behind the 5200, it was brought out at a high price with mixed advertising, the 2600 continued to sell on par or more than the 5200 on a monthly basis, and Atari decided, based on no other factors, to abandon the 5200 despite it selling most of its over 1 million sales in its first 365 days and ran the 7800 test launch in 84.

 

 

But I would go further and say that this was one of the biggest missteps in the history of the industry. Top 5 easily! in fact, I'd say for Atari specifically, it was their 2nd biggest screw-up ever. But enough with the hyperbole let me go and explain why.

 

The Atari 5200 was a Atari 400/800 computer in a console shell for the most part. You can debate the laziness of this design, but in 1982 the 5200 hardware was among the best, if not THE best console hardware available at the time. Power difference between the 5200 and ColecoVision being debatable.

 

So the 5200 had the power. It also introduced new play control with the analog sticks, which, unlike the phone keypads of other systems, many 5200 games actually used, and some games available on multiple systems played better because of it! (also some played worse but that's a different story)

 

By the time Atari stopped pushing the 5200 as the 2600 replacement the 5200 in late 83', it was getting computer ports in genres that were not too common on other consoles. After its discontinuation in 84, the 5200 got games like H.E.R.O., Dreadnaught, and Rescue on Fractulus, which were all supposed to be released earlier, and all of them showed just how big the gap between the 2600 and the 5200 was:

 

 

Now here's something many here may not have considered. Price aside, if Atari chose to salvage the 5200 instead of abruptly killing it randomly, not only would the 5200 generate more money, but the 7800 could have haf a 1985 launch instead of 84'. It may also have prevented the circumstances that led to the eventual buyout by Jack tramiel.

 

The 5200 could have easily helped Atari weather the crash, it still would have happened, but the results at the end may have been much different. By keeping the 5200 in play, developers would have had more time with the hardware, and we would have seen better and better graphics overtime. We also would have seen more ports in computer common genres like RPGS and flight sims right when the crash was taking effect. This would allow Atari to bring in fresh games that would have helped it survive the crash.

 

Consider also that the 5200 library had a good number of games but not anywhere near the amount of bloat the 2600 had. 2600 games were primitive, filled to the brim with games of varying quality, and did not have the "freshness" to weather the crash. The 5200 however, did, and having it still being pushed throughout 84-85 may have kept Warner Atari in-tact.

 

Coleco still would have failed with the Adam and chased after CBK. Mattel still would have spun-off INTV, but Atari would still be relevant and would be able to suck up that vacuum before the NES came. Allowing the 7800 to be in a much better position.

 

A 5200 being kept alive till 1985, with more 5200-only software, and continued marketing and retail support by Atari, would have likely completely changed how the crash, and its impact happened. It's amazing how fast Atari destroyed their future. The 5200 didn't even have a chance to breath.

 

With over 1 million consoles sold, with most of those sales being within its first 365 days, it was clear people were interested in the 5200. Them focusing on the 2600 while readying the 7800 was their biggest mistake. The 2600 days of providing significant profits was already long gone, and it couldn't entice customers for another 3-4 years.

 

It's got to be one of the most boneheaded moves in the history of gaming I'll tell you that for free.

 

Now with that said I know someones going to mention there were 5200-only games. Of course with Zone Ranger, Astro Chase, Krazy shootout, and Countermeasure among others, this is true. However, most of the 5200's other games are on the 2600! No consoles since the 5200, had the predecessor share most of its library. Not sure what Atari was thinking on that one!

 

 

[Flojomojo]

You know it costs money to manufacture, distribute, develop, market, and support a game console, right? And that Atari lost hundreds of millions of dollars in the crash?

 

With only a million consoles sold, with most of those sales in the first year, it was clear that the 5200 wasn't going to be a breakaway hit. Atari stuck with the 2600 too long, they weren't about to make the same mistake with the 5200. When you're in a hole, you stop digging.

