Kee Games proved to be one of the most interesting deceptions in the history of video games. Even more deceptive than Coleco's promise that the Adam computer would a) be released in time for Christmas b) work.

While Nolan Bushnell was setting up Atari and preparing to take arcades, bars, and bus stations by storm with his innovative video arcade games, he realized that traditional arcade game venue owners were distrustful of allowing game manufacturers to also control the distribution and servicing routes. Middle men helped insure that arcade owners got to keep a healthy portion of game receipts. If one was dealing directly with the manufacturer, a manufacturer might start implementing outrageous terms for current, hot games. The movie industry is a good example. The movie companies get a larger percentage of the box office gross for blockbuster movies, especially in opening weeks. Theatre owners get to retain a larger percentage of the box office as the movie wanes in popularity.

On the reverse side of the coin, the distributors themselves signed exclusive deals with manufacturers and dominated certain territories.

So, the problems facing Bushnell on the distribution front were two fold. Arcade owners wouldn't sign deals straight with Atari and most of the major pinball makers like Bally, Midway, and Williams had the establish game distributors signed up. Since few distributors wanted to risk losing their meat-and-potatoes pinball suppliers, no one wanted to take on this upstart Atari. Pong was great, sure, but its appeal wouldn't last. Then what? Americans would always return to pinball and if you didn't have table games to distribute, well, it was the salt mines for the lot of ya.

Bushnell got his partner Joe Keenan to set up a distribution company called "Kee Games" (from the Kee in Keenan). The company was set up in such a way that to the outside world, it didn't appear to be a part of Atari. Further Kee Games would not only distribute and service Atari's games but they would make their own games and they would "clone" Atari games. Kee could then sign its own distribution deals and get "cloned" games into arcades that Kee's distribution wing didn't have access too. Atari and Kee, therefore, doubled the number of potential outlets for Atari's games.

Bushnell also used Atari/Kee to release the same games at different price points, much like Intel's 486DX/486SX chip concept. Same chip, just a different price points. Atari would be the Cadillac of arcade games and Kee Games would make lower-end Chevy games.

Getting Kee Games into the game development business caused Bushnell a small problem. He had to transfer some of his engineers to Kee Games without signaling Kee was merely an Atari subsidiary. So what Bushnell did was issue a press release that condemned Kee Games for raiding his staff and luring away some of his best and brightest! Bushnell would trash talk Kee Games -- its brazen game cloning, its talent pilfering -- at ever turn to maintain the ruse.

In 1974, Kee Games released the number one arcade hit Tank. Compared to Pong, Tank's graphics were stunning. Tank's improved graphics were accomplished by storing them in ROM. It was the first arcade game to dedicate ROM chips for graphics. Kee Games sales began to dwarf Atari's. Not only were its games better sellers but its servicing/distribution routes were also highly lucrative.

Bushnell quickly realized that Kee Games could become the tail that wags the dog. Keenan might start calling the shots. Bushnell decided the time was ripe to bring Kee back into the fold. Atari announced it was merging with Kee Games in late '74. Bushnell no longer feared losing half his distribution channels since Pong and Tank were eating up quarters and leaving pinball games silent. Most arcade owners and distribution companies realized video games were here to stay and it was going to be an expanding market. It no longer seemed threatening to open up the exclusivity deals everyone previously demanded. In fact, because video game makers made such unique products, exclusivity deals could cripple you. If you distribute pinball games and juke boxes, they're fairly similar except for some window dressing. But Tank was totally unlike Pong. Arcade owners wanted Tank and Pong. But they might be satisfied with only Tank. If you could only offer them Pong, well, you might end up having nothing to offer.

It was only after the merger that the game industry learned the truth about Kee Games. Although, curiously, few in the industry noticed that Kee's games used an old Atari code library for its games that would pop up Atari's original name "Syzygy" on its trademark screen. It was a subtle slip up that could have blown the cover to anyone aware of Atari's early (and at that time highly recent) history.