Item — HN Reader

I wonder how much they paid the 1 programmer for the 5 weeks of development time. I'm sure nowhere near the $5m they spent on advertising or $21m on game rights.

Also, if they did indeed sell 1.5m copies at $40 per copy, that's $60m. Even allowing for large amounts of unsold stock that surely can't have been too far off covering costs, and can't have been the only reason for their subsequent $310m loss.

EDIT: Fair points about distributors margins, retailers margins, manufacturing costs etc. But even if they only saw $10m-$20m of the $60m in retails sales, that is still a reasonable amount, and mean their losses on that one game would only be in the millions or low 10s of millions, so there must have been additional reasons for the company's $310m loss.

5 comments

It is not the loss for 1 game that is important here, but the decision making and approach that Atari took for this game and probably elsewhere as well. If Atari were making strange decisions here, they were likely doing it elsewhere, ultimately leading to their downfall.

Wikipedia says the programmer was offered $200K + a Hawaiian vacation. It doesn't say what he actually negotiated or received.

Just for scale: $200k 1982-dollars is $491k in 2016-dollars.

So he was probably quite motivated to get it done.

Someone could offer me $200k in today's dollars for a five week project and I would gladly take it.

Someone could offer me a vacation in Hawaii for five week project and I would gladly take it

Someone could offer me an unpaid summer internship and I'd probably take it.

I know it's a joke, but don't take unpaid internships - you're devaluing your own (and everyone else's) job.

$40 would be the retail price, no? After retailer's margin and distributor's margin, maybe Atari got max $15 per cartridge. Making the whole debacle a money-losing affair.

Don't forget licensing, as well. There was likely a percentage cut on top of the rights.

E.T. was basically the "straw on the camel's back" moment for consumers. It wasn't just that the game itself was an overhyped blunder, but that by the time it came out, the market was already flooded with truly awful third-party games for the system. Seeing the manufacturer themselves turn out such an underdeveloped hunk of garbage (and E.T. is truly bad, even for a system with such terrible games) basically torpedoed what was left of consumer confidence.

At the same time, home computers were starting to nip at the game consoles' heels. Computers weren't just "toys," you could sell them on their practical applications as well. It was easier for little Timmy to get his parents to buy him a computer "for school" and then sneak games on it anyway, than just plonking down for a piece of hardware that only played inferior crap like E.T.

E.T. was the flashpoint, but the crash of 1984 had a lot of causes.

That's $60 mil retail, not what Atari took, I'd be surprised if they hit breakeven since you need you factor in manufacturing costs and they likely took maybe a third of the retail price.