 

Shoveling more money into a failing enterprise would be the more "boneheaded" thing to do. The bottom of the whole industry fell out. There's no way the shareholders would have permitted more investment in a sinking ship like 5200.

[JaguarVision]

You know it costs money to manufacture, distribute, develop, market, and support a game console, right? And that Atari lost hundreds of millions of dollars in the crash?

 

With only a million consoles sold, with most of those sales in the first year, it was clear that the 5200 wasn't going to be a breakaway hit. Atari stuck with the 2600 too long, they weren't about to make the same mistake with the 5200. When you're in a hole, you stop digging.

 

Shoveling more money into a failing enterprise would be the more "boneheaded" thing to do. The bottom of the whole industry fell out. There's no way the shareholders would have permitted more investment in a sinking ship like 5200.

 

I don't know about that. The 2600 had already been milked dry and continuing to release software for it instead of only the 5200 just ended up sabotaging the 5200 in the first place. It would actually save money to not port games to the 2600 and only have them on the 5200.

 

Not only that, but the 5200 was a fast seller, and had momentum which was artificially cut off by Atari themself.

 

So that begs the question as to why they cut the console. Did they have a crazy estimate of 4 million consoles sold the first year? It sold most of that 1+ million in the first 365 days, not too far behind the ColecoVision. Surely they could have held on to the 5200 for a little bit longer. There was no reason to keep giving the 2600 so much support in 82 or 83. No to mention they still had 5200 inventory sold years after discontinuation and released games for the 5200 up to 86 so I think they regretted the decision themselves honestly.

 

Of course it's all hindsight, we don't know the real reason why they supported the 5200 with software until 86, or what their sales metrics for the 5200 were before discontinuation. But based on what we know, it just seems very strange they would kill it so fast despite its clear momentum in the market.

[Flojomojo]

I imagine they were watching the trends and making guesses, like any planner would.

 

The 2600 was probably super cheap to manufacture by then, and they had cost-cutting measures like generic white boxes and no more color inserts. Game development slowed to a crawl.

 

I would ASSume modern consoles sell a lot from year to year, not just at launch. The first (or maybe 2nd) holiday season with the 5200 could have been all they needed to see to know they couldn't go any farther with the concept.

[JaguarVision]

I imagine they were watching the trends and making guesses, like any planner would.

 

The 2600 was probably super cheap to manufacture by then, and they had cost-cutting measures like generic white boxes and no more color inserts. Game development slowed to a crawl.

 

I would ASSume modern consoles sell a lot from year to year, not just at launch. The first (or maybe 2nd) holiday season with the 5200 could have been all they needed to see to know they couldn't go any farther with the concept.

 

Perhaps, but given how fast the 2600 crumbled along with Ataris finances, one would think that by 83' it would be clear that the 2600 was not generating enough money to keep relying on it, at least they would have two cash flows. They also seemed to at least believe there was some profit to the 5200 to keep releasing games for it until 1986, along with left over hardware inventory.

 

It's a very mysterious time frame for Atari. They were making a lot of odd decisions then.

Edited September 7, 2018 by JaguarVision

[Flojomojo]

at least they would have two cash flows.

 

... or two mouths to feed. These things don't support themselves.

 

I'll bet the answer is in here.

[Keatah]

The industry was new. People and companies were still experimenting to see what worked. In retrospect it is easy to see the mis-steps. One of them being not enough differentiation between the 5200 and the 8-bit computer lineup.

[JaguarVision]

The industry was new. People and companies were still experimenting to see what worked. In retrospect it is easy to see the mis-steps. One of them being not enough differentiation between the 5200 and the 8-bit computer lineup.

 

Well no, at the time Atari had to know before the crash the 2600 was no longer able to milked anymore. At least not to the extent they could rely on it. As for the 5200 I see no pr of it being a commercial failure in its first year, so you'd think they would set things up so they would get money from at least two sources, if not the 5200 than the 8-bit line of computers, but they didn't do either.

