Atari was successful at creating arcade video games, but their development cost and limited lifespan drove CEO Nolan Bushnell to seek a programmable home system.

Beginning with the VCS version of Asteroids in 1980, many games used bank switching to allow 8 KB or larger cartridges.

The popularity of the VCS led to the founding of Activision and other third-party game developers and competition from the Intellivision and, later, ColecoVision consoles.

Atari engineers recognized, however, the limitation of custom logic integrated onto the circuit board, permanently confining the whole console to only one game.

Therefore, development of a console had cost at least $100,000 (equivalent to about $566,000 in 2023) plus time to complete, but the final product only had about a three-month shelf life until becoming outdated by competition.

[11] Financial models showed that even at $25, the 6502 would be too expensive, and Peddle offered them a planned 6507 microprocessor, a cost-reduced version of the 6502, and MOS's RIOT chip for input/output.

[6] As the TIA's design was refined, Al Alcorn brought in Atari's game developers to provide input on features.

[11] The console lacks a framebuffer and requires games to instruct the system to generate graphics in synchronization with the electron gun in the cathode-ray tube (CRT) as it scans across rows on the screen.

The programmers found ways to "race the beam" to perform other functions while the electron gun scans outside of the visible screen.

Hardy had been an engineer for Fairchild and helped in the initial design of the Channel F cartridges, but he quit to join Atari in 1976.

The interior of the cartridge that Asher and Hardy designed was sufficiently different to avoid patent conflicts, but the exterior components were directly influenced by the Channel F to help work around the static electricity concerns.

[8][15] Atari was still recovering from its 1974 financial woes and needed additional capital to fully enter the home console market, though Bushnell was wary of being beholden to outside financial sources.> Atari obtained smaller investments through 1975, but not at the scale it needed, and began considering a sale to a larger firm by early 1976.

Atari was introduced to Warner Communications, which saw the potential for the growing video game industry to help offset declining profits from its film and music divisions.

The Atari VCS was launched in September 1977 at $199 (equivalent to about $1,000 in 2023), with two joysticks and a Combat cartridge; eight additional games were sold separately.

[18] Bushnell pushed the Warner Board of Directors to start working on "Stella 2", as he grew concerned that rising competition and aging tech specs of the VCS would render the console obsolete.

[a] Pac-Man propelled worldwide Atari VCS sales to 12 million units during 1982, according to a November 1983 article in InfoWorld magazine.

[37] In addition to third-party game development, Atari also received the first major threat to its hardware dominance from the ColecoVision.

Coleco had a license from Nintendo to develop a version of the arcade game Donkey Kong (1981), which was bundled with every ColecoVision console.

It provides a single-color, 20-bit background register that covers the left half of the screen (each bit represents 4 adjacent pixels) and is either repeated or reflected on the right side.

[64][14] Early games for the system use the same visuals for pairs of scan lines, giving a lower vertical resolution, to allow more time for the next row of graphics to be prepared.

[73] The initial production of the VCS was made in Sunnyvale during 1977, using thick polystyrene plastic for the casing as to give the impression of weight from what was mostly an empty shell inside.

Production of the unit was moved to Taiwan in 1978, where a less thick internal metal shielding was used and thinner plastic was used for the casing, reducing the system's weight.

The 2800 was released a short time after Nintendo's Family Computer (which became the dominant console in Japan), and it did not gain a significant share of the market.

Multiple retro-style consoles and microconsoles have been released since the lifespan of the original Atari 2600: In 1977, nine games were released on cartridge to accompany the launch of the console: Air-Sea Battle, Basic Math, Blackjack, Combat, Indy 500, Star Ship, Street Racer, Surround, and Video Olympics.

Atari outsourced box art to Cliff Spohn, who created visually interesting artwork with implications of dynamic movement intended to engage the player's imagination while staying true to the gameplay.

Spohn's style became a standard for Atari when bringing in assistant artists, including Susan Jaekel, Rick Guidice, John Enright, and Steve Hendricks.

Ralph McQuarrie, a concept artist on the Star Wars series, was commissioned for one cover, the arcade conversion of Vanguard.

[97] Many early VCS titles were able to display in both monochrome (black and white) and full color through the use of the "TV type" switch on the console.

A company named American Multiple Industries produced a number of pornographic games for the 2600 under the Mystique Presents Swedish Erotica label.

[103] The 2600 was so successful in the late 1970s and early 1980s that "Atari" was a synonym for the console in mainstream media and for video games in general.