On June 11, 1982, E.T. entered Elliot’s tool shed and into the hearts of humans across the world. Roger Ebert famously said the Steven Spielberg-directed film was “not simply a good movie. It is one of those movies that brush away our cautions and win our hearts.” President Reagan and First Lady Nancy screened the movie at the White House and, while watching, the President reportedly “looked like a ten year old kid.” It was reported that Princess Diana cried while watching the lovable alien. It made nearly $800 million at the box office (adjusted for inflation, that’s about $2 billion today), making it the highest-grossing movie ever at the time. In every sense of the word, E.T.: The Extra-Terrestrial was a phenomenon and a money-making machine in a variety of ways.

Atari was founded almost exactly ten years before the release of E.T., on June 27, 1972 by Nolan Bushnell (the same gentlemen who founded Chuck E. Cheese Pizza Time) and Ted Dabney. Only three months later, the company installed their first Pong arcade game (originally meant to be simply a training exercise for Alan Alcorn and not to be released to the public) in a bar in Sunnyvale, California called Andy Capp’s Tavern. From the end of 1972 through the 1970s, Atari installed upwards of 35,000 machines in bars, bowling alleys, and arcades in the United States alone, not too mention thousands more around the world. In 1975, Atari released Home Pong (yes, Pong you could play at home) through Sears just in time for the holiday season. It sold 250,000 units in the first year.

Not long after, in 1976, Bushnell sold Atari to Warner Communications for somewhere in the ballpark of $28 million (about $120 million today).

By the end of the 1970s, Atari was trying to figure out a way to consolidate all of their arcade games and separate themselves from their competitors. The Atari VCS (later named the Atari 2600) was released in October 1977, but poor marketing and the price point ($199 – equivalent to almost $800 today) made it a slow seller.

In addition, at first many people didn’t understand you could play other games besides the various derivatives of Pong on the Atari 2600. However, with the release of Space Invaders, licensed through the company Taito in 1980, the 2600 became a hit

Soon a series of other games like Adventure, Pitfall, Pele’s Soccer, and Superman continued to  skyrocket sales, eventually hitting ten million consoles sold by 1982. The Atari 2600 was now the most popular home entertainment system ever produced holding approximately an 80% market share.

According to the book “All Your Base Are Belong to Us”- it was actually 1981, a year before E.T. the movie was released, that Steve Ross, Steven Spielberg, and Universal began negotiating the licensing rights to turn the movie into an Atari game. The film was released in the beginning of June of 1982 and the deal was finally signed with Atari paying a record breaking $25 million (about $63 million today) for the rights to make the game.

They gave the task of designing and programming said game to Howard Scott Warshaw, who had already produced the mega-hits Raiders of the Lost Ark and Yar’s Revenge for Atari.

Everything seem to be going well, except for one thing. As so often happens to programmers, upper management had promised the software, in this case a game, could be done in almost literally no time at all, ready for release by the 1982 holiday season. That meant the deadline would have to be September 1st to make sure it could hit the shelves by December, giving Warshaw about six weeks to create, code, and test a game from scratch. For reference, a typical Atari game took at least six months to a year to fully design, write, and program.

Unsurprisingly from this, to get Warshaw to agree in the first place, Atari had to offer him $200,000 (about half a million dollars today) for the couple months of work, as well as a free vacation to Hawaii after he was done.

In order to speed up production, Atari had to skip audience/gamer testing, usually a very essential part to game development, and Warshaw basically had to come up with the concept of the game and general play right on the spot and get started coding on day one.

Amazingly, Atari actually managed to create a workable game by the deadline and E.T.: The Extra-Terrestrial for Atari 2600 was released to the world December of 1982 for $39.95 (accounting for inflation, that’s about $100 today).

With the hype around the game and Atari’s anticipation that it was going to be a hit, they produced four million copies, thus assuming that roughly half of all console owners would buy it.

Unfortunately for them, the reviews were horrible. Words like “convoluted,” “primitive,” and “monotonous” were often used. Coming from first-hand experience from both the author and co-author of this piece having played the game recently, that’s pretty accurate. For those who haven’t wasted moments of their life on this game, the game play mostly involves the player controlling E.T. (and his extending neck) as he floats between especially crappy looking green spaces.

Of course, the object here is to help E.T. phone home via collecting pieces of a phone, as well as Reese’s Pieces for energy, all while avoiding the adults. Should you manage to get the three pieces of the phone and phone home, you then must get to the ship which comes to retrieve you within an allotted time slot. If you do, your prize for winning is to play the game exactly as it was before, except now the phone pieces are in different places than they were before…

Beyond the game being a steaming pile of something vaguely brown and smelly, by the time it was released in December it was a full six months after the movie was released. Consumers were getting E.T. fatigue.

Miraculously, the game did sell 1.5 million copies thanks to the holidays and parents and grandparents buying it for their littles. But the problem was dually that this was nowhere near the four million copies Atari had created, and very soon a huge amount of those that had sold were being returned. How many? Atari CEO Ray Kassar stated all but about 500,000 copies got returned, leaving them with 3.5 million on hand and a hold lot of angry businesses Atari sold their product through.

Additionally other games such as Pac-Man were also on hand with no purchasers to be found. You might at this point be wondering how they could have possibly had a ton of extra Pac-Man’s given it sold a whopping 7 million units, despite poor reviews. Well, it turns out that even though there had only ever been 10 million Atari 2600s ever sold at that point (and presumably a lesser number in use), Atari actually had 12 million copies of the game made…  The result was an extra 5 million copies they couldn’t sell.

And so it was that Atari decided to bury the evidence of all their screw ups- literally.

