Scott Stilphen

263.  Had a perfect game until the 9th frame.

263.  Had a perfect game until the 9th frame.

263.  Had a perfect game until the 9th frame.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

239 with Harmony.  I'll try an actual cartridge next time.

Rick Maurer had already been working on VCS S.I. a few months before Kassar supposedly asked about it.  So regardless of whether or not that story is true, S.I. was going to come out for the VCS :)  Given how clueless Kassar was about the video game business, he'd only request a version be done because the arcade game was such a phenomenal success.  That would have been a decision ANYBODY could have made, but I'm guessing the W-B brass were happy to credit Kassar for the VCS's success because of S.I.  For Kassar, it's simply a case of being in the right place at the right time, because 2.5 years after S.I. was released, Atari was 'on fire and sinking fast' because Kassar obviously didn't have a clue how to run Atari.
But to answer the OP's question, VCS Space Invaders was the first 'killer app' for that console, or any console for that matter :)  Sales of the VCS were tepid the first few years, but when S.I. came out, sales were red hot.  Millions of people bought a VCS strictly for S.I., so there's no doubt about it.

Rick Maurer had already been working on VCS S.I. a few months before Kassar supposedly asked about it.  So regardless of whether or not that story is true, S.I. was going to come out for the VCS :)  Given how clueless Kassar was about the video game business, he'd only request a version be done because the arcade game was such a phenomenal success.  That would have been a decision ANYBODY could have made, but I'm guessing the W-B brass were happy to credit Kassar for the VCS's success because of S.I.  For Kassar, it's simply a case of being in the right place at the right time, because 2.5 years after S.I. was released, Atari was 'on fire and sinking fast' because Kassar obviously didn't have a clue how to run Atari.
But to answer the OP's question, VCS Space Invaders was the first 'killer app' for that console, or any console for that matter :)  Sales of the VCS were tepid the first few years, but when S.I. came out, sales were red hot.  Millions of people bought a VCS strictly for S.I., so there's no doubt about it.

Here's the source of that old rumor:

The article doesn't mention its sources, and nobody has ever come forward to claim credit.  Personally, I think the rumor is nonsense.  For one thing, every other system on the market at the time was inferior to the Colecovision.  Coleco could have given Garry Kitchen 16K to port Donkey Kong, and it still would have been vastly inferior to the Colecovision version, so there was no need to 'sabotage' their versions for other systems.  Think about the logic behind such a plan.  Coleco didn't have any in-house programmers, and they sub-contracted out to other companies to do games for other systems.  Now, imagine Coleco offering a job to a company with the explicit demand to do the worst job programming it as possible.  No company would have accepted a job with that requirement if they wanted to be in business for long.  Well, the better the game turns out, the more copies they sell ,right?  If they wanted to sell the least amount of copies as possible, they could have chosen to .... not release it :)  Also keep in mind Coleco debuted the Colecovision at the 1982 Summer CES show, along with carts for both the Atari VCS and Intellivision.  So the first 4 VCS games Coleco released were either already done are in the process of being:
Donkey Kong - July 1982
Venture - September 1982
Mouse Trap - October 1982
Carnival - November 1982
Now, could Coleco have allocated 8K for VCS Donkey Kong and other titles?  Absolutely (and of the 13 titles they released, only the first 4 were 4K; everything else was 8K).  And considering Coleco sold more copies of VCS Donkey Kong than anything else they released (approximately 4 million VCS DK carts were sold), they could have easily afforded to, and Donkey Kong's success in the market likely convinced Coleco to step up to using 8K.  Donkey Kong was the hottest arcade license after Pac-Man.  To Garry Kitchen's credit, he tried to convince Coleco to use an 8K ROM since they were available by that time, but they refused due to the added cost.  Had they offered him 8K and a few more months development time, he's sure he could have included the other 2 screens.
As for the author's comments about DK Jr being "absolutely swill", that's a bit harsh.  No, it doesn't have the gameplay that DK has, even with the addition of a 3rd screen (thanks to being 8K).  But it doesn't play the same for the reason someone else here mentioned - there's no fruit to drop!  That's a gameplay element that's on every screen in the arcade version.  That would be like omitting the hammer in Donkey Kong or the energizers in Pac-Man.  It's a crucial element of the game for dealing with enemies, and without it, you're just running for your life with no way of going on the 'offense'.  Garry knew that and made sure the hammer was included in his DK.  He's mentioned he set out to make the best version he could, and the public drubbing Atari got for their VCS Pac-Man was even more of a reason he wanted to do his best.  For only being 4K and spending all of 3 months programming it, it's really an impressive effort.  Garry mentioned including the slanted ramps on the barrel screen was a real challenge, and he said he spent a lot of time on the game so that it looked and played as close to the arcade version as possible.  The game had to be finished by a specific date w/o question and he spent the last 72 hours straight (no sleep, no breaks) sitting in a cubicle in Hartford, Connecticut with the owners of Coleco standing over his shoulder waiting for the finished game. 