 

Considering how fast Ataris financials were destroyed by the crash it had to b very clear to Atari before hand they were not generating the needed income.

[zzip]

I don't think so because if Jack Tramiel still buys Atari in that alternate timeline, he still would have likely focused on computers and neglected the console side of the Atari business, allowing Nintendo and Sega to overtake them.

 

I think regardless of whether the 5200 or 7800 was their flagship system, it would have ended up in a similar result.

Edited September 7, 2018 by zzip

[Lost Dragon]

The UK and European side of the 5200 isn't that well reported.

 

Originally intended to replace the aging 2600, we were told to expect a UK launch in the summer of '83.

 

Hardware expected to have a RRP of that of the Colecovision,games expected in at around £29.95.

 

Next announcement by Atari, it's been delayed as focus on getting a production plant in Ireland set up, UK 5200 now due Xmas '83.

 

 

Then

 

Eric Salamon, then Marketing Director of Atari UK:

 

 

 

"We are in a fast moving buisness of high technology.When we isolate a marketing opportunity, we seek to fill that gap.

 

 

 

Sometimes these gaps close and new ones arise before we can introduce the product.This has been the case with the 5200.

 

 

 

Atari will be concentrating on the 2600 and a new series of home computers, as well as making software for other systems."

 

UK isn't getting the 5200,which must of p#ssed off the various home shopping firms here which had been advertising it in their catalogues..

 

As for Germany, a friend of mine says Atari over there didn't even want it, seeing the 600XL as offering better VFM.

 

Slogan of why should i buy a toy,when i can get a computer which also plays Donkey Kong?

[Flojomojo]

> I think regardless of whether the 5200 or 7800 was their flagship system, it would have ended up in a similar result.

 

Especially since things like this were considered state-of-the-art at the time.

 

[ubersaurus]

The 5200 sold a million units in the same period that the Colecovision sold what, 2, 3 million units? And support for the machine was certainly anemic compared to other consoles on the market, including the 2600 (which was still selling extremely well). As has been said, the industy was new and no one quite knew what they were doing, but on the whole? Killing the 5200 wasn't the problem so much as releasing it in the first place with failure prone controllers, no backwards compatibility with the 2600 (or the 400 computer!), that ridiculously bulky footprint, and games that were only marginal improvements over what the folks at Coleco and Mattel were doing.

 

Post crash Warner Atari was hemorrhaging money, Tramiel bought up not only the assets but the debt from the consumer division, and going through all the legal rigamarole to get everything cleared with the 7800, etc. meant they just kept up with selling existing software and hardware through 84 and 85 but didn't have the funds to keep on the development staff, let alone hire and train new people. The 5200 was essentially boned by timing there, but they did keep on selling games for it into what, 1987 or so.

Edited September 7, 2018 by ubersaurus

[JaguarVision]

One thing you guys must remember is Atari not only cut the 5200 revenue off, but it was throwing in considerable investment in the 7800 with all kind of add-ons and gadgets at the time, and there was no way to tell that would be profitable day one. It ended up being that no one would ever find out!

 

The 5200 at least would have saved money. Any tactic that would either make it so that Jack couldn't but the company, or putting the 7800 in 1985 is beneficial.

 

Even if Warner still sold to Jack the 7800 releasing in 85 would give Atari a year head start and would put the 7800 in a wayyyyy better position than where the 7800 ended up profitable or otherwise.

 

With a 1985 release, along with not cutting the 5200 abruptly, retailer trust would not have been as tainted, there would be more time to gather developers early before the Nintendo lock-out, more courting of Computer developers, the ability to drop the price the next year, and a years worth of advertising.

 

it would at least make the 7800 vs. NES more interesting instead of the 7800 Vs. SMS in who gets the most scraps.it would also likely lead to a more stable Atari and who knows it may still have been around in some form today, even as a software only company. Instead of well, infogrames which it is now.

