"Cheers!"
Two hours later, the Atari office echoed with voices of celebration.
All three men wore bright smiles. Nolan Bushnell was satisfied. Magnavox's innovation ban had threatened to choke Atari's growth, but now they had found a new path forward. It felt like spotting a way out of a dead end—suddenly, the future seemed bright again.
"To the success of the new game!"
Don Valentine was equally relieved. As Atari's investor, he had put in six hundred thousand dollars.
If Magnavox had crushed the company outright, that money would have vanished. At this point in his career, he wasn't yet the investment legend he would later become—every dollar was hard-earned, and no one threw away their sweat so casually. Atari needed a way out, and now they had it.
"Pleasure doing business!"
Ethan raised his glass, clinking it against Bushnell's and Valentine's. The crisp chime rang out, the amber liquid inside their glasses swaying gently.
The negotiations had been tense at times, but Ethan had skillfully maneuvered toward a deal he could accept.
The contract was simple: Ethan Jones and Evelyn Johnson would license Snake to Atari for one year. Atari would pay a flat licensing fee of six thousand dollars and commit to producing and selling at least one thousand Snake arcade units over the next twelve months.
From a modern perspective, one thousand units might seem laughable compared to the millions of copies games would sell decades later. But this was 1975, not the era of mobile internet.
Consider this: the wildly successful Pong had sold only 2,500 units in its first year. By 1974, when Magnavox sued Atari, the total confirmed Pong arcade sales were just 8,000 units. Yet, with a price tag of $1,000 per machine, Atari still pulled in $8 million in revenue.
So, in Ethan's view, locking in a 1,000-unit minimum was an excellent start.
After all, the first step toward earning is the hardest—and reputation builds from there.
As for revenue sharing, the agreement was straightforward: 15% of the selling price.
Ethan had hoped for more—ideally, something resembling Apple's future licensing deals—but arcade hardware in 1975 wasn't a high-margin business. A television-sized screen alone cost at least $75. The game board cost $150, and with extras like built-in speakers and custom joysticks, total production costs climbed to over $600 per unit.
With only a 40% profit margin to work with, giving Ethan 15% was already Atari's limit. After other expenses, Bushnell and his investors would keep roughly 78%.
Of course, in this era, the real money didn't come from selling the cabinets—it came from the game boards.
Atari's replacement board service charged $400 per order, and even after material, labor, and shipping, each swap brought in $150 net profit.
Ethan's ask for this segment had been ambitious—30% of the selling price, or $120 per board—but Bushnell and Valentine had flatly refused.
They argued that the board replacement service was essentially an upgrade for products Atari had already sold—part of their existing market. Ethan wanting to take eighty percent of the net profit? They might as well cut ties with him right there.
But negotiations are all about starting high and ending with a compromise. After a round of back-and-forth, they settled on eighteen percent.
In other words, for every "Snake" game board sold by Atari, Ethan could pocket seventy-two dollars—nearly a fifty-fifty split of the net profit.
Although the amount might seem small, in this era… Well, nothing was particularly expensive anyway.
Finishing his whisky in one gulp, Ethan felt the burn creep down his throat. The spicy sensation made him wince, a reaction that didn't escape the others.
"Hey, Ethan, your alcohol tolerance really needs work," Nolan Bushnell teased now that the contract was signed and the tension gone. "When I was your age, I was already tearing up the nightclubs!"
"Yeah! You've got to practice more," Don Valentine added with a laugh. "If you wait until you're a millionaire, it'll be too late. By then, the beautiful girls will be throwing themselves at you, trying to get you drunk—hoping for a wild, unforgettable night!"
Their banter kept the atmosphere light and cheerful.
"My tolerance is fine," Ethan protested, waving them off. "I just drank too quick."
"Hahaha~" The two laughed harder.
"We understand! We totally understand!"
His stubborn insistence only made them laugh more.
After the joking subsided, they returned to business. Nolan Bushnell pulled a stack of checks from his desk drawer, preparing to write out the six-thousand-dollar licensing fee. But just as he started, he paused.
"Ethan, do you want one check or two?"