Somewhere between 10 to 20 semi-trucks rambled into Alamogordo, New Mexico in September of 1983. They were carrying the discarded remnants of the most expensive video game licensing deal in history up to that point, among a lot of other mistakes. The trucks went to the city’s landfill and dumped the unsold E.T. video game cartridges into a hole in the ground.

Funny enough, news accounts at the time reported it was a bit like Christmas for kids in the nearby small town of Alamogordo, who went out excavating to score copies of various Atari product.

To try to stop the kids digging, its noted in a New York Times article from September 28, 1983, “Guards kept reporters and spectators away from the area yesterday as workers poured concrete over the dumped merchandise.”

For many years, despite reliable documentation like the New York Times, people believed that this burial was an urban legend, including Howard Scott Warshaw himself. In interview with the AV Club in 2005, when asked if the landfill story was true or false, Warshaw answered, “I say false.”

But Warshaw wasn’t correct. It, in fact, did happen. On April 26, 2014, financed by Fuel Entertainment and Xbox who were producing a documentary about the video game crash that followed directly after, a team of excavators uncovered many E.T. games, among others, buried in a landfill in the New Mexico desert.

While the boxes were not intact any longer, many of the cartridges were, for all intents and purposes, in okay shape. As for how many were found, the film makers were only able to dig up about 1,300 cartridges. This was because the city itself wasn’t too keen on the project and gave a digging permit of just one day, with only a few hours of actual digging taking place.

That said, according to one former Atari employee, James Heller, who helped organize the landfill dumping in the first place, he estimated the actual number of game cartridges of various type buried there to be closer to around 730,000, though what Atari did with the many millions of other cartridges is anybody’s guess if he’s correct.

Surprisingly, of the recovered games from the landfill, the city was able to auction off about 900 of them, earning a gross of $107,930.15 in the process.

Atari was never the same after the E.T. flop, which was the pinnacle of a series of missteps by the company’s management, with this one not only costing an incredible amount of money, but also permanently damaging consumer and industry trust in the brand. Unfortunately for them, this occurred simultaneously to other game consoles starting to capture the market with more innovative product and better games, as well as the video game crash that occurred directly thereafter.

As Warshaw put it in an A.V. interview,

Atari’s a company that goes from the most explosive and successful company in American history to the fastest-falling company in American history. They went from…nothing, to $2 billion in sales, in just a couple years, and then the next year, they lost [a half a billion dollars].

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Bonus Facts:

• Another game that popular vies for the worst game of all time is another 1982 Atari title called Beat ‘Em & Eat ‘Em. Was this perhaps a game where you beat some characters or animals and then eat them? Nope. It turns out this was a game where you play two women who just so happen to be sans clothes and standing on a street corner… Not as dark as you might expect given the game title and the short description there, instead, above the women on a rooftop is a man who… we’ll just go with shoots a certain white-ish substance at them from his happy place. Your job as the women is then to catch said substance in your mouth… (Think space invaders but actually trying to catch the aliens instead of shoot or avoid them.) Should you miss any, you lose and the round is played again, though after 4 misses, the game is over. Should you catch it all, you get to observe the pixelated women happily licking their lips and then proceed to the next round with everything happening faster. Funny enough, once you get 69 points, you get an extra turn, allowing for an additional miss. Doubling down on this gem of a game is another by the same makers called Philly Flasher where two men stand below and try to catch breast milk squirted at them from a woman above. Should you successfully catch all of it in your mouth, you get the honor of watching the men play with themselves…

• Moving swiftly on, Bushnell’s inspiration for creating Chuck E Cheese’s occurred when he noticed that while Atari could generally expect to make between $1,500 and $2,000 for every coin-operated arcade machine they sold, the person buying them could reliably expect the machine the generate 10 times that amount during its lifetime. In Bushnell’s own words: “It didn’t take rocket science to say I’m on the wrong side of the equation.”(And just as a quick aside here for those of you already heading to the comments- contrary to popular belief, ShowBiz Pizza Time did not come before Chuck E Cheese’s- it was the other way around.)In any event, after a little research, Bushnell concluded that maximising profits from arcade games and the like was all about securing a location and having a captive audience- two things he reasoned he could easily achieve with a restaurant. Bushnell’s idea then was to create a restaurant where food was, as he described, “an ancillary service” and the real draw was the games and entertainment. Towards this end, Bushnell decided that his restaurant should sell pizza, reasoning that it would be impossible to screw up such a simple foodstuff as long the ingredient were good and the time it took to make would be more time for kids to play his games.
  According to Bushnell, the working name for his pet project was originally Coyote Pizza. As such, he bought a coyote costume he saw at a tradeshow which he sent to his engineers with a note instructing them to shove a robot inside it and make it talk. Unfortunately for Bushnell, what he had thought was a coyote costume turned out to actually be a rat, which his engineers dutifully pointed out when he asked them, “How’s the coyote coming?”

  At that stage of the game, Bushnell decided it would be easier to rename the restaurant than, you know, sending the costume back and getting a different one, so told his marketing team he now wanted to call the restaurant Rick Rat’s Pizza…

  The marketing team, according to Bushnell, “had a shitfit. ‘You can’t call a restaurant a rat place! People think rats are dirty. It’s not going to work.'”

  Bushnell’s response was to tell them to just pick another name then if it was such a big deal, adding, “I don’t give a shit what it is. But it has to be happy.”

  The name they eventually settled on was Chuck E. Cheese’s, apparently because you have to smile a couple times while saying it…

  Amazingly the scheme worked, and the chain exploded in popularity.  Even after a pretty catastrophic fall in much more modern times when the games and entertainment there became more than antiquated, the company still managed to sell for just shy of $1 billion in 2014, with the new ownership taking steps to modernize the whole affair, and well over 600 locations still in operation world-wide today.