The Atari 7800 was the follow-up system to the Atari 5200, and was developed as a response to the overwhelming criticism of the previous system. Atari announced the 7800 in 1984, the same year that they phased out the 5200, although, the unit was not fully rolled out until 1986. Atari responded to the negative feedback by making the 7800 almost fully backward compatible to the 2600; as the 5200 was not able to play 2600 games without an adaptor.
The Atari 2600 was known to have amazing ports of arcade games, although this was quickly overtaken by systems such as the Intellivision and ColecoVision who were producing ports of the same quality though boasting new and improved graphics. The 7800 was required to up its game if Atari wanted to retake the lead in the gaming market and challenge the ColecoVision. To do this, Atari brought in a third party to design the new unit. This company was called General Computer Corporation (GCC) and they had experience in the development of arcade games.
GCC addressed many concerns from potential buyers, designing it to improve on the 5200 and also developing it as a fully-functional home computer. The 5200 was heavily criticised as, without an adaptor, it could not play 2600 games. So the 7800 was made to play 2600 games out of the box. Whereas computers were concerned, a keyboard was developed along-with an expansion port that allowed space for disc drives, printers etc which would appeal to the whole family.
The initial launch, in 1984, was a success. The few consoles released for test marketing had come back with rave reviews and 13 games were announced for a full product launch. The lineup included huge arcade titles such as Ms Pacman, Pole Position II, Centipede, Dig Dug, Robotron: 2084, Galaga and many more. However, during this period, Atari’s Consumer Division was sold to Jack Tramiel. Jack Tramiel deemed home consoles dead after the video game crash of ’83 and pushed the project to the side until further notice. The consoles already manufactured were stored in a warehouse and left to sit idle for two years.
Upon seeing the success of Nintendo’s NES, Tramiel decided to dust off the project. Tramiel was not a fan of the system, making cutbacks and giving tight budgets and time frames to his staff. This included removing the expansion port, dual joysticks, a keyboard and a highly anticipated high-score cartridge. The only peripherals that were included with the system were the Atari Proline Joystick (which was quickly replaced with a joypad due to criticism) and a light gun for the system.
Lockout features were also added to the system. Atari had run into trouble when inappropriate and graphic games appeared for the 2600. To avoid this, a digital signature was created for the 7800. So that if any unauthorised game was included it would not perform to work properly, and in some cases, prevented the games from being played.
By the end of 1986 the 7800 had only sold 100,000 consoles, compared to 125,000 Sega Mastersystem consoles and an additional 1.1 million NES consoles sold. Atari blame these low sales on time frame, claiming that they only had time to manufacture a certain amount of consoles within their given time-frame as well as the consoles that were in storage from 1984. Furthermore, there was an increasing lack of games for the system, most showing months between releases and with very little new content for gamers to play. For example Galaga was released in August ’86 but Xevious being released in November of the same year. By the end of 1986 only 10 games had been released for the system, which was very low in comparison to the NES and Mastersystem having between 20 and 30 games each.
The 7800 stumbled upon further issues due to a clause Nintendo had issued to developers preventing any other company developing Nintendo games into system cartridges for a period of two years if the game would challenge a similar title on the NES. Consequently, this hindered sales of both the 7800 and the Sega Mastersystem. However, a loophole was soon discovered in the clause. Although they were restricted to not being able to use developers who had developed the subsequent NES version of a game; copyright holders of the original arcade game could not be held accountable for these rules. Through the use of this loophole, Atari managed to develop classic Nintendo games such as Mario Bros, Double Dragon and Commando. Due to this, by the end of 1988 the 7800 had sold 1 million units worldwide. It remained in production officially until 1991, when Atari shut its doors.