Since the deal was official, Ethan had no reason to hide the copyright arrangement. He presented the document granting Evelyn Johnson full authorization—necessary for signing the contract in the first place.
As for the checks, Ethan had already discussed with Evelyn that all income from "Snake" would be split fifty-fifty. But the payment method? He had a different idea.
"Make one check for three thousand, another for two thousand, and give me the last thousand in cash. That should work."
Nolan raised an eyebrow but didn't question it. He wrote the two checks, then went to the office safe and retrieved a neat stack of twenty-dollar bills. Counting out half of it, he handed it to Ethan for verification.
Once satisfied, Ethan smiled. "So, I just wait for the game to launch now?"
"Hmm," Nolan replied, "at least fifteen days, at most a month, and we'll have the first batch of machines ready."
Nolan Bushnell thought for a moment and said, "By then, we'll invite our previous partners to try out the machines here at the company. If you're interested, you can come and take a look. We'll let you know in advance."
"Okay, goodbye."
"Goodbye."
With everything settled, Ethan bid farewell. As he was leaving, Steve Jobs—who had been waiting outside for the results—took the initiative to see him off. Ethan did not refuse the courtesy of the future head of Apple.
After walking out the factory gate, Ethan waved to the Steve waiting nearby, signaling for him to walk with him for a bit. When the Atari factory had completely disappeared from view, he handed over the fifty twenty-dollar bills he had just requested.
"What is this…?" Steve Jobs asked, clearly puzzled.
"Your reward," Ethan Jones said with a smile. "If it weren't for you, I might not have been able to reach such a straightforward deal with Atari. You deserve this—take it."
"But… this is too much." Steve Jobs hesitated, but he didn't actually refuse.
"Oh! Brother! The information you gave me is worth more than a thousand dollars!" Ethan raised his voice and stuffed the money into Jobs' hands.
"And this isn't just free money! Nolan just told me that when the 'Snake Game' machines are ready, they'll invite partners to inspect them. I'm interested in that, so remember to come to my house and let me know.
Also, for our first cooperation—I don't know how good Atari's salespeople are, but I'm betting your sales skills are excellent. So, I'll be counting on you to help out when the time comes."
With Ethan putting it that way, Steve Jobs didn't stand on ceremony. His eyes flickered as he looked at the cash in his hand, and he smiled.
"Okay, then I'll take it."
"That's the spirit, brother!" Ethan raised his eyebrows and patted him on the shoulder.
Jobs pocketed the money. "Did you call me over just for this?"
"Of course."
"…" Jobs paused for a moment at that answer, then smiled. "Then, shall I go?"
"Hmm~" Ethan waved his hand, shooing him away.
That earned a small laugh from Jobs, who turned to leave.
However, after a short while, he came running back.
Ethan was puzzled. But when Jobs, still catching his breath, told him that Nolan Bushnell had invited him to an exhibition, arranged a cooperation, and even given him a reward of five hundred dollars, Ethan simply watched him wave goodbye again and leave.
If before this he had felt Steve Jobs' presence was a bit unreal, now he was certain: this was undoubtedly the real Steve Jobs. Because in his memory, Jobs was extremely short on cash at this point in time—so short that he had embezzled all the prize money from Breakout.
Ethan admitted that he wanted to get close to Steve Jobs.
He was greedy for Steve Jobs' talent—oops! No, he was greedy for Apple's! So, he had given Jobs a thousand-dollar reward.
And now…"he pretty honest, huh?"
Watching the future Apple founder bounce down the street, Ethan smiled out of the corner of his eye.
Notes :
1. The Arkanoid/Breakout payment story – Nolan Bushnell's "pay-per-transistor-saved" deal with Jobs, Jobs outsourcing to Wozniak, the transistor count miracle (44), the $5,000 bonus, and Jobs keeping most of it. You also note Woz's later mixed feelings and the fact that Atari's engineers couldn't replicate Woz's ultra-efficient board, making the effort commercially useless for Atari.
2. Pong cost inconsistency – conflicting historical accounts about unit pricing: some sources claim $100 per unit, but Bushnell himself said $75 for the screen alone, plus nearly $200 for the motherboard, which mathematically doesn't line up with that $100 figure.