[JaguarVision]

The 5200 sold a million units in the same period that the Colecovision sold what, 2, 3 million units? And support for the machine was certainly anemic compared to other consoles on the market, including the 2600 (which was still selling extremely well). As has been said, the industy was new and no one quite knew what they were doing, but on the whole? Killing the 5200 wasn't the problem so much as releasing it in the first place with failure prone controllers, no backwards compatibility with the 2600 (or the 400 computer!), that ridiculously bulky footprint, and games that were only marginal improvements over what the folks at Coleco and Mattel were doing.

 

Post crash Warner Atari was hemorrhaging money, Tramiel bought up not only the assets but the debt from the consumer division, and going through all the legal rigamarole to get everything cleared with the 7800, etc. meant they just kept up with selling existing software and hardware through 84 and 85 but didn't have the funds to keep on the development staff, let alone hire and train new people. The 5200 was essentially boned by timing there, but they did keep on selling games for it into what, 1987 or so.

 

Not quite. The ColecoVision sold 1 million in 8-9 months. we have nothing more than that for sales. But most of the over 1 million sold for the 5200 was within its first 12 months so that's still pretty good. you also need to consider that they gave up on pushing the 5200 for some weird reason before 84 and the 2600 was stealing sales.

 

The games aren't Ataris fault, at least not the first year of games, as most Atari controlled games at least looked better than the 2600 versions while third-parties like Activision were kind of lazy. But that applies to the ColecoVision as well.

 

Considering the games it would get from 84-86 it made no sense to discontinue the 5200 so early as you would have gotten games substantially better graphically than the 2600 or Intellivision could ever hope to put out.

 

Also they weren't just selling existing software for the 5200 they were selling new games and were still selling through contract, inventory through retailers like toys r us and others. Which is a strange move unless they saw profit in doing so. That's were the confusion is, why cut it off if you wanted to continue supporting it anyway?

 

Then they released the 7800 but also redesigned the 2600 to look just like the 7800? The same 2600 where it was already established was no longer making enough money to sustain the company? Heck one could argue the 7800 looks like the 5200 if you remove the rainbow lines on the edges of the gray label.

 

It doesn't add-up.

[Lost Dragon]

Don't people refer to the XEGS as being the console Atari should of released instead of the 5200?

[JaguarVision]

Don't people refer to the XEGS as being the console Atari should of released instead of the 5200?

 

That's the 7800 not the 5200.

 

The XEGS was based on the XE Atari line which wouldn't exist until after Atari was brought by Jack. So there was no way for XEGS hardware to exist in 82. 5200 was based on the original 8-bit line.

 

Though even with the 7800 I'm not entirely sure about replacing it with XEGS, yeah XEGS had more games but the 7800 is more capable hardware.

[Lost Dragon]

I'd moved on from the 800 XL by the time the XEGS arrived and it itself ended up replacing Atari UK's inital plans to replace the 2600 with the 7800 after plans to replace the 2600 with the 5200 fell through.

 

7800 arrived here with very little impact, so i am never sure which of the 3 systems (5200,7800 or XEGS), folks think Atari should of gone with.

 

I know the 7800 gets a lot of love from some, though it's personally never stood out much for myself.

 

Atari UK used to talk a lot about systems carrying the flame in the marketplace, but at 1 time they had the 2600, 7800 and XEGS carrying said flame for parents wanting a cartridge based console for the kids over here.

 

That always struck me as rather odd.

 

They were afraid to kill off the 2600, rumours said they gave them away free to dealers who stocked the ST, but how much truth in that there is, is something else.

 

They launch the XEGS after offloading unsold stocks of the 800XL to UK high street electrical chain so it appears at a time classified ads were full of people selling off unwanted XL's and then launch the 7800 after that.

 

Whilst it was clear they themselves were very much focused on pushing the ST.

 

Would it not of been better to of just released the 7800 sooner or at the very least properly supported it when it was released, than simply throw it out later after sitting on it?.