Here's the source of that old rumor:

The article doesn't mention its sources, and nobody has ever come forward to claim credit.  Personally, I think the rumor is nonsense.  For one thing, every other system on the market at the time was inferior to the Colecovision.  Coleco could have given Garry Kitchen 16K to port Donkey Kong, and it still would have been vastly inferior to the Colecovision version, so there was no need to 'sabotage' their versions for other systems.  Think about the logic behind such a plan.  Coleco didn't have any in-house programmers, and they sub-contracted out to other companies to do games for other systems.  Now, imagine Coleco offering a job to a company with the explicit demand to do the worst job programming it as possible.  No company would have accepted a job with that requirement if they wanted to be in business for long.  Well, the better the game turns out, the more copies they sell ,right?  If they wanted to sell the least amount of copies as possible, they could have chosen to .... not release it :)  Also keep in mind Coleco debuted the Colecovision at the 1982 Summer CES show, along with carts for both the Atari VCS and Intellivision.  So the first 4 VCS games Coleco released were either already done are in the process of being:
Donkey Kong - July 1982
Venture - September 1982
Mouse Trap - October 1982
Carnival - November 1982
Now, could Coleco have allocated 8K for VCS Donkey Kong and other titles?  Absolutely (and of the 13 titles they released, only the first 4 were 4K; everything else was 8K).  And considering Coleco sold more copies of VCS Donkey Kong than anything else they released (approximately 4 million VCS DK carts were sold), they could have easily afforded to, and Donkey Kong's success in the market likely convinced Coleco to step up to using 8K.  Donkey Kong was the hottest arcade license after Pac-Man.  To Garry Kitchen's credit, he tried to convince Coleco to use an 8K ROM since they were available by that time, but they refused due to the added cost.  Had they offered him 8K and a few more months development time, he's sure he could have included the other 2 screens.
As for the author's comments about DK Jr being "absolutely swill", that's a bit harsh.  No, it doesn't have the gameplay that DK has, even with the addition of a 3rd screen (thanks to being 8K).  But it doesn't play the same for the reason someone else here mentioned - there's no fruit to drop!  That's a gameplay element that's on every screen in the arcade version.  That would be like omitting the hammer in Donkey Kong or the energizers in Pac-Man.  It's a crucial element of the game for dealing with enemies, and without it, you're just running for your life with no way of going on the 'offense'.  Garry knew that and made sure the hammer was included in his DK.  He's mentioned he set out to make the best version he could, and the public drubbing Atari got for their VCS Pac-Man was even more of a reason he wanted to do his best.  For only being 4K and spending all of 3 months programming it, it's really an impressive effort.  Garry mentioned including the slanted ramps on the barrel screen was a real challenge, and he said he spent a lot of time on the game so that it looked and played as close to the arcade version as possible.  The game had to be finished by a specific date w/o question and he spent the last 72 hours straight (no sleep, no breaks) sitting in a cubicle in Hartford, Connecticut with the owners of Coleco standing over his shoulder waiting for the finished game. 

Listed updated.

