The Atari 7800 (also known as the Atari 7800 ProSystem) was designed to replace the Atari 5200. The 7800 was the first console by Atari designed by contractors GCC (General Computer Company). GCC, which had a background in creating arcade games, designed the new system with a graphical architecture similar to arcade machines of the time. The 7800 was originally released in limited quantities in Southern California in June 1984, but after the sale of Atari to Tramiel Technology Ltd on July 2, 1984, it was removed from the market. The system was not released again until January 1986, at which point it was competing with the NES and Master System. The system retailed for $140 US. Unlike the 5200, this system was compatible with 2600 cartridges at launch, making it the first console with backwards compatibility built in. This made the system compatible with all 2600 games and accessories. The system is unable to play 5200 games or use accessories designed for the 5200, though.
The Atari 7800 came bundled with the Atari Proline Joystick, a two button controller with a joystick for movement. Atari later released joypad controllers in Europe, which were similar to NES or Master System controllers. The Joypad was not available in North America.
The project was originally called the Atari 3600, but was later renamed the Atari 7800.
Key considerations during the design phase of the 7800 included the Colecovision's graphical power, the criticism the 5200 received because it could not play 2600 games, and the state of the market in which gaming was being taken over by home computers. The 7800 system was designed with update ports; these ports were intended to allow the user to upgrade their system into a fully functional home computer. GCC had also designed battery-backed RAM cartridges for storing game scores.
The computer add-ons, RAM cart, and a rumored laserdisc player peripheral were all cancelled. The additional ports for these features were removed in later revisions of the console.
The 7800 used a custom GPU named MARIA which allowed for many sprites to be stored in display lists and moved around screen. This allowed for more advanced graphics than any other system on the market at the time, but was difficult for programmers to utilize. MARIA also allowed for a pallet of 256 colors, which was an impressive number of colors for the time.
The weakest part of the system was its sound chip, which was nearly identical to the 2600 chip and which made the sound practically the same as that system. To compensate for this, developers were able to include a POKEY or GUMBY audio chip in the game cartridge which would increase sound quality. Very few 7800 cartridges took advantage of this; some games that did leverage the POKEY chip include Ballblazer and Commando.
Following the debate over Custer's Revenge, an Atari 2600 VCS title with adult themes, Atari had concerns over similar adult titles finding their way onto the 7800 and displaying adult graphics on the significantly improved graphics of the MARIA chip. To combat this, they included a digital signature protection method which prevented unauthorized 7800 games from being played on the system.
The 7800 in North America also leveraged a lockout chip to prevent unauthorized games to be played on the system. Since unauthorized software was a big issue on the 2600, each 7800 cartridge had to be signed by Atari. The PAL system did not feature the lockout chip.
Because of Nintendo's policies, Atari had a hard time getting third party content on the console. Nintendo prevented developers from releasing games that were available on the NES for competing consoles, leaving the 7800 with only 11 third party titles from Absolute Entertainment, Activision, and Froggo.
Through a loophole where other developers could license titles directly from the arcade rights holders who had licensed rights for NES development to another developer, a couple games available on the NES were made available on the 7800. These included Commando, Double Dragon, Ikari Warriors, Kung Fu Master, Mario Bros, Rampage, and Xenophobe.
The 7800 had less than 100 titles, most being better quality arcade ports of titles already released on the 2600. Many more games were in development, but were cancelled. A few of these prototypes have been located, but many were lost due to Tramiel's reluctance to make them in the first place.
On January 1, 1992, Atari Corp. formally announced that production of the 7800, 2600, and Atari 8-bit computers would cease. Despite seeming like a failure, the 7800 generated strong profits because of the low investment in game development and marketing.
In 2004, Atari released the first Atari Flashback console which contained five 7800 games within.