 

It reminds me of throwing stuff out from an aeroplane in trouble in old movies, so it could stay aloft longer.

[adamchevy]

I'd moved on from the 800 XL by the time the XEGS arrived and it itself ended up replacing Atari UK's inital plans to replace the 2600 with the 7800 after plans to replace the 2600 with the 5200 fell through.

 

7800 arrived here with very little impact, so i am never sure which of the 3 systems (5200,7800 or XEGS), folks think Atari should of gone with.

 

I know the 7800 gets a lot of love from some, though it's personally never stood out much for myself.

 

Atari UK used to talk a lot about systems carrying the flame in the marketplace, but at 1 time they had the 2600, 7800 and XEGS carrying said flame for parents wanting a cartridge based console for the kids over here.

 

That always struck me as rather odd.

 

They were afraid to kill off the 2600, rumours said they gave them away free to dealers who stocked the ST, but how much truth in that there is, is something else.

 

They launch the XEGS after offloading unsold stocks of the 800XL to UK high street electrical chain so it appears at a time classified ads were full of people selling off unwanted XL's and then launch the 7800 after that.

 

Whilst it was clear they themselves were very much focused on pushing the ST.

 

Would it not of been better to of just released the 7800 sooner or at the very least properly supported it when it was released, than simply throw it out later after sitting on it?.

 

It reminds me of throwing stuff out from an aeroplane in trouble in old movies, so it could stay aloft longer.

I'm not sure I would have purchased an 8bit computer for one of my kids instead of a 5200. Just like today, I would rather give my kids a game system for Christmas. The move to pull the 5200 from market seems foolish to me, but I didn't have all the numbers in front of me. It seems like the hail mary they could have used to weather the storm. If they would have paid the programmers a bit more per cartridge then they would have gotten more quality programmers wanting to write games for the system. I know most Atari programmers wanted to make games for the 2600 at the time from listening to a few interviews from various podcasts.

[JaguarVision]

I'd moved on from the 800 XL by the time the XEGS arrived and it itself ended up replacing Atari UK's inital plans to replace the 2600 with the 7800 after plans to replace the 2600 with the 5200 fell through.

 

7800 arrived here with very little impact, so i am never sure which of the 3 systems (5200,7800 or XEGS), folks think Atari should of gone with.

 

I know the 7800 gets a lot of love from some, though it's personally never stood out much for myself.

 

Atari UK used to talk a lot about systems carrying the flame in the marketplace, but at 1 time they had the 2600, 7800 and XEGS carrying said flame for parents wanting a cartridge based console for the kids over here.

 

That always struck me as rather odd.

 

They were afraid to kill off the 2600, rumours said they gave them away free to dealers who stocked the ST, but how much truth in that there is, is something else.

 

They launch the XEGS after offloading unsold stocks of the 800XL to UK high street electrical chain so it appears at a time classified ads were full of people selling off unwanted XL's and then launch the 7800 after that.

 

Whilst it was clear they themselves were very much focused on pushing the ST.

 

Would it not of been better to of just released the 7800 sooner or at the very least properly supported it when it was released, than simply throw it out later after sitting on it?.

 

It reminds me of throwing stuff out from an aeroplane in trouble in old movies, so it could stay aloft longer.

 

Atari didn't have the resources to Launch the 7800 across all over Europe in 86, it was a few countries in Europe and the U.S.

 

It's likely in other European countries the 7800 was released due to the relative success of it in NA and thought the popularity of the Atari computers in Europe could carry it. They even bothered to try and fight off the SMS competition by releasing a D-pad controller exclusively for select European countries with the late 7800 launch.

 

As for the 5200 in Europe, the belief was that they could replace the 5200 with Atari computers instead which to be honest wasn't a bad idea. The XEGS is just a XE computer in a console shell so it makes sense why they brought that over to Europe.

 

But just like in NA I am very confused as to why not only did they continue selling the 2600, but came out with a new redesign shaped near identical to the 7800.