The manual mentions the game fully supports the analog controls.  From what I know, there's only 12 games for the 5200 that fully support analog controls:
 
Centipede *
Galaxian *
Jungle Hunt *
Missile Command *
Pengo
Pole Position *
RealSports Basketball *
RealSports Football
RealSports Soccer
RealSports Tennis
Space Invaders *
Super Breakout
The ones marked with an asterisk are noted on Atari's 5200 catalog/poster as being Trak-Ball compatible, which would indicate full analog support.  Vanguard is listed on the poster and is not indicated.  So did Atari forget to note it on the poster, or is the manual incorrect?
 

That, and it was a better name than Epyx had for it - "Handy".

Ronald Wayne.  Check out his book, Adventures of an Apple Founder, which was released 10 years ago.  It's an excellent read, if you get a chance to pick up a copy.

There were actually 3 people who were involved with founding Atari (another Ampex co-worker of theirs - Larry Bryan), but the '5th Beatle' dropped out before the paperwork was filed.  And Dabney was bought out the following year (1973), so Bushnell was the one at the top making all the major decisions.  Having guys like Al Alcorn and Joseph Keenan certainly helped with Atari's early success, as did the guys from Cyan Engineering.  So when I refer to Bushnell's Atari, there's a lot of people under him who helped and deserve credit as well :)  The 'real' Atari was run by engineers who were always chasing the latest innovations.  Warner's Atari was run by 'suits' who had no desire to make any meaningful changes to how it was run, because that's what Kassar wanted, and all he understood - keep selling the same product over and over.  Like people are happy buying the exact same model vehicles or the same furniture...

Well, the real Atari was under Bushnell.  The VCS and 800 were already being planned and developed by the time Bushnell sold Atari to Warner.  The only new hardware that was developed and released under Warner/Kassar came out of the coin-op department, which thankfully was largely free of Kassar's influence.  Kassar allocated millions to Atari's R&D department, only to sit on everything that was developed.  When Tramiel took Atari over, all that wonderful tech that was created walked out the door, along with all the engineers who developed it.  If you think about it, Kassar was handed a company that was positioned to be where Apple is today, but he had absolutely no vision for the future, let alone the mindset to effectively manage Atari during his time.  So under Kassar, Atari "rested on its laurels".  Under Tramiel, Atari tried to reinvent itself into a computer company - something it never originally set out to be.  The 800 was never intended to be a computer, but Apple's success with the Apple II prompted Warner to re-purpose the hardware.

Well, the real Atari was under Bushnell.  The VCS and 800 were already being planned and developed by the time Bushnell sold Atari to Warner.  The only new hardware that was developed and released under Warner/Kassar came out of the coin-op department, which thankfully was largely free of Kassar's influence.  Kassar allocated millions to Atari's R&D department, only to sit on everything that was developed.  When Tramiel took Atari over, all that wonderful tech that was created walked out the door, along with all the engineers who developed it.  If you think about it, Kassar was handed a company that was positioned to be where Apple is today, but he had absolutely no vision for the future, let alone the mindset to effectively manage Atari during his time.  So under Kassar, Atari "rested on its laurels".  Under Tramiel, Atari tried to reinvent itself into a computer company - something it never originally set out to be.  The 800 was never intended to be a computer, but Apple's success with the Apple II prompted Warner to re-purpose the hardware.

Well, the real Atari was under Bushnell.  The VCS and 800 were already being planned and developed by the time Bushnell sold Atari to Warner.  The only new hardware that was developed and released under Warner/Kassar came out of the coin-op department, which thankfully was largely free of Kassar's influence.  Kassar allocated millions to Atari's R&D department, only to sit on everything that was developed.  When Tramiel took Atari over, all that wonderful tech that was created walked out the door, along with all the engineers who developed it.  If you think about it, Kassar was handed a company that was positioned to be where Apple is today, but he had absolutely no vision for the future, let alone the mindset to effectively manage Atari during his time.  So under Kassar, Atari "rested on its laurels".  Under Tramiel, Atari tried to reinvent itself into a computer company - something it never originally set out to be.  The 800 was never intended to be a computer, but Apple's success with the Apple II prompted Warner to re-purpose the hardware.

