Many "PONG" variations appeared.   Atari was too late to trademark "PONG", but in later years, Atari ensured it's properties and internal developments were both patented and trademarked, giving what is today an impressive portfolio of properties.  Bushnell was adamant about entering the home entertainment market.  A company called Magnavox were the first to enter this market with their "Odyssey" system.  Magnavox actually sued Atari in 1973 on copyright grounds, and their suit was successful - this meant Atari had to pay royalties to ship the game "PONG" - but the tables would turn as Atari became more inventive.

In 1974 Atari launched "PONG" for the home.  It was less expensive than the rival system from Magnavox, and newer models even produced a colour picture on a colour TV Set! (Atari even produced models for the SEARS group).  Atari was doing well with it's arcade units , which now included Spacewar - but it was the home market that would launch Atari to become one of the most well known brand names in the world.

The launch of the Fairchild "Channel F" in 1976 would become a real threat to Atari and other dedicated console manufacturers.  The Fairchild had the ability to play different games by using a programmable cartridge - Atari had to act quickly before it lost the market to new competitors.

Atari's engineers began work on project "Stella", but Bushnell required more capital to get the project into production.  In October 1976, Nolan Bushnell sold Atari to Warner Communications, a subsidiary of Warner Brothers Inc, for $28 Million.