[ubersaurus]

Tramiel wouldn't have been able to sell the 7800 in 1985 because he still would have had to deal with all the contract shit with Warner and GCC. He wanted to get the thing out in late 84 as was the original plan, but it got stalled while him and Warner worked out who was going to pay GCC for the 7800 work (it should have been Warner, ended up being Jack). And 7800 or no, it doesn't change the fact that Warner-era Atari was still losing a shitton of money every day prior to the sale. That was going to doom the 5200 no matter what. They brought out the 2600 jr. because Warner had already paid for the system design and the 2600 was a big enough seller to make it worth a shot - Atari sold some 1 million 2600 consoles in 1985, after all. They knew there was a niche on the low end of the console market the 2600 jr could fill and they took it. You could argue that the system was ancient and not worth supporting, but it seemed to have enough life in it to keep it alive into the 90s.

 

As far as Colecovision sales, by mid-1984 the company was saying they'd sold over 2 million units, and continued to sell machines into 1985 before ending support for the console. By May 1984, when Warner-era Atari announced it was halting production for the 5200, they were reporting 1 million units sold. So it was a 2-to-1 sales issue with the 5200's ostensible biggest competitor, at worst.If you go back and read some of the newsletters and magazines reporting on the industry at the time, the 5200 struggled. It was more expensive than the Colecovision, had a much weaker library, and again, suffered from build issues and lack of compatibility with Atari's existing product lines. Killing it to start over with something new (and Atari did plan on having a 7800 attachment for the 5200) made sense, much like Nintendo killing the Wii U for the Switch.

 

And sure, there were still 5200s out there, and Warner was still developing games for them, but I can't imagine they would have kept making new ones into the 7800 had things panned out differently. All Tramiel was doing was selling the produced and complete games he had purchased with the consumer division.

[atarilovesyou]

5200 wasn't going to save Atari, but if things were done differently then perhaps Atari's fortunes would have also. It has everything to do with the people that ran Atari, not the machines themselves.

[82-T/A]

The Atari 5200 joystick problem was a HUUUUGE problem, and I think that is really (in my uneducated opinion) what caused the system to fail.

 

My parents bought one for my brother back in the early 80s... and when we could barely control Pac Man because the joystick was screwed up, my mom returned it.

 

One of our neighbors also got one for Christmas that year, and they too returned theirs. Neither of us got a replacement, but just returned it and got money back (not my call... I was like 5 at the time).

 

Of the non-life and death situations in my life... this is one of the ones that still stands out... I was devestated when the game couldn't play, and my mom boxed it up and said she was going to return it.

[mbd30]

The Atari 5200 joystick problem was a HUUUUGE problem, and I think that is really (in my uneducated opinion) what caused the system to fail.

 

My parents bought one for my brother back in the early 80s... and when we could barely control Pac Man because the joystick was screwed up, my mom returned it.

 

One of our neighbors also got one for Christmas that year, and they too returned theirs. Neither of us got a replacement, but just returned it and got money back (not my call... I was like 5 at the time).

 

Of the non-life and death situations in my life... this is one of the ones that still stands out... I was devestated when the game couldn't play, and my mom boxed it up and said she was going to return it.

 

Exactly. Atari should have released the 5200 with normal joysticks that people actually want to use. How does such a poor design choice even happen? You'd think that Atari would have play tested the heck out of something as important as the controller for their new console.

[atarilovesyou]

 

Exactly. Atari should have released the 5200 with normal joysticks that people actually want to use. How does such a poor design choice even happen? You'd think that Atari would have play tested the heck out of something as important as the controller for their new console.

People can make any excuses they like, but that controller was a terrible decision. I mean, did they really think the same style joystick on the CoCo2 was a great choice for arcade gaming? Maybe if they even made it self centering...but they didnt. Just a dumb move.

[Ramses]

I also agree in regards to the controller. I'd say there's a good chance that it was the main contributor to the failure of the 5200. It's THAT bad.