Raymond Edward Kassar was born January 2, 1928 and died December 10, 2017, aged 89, in Vero Beach, Florida. Ray Kassar was president, and later CEO, of Atari Inc. from 1978 to 1983. Atari’s parent company, Warner Bros, hired him as president of Atari’s consumer division in February 1978 after he spent 26 years at Burlington Industries, a textile maker.
Ray Kassar’s rise at Atari
In November 1978, Warner fired Atari co-founder Nolan Bushnell. By some accounts, it was a disagreement over Atari’s future. By other accounts, it was a dispute over how much time Bushnell spent at the company.
Warner then promoted Kassar to CEO. Under Kassar’s leadership, Atari’s culture shifted from a focus on engineering to a focus on business, with mixed results. The culture at Burlington Industries had been one of order, organization, and efficiency. Kassar tried to replicate that at Atari. After calling Atari programmers “high-strung prima donnas” on the record in an interview with the San Jose Mercury News in 1979, Atari employees unaffectionately called him the “sock king” and the “towel czar.”
Kassar was notoriously unpopular with Atari engineers, but the business partisans didn’t universally fall into line with Kassar either. Atari’s upper management suffered severe turnover rates. Many blamed Ray Kassar’s autocratic management style, but Kassar was not held accountable.
According to the Nov 28, 1983 issue of Infoworld, Nolan Bushnell told Warner that Kassar was the wrong man for the job. “I told [Warner co-president Emanuel Gerard] he was the wrong man. I didn’t think Kassar could get along with engineers. He couldn’t get down on the floor with them… You’ve got to have enough faith in them to say, ‘I don’t know what you’re talking about. Here’s some money, go show me.'”
This stood in sharp contrast with some of his peers. For example, future Atari CEO Jack Tramiel would fraternize with engineers, consider ideas from them, and even let them joke with him, even though he also had a reputation for being hard to work for.
Kassar’s disputes with Atari engineers
Atari its greatest success during Kassar’s time as CEO, growing Atari’s sales from $75 million in 1977 to over $2.2 billion in 1980. But the stifling atmosphere and lack of royalties or recognition to the individual game designers angered employees. Many quit. During this period, nearly all members of the original Atari staff, including Al Alcorn and Jay Miner, quit or were fired. This cut off Atari’s pipeline of new ideas, which caused problems as the Atari 2600 game console and Atari 800 home computer aged. As competitors caught up, Atari didn’t have anything new to counter with.
The most infamous example of Kassar’s attitude toward employees was his dispute with Atari developers. Four programmers were unsatisfied with their paychecks. They believed the salary they were making was inappropriate for someone designing the games that made the company millions of dollars. They wanted a small royalty. But when they asked Kassar, David Crane recalls that Kassar responded, “You are no more important to that game than the guy on the assembly line who puts it together.”
Crane, along with Bob Whitehead, Larry Kaplan, and Alan Miller resigned from Atari and formed their own company, Activision, becoming the first ever third party developer.
In 1981, Atari released the highly popular and successful game Yars’ Revenge for the Atari 2600. Howard Scott Warshaw, the game’s designer, got the names “Yar” and “Razak” by jokingly spelling “Ray Kassar” backwards. Warshaw called the game “Ray’s revenge on Activision.”
Atari’s fall from grace in late 1982
Kassar’s problems caught up with him, and Atari, by the fall of 1982. After earning more than $300 million in the first three quarters, shattering its previous records for a full year, Atari missed its targets for the critical fourth quarter. Making matters worse, Kassar sold 5,000 shares of stock in Warner Communications only 23 minutes before the report went public. Warner stock went into a free fall, losing 40 percent of its value.
The Securities and Exchange Commission accused Kassar and then-Atari vice-president Dennis Groth of illegally trading stock with insider knowledge. Kassar settled, returning his profits without acknowledging guilt or innocence.
A final stain on Kassar’s legacy with Atari was his missed opportunity with Nintendo. Nintendo wanted Atari to partner to bring its Famicom console to the United States, but a dispute with Nintendo over its licensing of Donkey Kong caused Kassar to cut off communication with Nintendo. Nintendo later launched the very successful Nintendo Entertainment System on its own, without Atari.
Things only got worse in 1983, losing $45.6 million in its first quarter and a stunning $310 million in its second. Atari’s woes took the whole industry down with it. Whether Atari fired Kassar or he resigned depends who you ask, but Kassar left Atari on July 7, 1983. Warner hired former Phillip Morris executive James J. Morgan as CEO of Atari in September 1983.
Kassar never held another executive position again. He worked as a private investor and sat on the Board of the American Hospital of Paris Foundation.
25 years and two days after Warner announced its earnings miss and Kassar sold 5,000 shares of stock prompting an SEC investigation, Kassar died at the age of 89, in Florida.
But about that Yar’s Revenge thing. I’m not convinced Ray Kassar ever got revenge on Activision, Atari, Nintendo, or any other tech company he had a beef with. But maybe he got revenge on Warner. Warner and its successor, Time Warner, never mixed well with technology companies. See the disastrous AOL-Time Warner merger for a nice example.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.