The original Atari, Inc., founded in Sunnyvale, California, in 1972 by Nolan Bushnell and Ted Dabney, was a pioneer in arcade games, home video game consoles, and home computers. The company's products, such as Pong and the Atari 2600, helped define the electronic entertainment industry from the 1970s to the mid-1980s.

Negotiating until close to midnight on July 1, 1984, Jack Tramiel purchased the home computing and game console divisions of Atari for $240 million in promissory notes and stocks. Warner gained a 20% stake in Tramel Technologies, which was renamed Atari Corporation. Warner retained the arcade division, continuing it under the name Atari Games, but sold it to Namco in 1985. Warner also sold the Ataritel division to Mitsubishi.