Well, the real Atari was under Bushnell.  The VCS and 800 were already being planned and developed by the time Bushnell sold Atari to Warner.  The only new hardware that was developed and released under Warner/Kassar came out of the coin-op department, which thankfully was largely free of Kassar's influence.  Kassar allocated millions to Atari's R&D department, only to sit on everything that was developed.  When Tramiel took Atari over, all that wonderful tech that was created walked out the door, along with all the engineers who developed it.  If you think about it, Kassar was handed a company that was positioned to be where Apple is today, but he had absolutely no vision for the future, let alone the mindset to effectively manage Atari during his time.  So under Kassar, Atari "rested on its laurels".  Under Tramiel, Atari tried to reinvent itself into a computer company - something it never originally set out to be.  The 800 was never intended to be a computer, but Apple's success with the Apple II prompted Warner to re-purpose the hardware.

RickR pretty much nailed it with his comments about Tramiel.  The guy was just a ruthless businessman and his track record for that is a mile long.  Certainly his experience during the holocaust shaped him.  To paraphrase a line from "V for Vendetta", what they did to him was monstrous, and the result was they created a monster.  The sole reason he bought Atari was to compete (get back) with Commodore for firing him.  His motivation was one of pure revenge, and his focus was on the home computer market.  Whereas there were several causes of the video game crash, there was only one cause for the home computer crash - Jack Tramiel.  In his effort to hurt Texas Instruments, he initiated a price war that nearly toppled everyone.  He effectively 'erased' the market by lowering Comodore's prices to the point where only Commodore could make any money, thanks to their vertical integration (from owning their own chip fabrication company - MOS Technology).  He tried a similar tactic with the XE and ST lines, pricing them far below the competition, except this time he didn't have MOS to back him up, so he turned to making them as cheap as possible.
As for the video game market, all he did in the first 2 years of his ownership was sell off the backlog of inventory in Atari's warehouses as a means of raising money for his computer ambitions.  He had zero interest in competing in the vg market, and publicly stated that several times.  It was only when he saw the vg market roaring back with Nintendo and Sega did he decided to make an effort to re-enter it.  But even if he had paid GCC's contract obligations and kept the 7800 on the market in 1984, it still would have failed - the NES was the future, and they had the IPs and the creative development folks behind it.  Jack's mindset at Commodore was, if he released good hardware, the software would naturally follow (from others); it happened with the VIC-20 and C-64, but only with those.  The Lynx only came into Atari's possession due to Jack's unethical business practices, basically putting a financial squeeze on Epyx until they were on the verge of collapsing, allowing him to grab the Lynx for cheap.  That pattern would repeat itself with Jack many times over.  The Jaguar could have really made an impact in the market, but besides Tempest 2000 (which was the only reason I bought a Jag), aside from a few standout titles (Alien vs Predator, Doom) the software library was mostly forgettable.  Its hardware was also hamstrung when compared to the Playstation.  Like the Lynx, the 3rd-party support was almost nonexistent.  Atari's time in the vg marketplace under Tramiel was one of missed opportunities.  Tramiel had the NES and Amiga in his grasp, and dropped them.  The Atari ST was a terrible game machine, but then again, unlike the Amiga, it was never designed to be.  The TT and Falcon aren't even worth mentioning as they made zero impact in the computer market, much like Atari's PC clone. The Lynx was really the hidden gem in Tramiel's lineup.  Great machine that should have captured the handheld market, if not for its unyielding size and voracious battery appetite.  The Lynx II was an improvement, but once again - too little, too late.  Like the VCS, Nintendo's GameBoy won out against superior consoles with its simplicity.
To summarize, Jack hurt Atari's reputation in the video game market.  Nothing released under him had much of an impact.  He also hurt Atari financially by trying to support multiple systems (VCS, 7800, XEGS, Lynx, Jaguar) because he didn't have the money to effectively market them and compete with Nintendo, Sega, and Sony.  It wasn't a case of David vs Goliath, it was a case of David vs 3 Goliaths.  As for the ST computers, The Amiga outsold them more than 2 to 1, and that was mainly due to its fantastic abilities to run games.  So ultimately, his plan to exact revenge against Commodore failed.