Atari, founded by University of Utah graduate Nolan Bushnell, was once the fastest growing company in the US.   Started in 1972 with an initial investment of $500, Atari attained sales exceeding $500 million in 1980.   During the late 1970's and early 1980's, it was a center for exciting developments in software and chip design for home entertainment products.  A joint venture with LucasFilm in 1982, in which Atari licensed and manufactured games designed by LucasFilm, established cross-pollination between video games and film studios.

        Several pioneering figures in the VF field got their start at Atari.   Warren Robinett, who had directed the head-mounted display and nanomanipulator project at the University of North Carolina in Chapel Hill, developed the popular video game ADVENTURE at Atari in the late 1970's.   Jaron Lanier, creator of the video game Moondust, used the profits to launch VPL-Research in 1984, the first commercial VR company.   In 1980, Atari created its own research center, directed by Alan Kay, who came from Xerox Palo Alto Research Center and assembled a team of the best and brightest in interface design and VR research, the DataGlove was one such product.

        But Atari fell on hard times.   Not long after its banner year in 1980, it registered $536 million in losses for 1983.  The Atari Research Laboratory was a casualty of the economic crash in the video game industry.   Most of the people working in VR at Atari either migrated to work on VR projects in federal laboratories, or, like Lanier, persured government contracts.   Lanier eventually won a contract to build the DataGlove for NASA.

        Industry was clearly not prepared, after sustaining such a big economic blow, to continue development of VR technology own its own.   Indeed Lanier's failed efforts to market a consumer entertainment version of the DataGlove, called PowerGlove, for Nintendo, demonstrated that the 1980's was not the right time for a sustained industry push of this type of technology.