The rotary dial on the office telephone spun back into place with a whir.
Duke kept the receiver pressed against his ear, listening to the static of the long-distance line connecting Los Angeles to Washington, D.C.
His chief legal lobbying counsel, Arthur Vance, was calling from a payphone near the Justice Department, delivering an update that required confidentiality.
Arthur's voice filtered through the earpiece, thin and dfficult to hear over the analog wire.
The new Carter administration was assigning a fresh wave of young attorneys to the antitrust division.
These lawyers were looking closely at corporate dominance across the industrial landscape.
"They aren't just launching a routine inquiry, Duke," Arthur explained over the crackling line, his voice dropping an octave as someone walked past his phone booth.
"They are drawing up flowcharts and the name being said around the Justice Department is 'ParaBell.' to refer to Paramount."
"They think you're building the AT&T of leisure. The moment you have the biggest film studio in Hollywood with Atari's industry dominance, you started looking like a monopoly."
In the late 1970s, vertical integration remained a bad concept in the entertainment business.
"The regulators aren't moving in a vacuum either," Arthur added, tapping a brass pen against the glass of the phone booth.
"Lobby groups are working overtime in D.C. to feed the Justice Department their ammunition. ABC, CBS and NBC are are seeing the ratings from major test markets."
"And for every hour a kid spends hooked up to an Atari console, is an hour his parents aren't able to watch their shows."
Arthur paused to let a truck rumble past on the street before continuing. "And it isn't just the television networks twisting the knife."
"That guy Stanley Jaffe is on the Hill this week. Stanley is lobbying the SEC and antitrust staff, claiming your holding shares in a rival studio is anti-competitive. He's demanding the government force you to divest the Columbia shares."
Back when Stanley asked him to step in as a white knight to buy a stake in Columbia Pictures, just to keep his father, Leo, in the president's chair, he was his savior. Now he was lobbying against him.
Hollywood loyalty? Nonexistant.
Duke thanked Arthur, promised to handle the optics of their corporate structure, and placed the receiver back onto its cradle.
He leaned back in his leather executive chair, he almost wanted to get up and look out the window.
Video games and interactive electronics were new, unregulated markets with a lot of attention, making Paramount a prime target for ambitious politicians seeking easy headlines.
Playing defense against the Justice Department and industry lobbyists was a losing strategy.
Instead of shrinking the company or quietly selling off assets to appease rivals, he needed to prove that his empire fostered competition, supported talent, and created domestic jobs.
____
Later that afternoon, Duke walked across the studio lot to a private conference room reserved for sensitive negotiations.
Waiting for him were four young software engineers.
Larry Kaplan, Alan Miller, Bob Whitehead, and Jim Levy.
Unknown names, but they were the people who would go on to create Activision.
They were dressed casually in corduroy pants and not fitted polo shirts, a contrast to the tailored suits usually seen in the executive offices.
These four men were currently very frustrated with their employer and kept trying to rile up employees to ask for better pay and more creative independance.
Under the standard procedures at Atari, game programmers were treated as anonymous engineers.
The studio did not credit them on the game, nor did it offer royalties for hit titles.
A programmer could write a cartridge that generated millions of dollars in retail sales, only to receive a standard modest salary in return.
In Duke's past life, this matter led these four men to leave Atari in 1979 and creating Activision, sparking a bitter lawsuit with Atari that dragged on for years.
In his past life in 1979, these four realized they were responsible for 60% of Atari's $100 million cartridge sales but were only paid flat $22,000 salaries.
When they asked Atari CEO Ray Kassar for royalties and name credits on game boxes, he dismissed them, reportedly calling them "towel designers" cause he believed that Cartridges were a 'run off the mill' matter that every graduate could do.
The four walked out and went on to incorporate Activision on October 1, 1979, creating the world's first independent console game developer.
After they published their first cartridges, Atari panicked that an outside company could produce games for its Atari 2600 console without permission, so they filed a $20 million lawsuit.
The lawsuit accused Activision of stealing trade secrets, violating non-disclosure agreements, and committing patent and trademark infringement.
The courts eventually ruled that programmers had the right to develop software for third-party consoles, forever changing the video game industry.
Duke had no intention of repeating that legal battle.
Duke took a seat at the head of the table, smiling at the skeptical engineers.
He poured a glass of water from a glass pitcher, taking a moment to set a relaxed collaborative tone.
"I know you're unhappy," Duke began, his voice calm and validating. "You are artists, and you want your names on the canvas. I think you are right to ask for that."
The programmers exchanged surprised glances.
They had expected a corporate lecture about non-compete clauses and intellectual property ownership.
Instead, the head of the studio was agreeing with their grievances.
Jim Levy, leaned forward, resting his elbows on the table.
He asked Duke what Paramount intended to do about the situation, assuming this was merely a tactic to keep them placated and chained to their desks.
"I want to fund your departure," Duke said simply, watching the shock appear on their faces. "I want you to form your own independent development studio. We will call it Activision."
"Paramount will provide half a million dollars in seed capital for a 51% equity stake, but you four will maintain creative control. You will design the games, you will put your names on the boxes, and you will earn royalties on every single cartridge sold."
Larry Kaplan, a brilliant engineer, raised an eyebrow confused. "You want to pay us to leave your company and make games that compete with your... your own in-house software?"
The concept was unheard of in the tightly controlled consumer electronics market. After all, Hardware manufacturers relied on software exclusivity to drive console sales.
Opening the ecosystem to outside developers felt like giving away the keys to the treasure chest.
The Atari 2600 was built around the MOS Technology 6502 microprocessor, a chip with severe memory limitations.
Programming for it was an arduous task that would come to be known as 'racing the beam'.
It was not an easy thing to explain, but basically because the chip lacked a frame buffer (video memory), programmers had to synchronize game code execution precisely with the television's moving electron.
Drawing graphics onto the screen in just milliseconds before the physical beam illuminated the screen.
If a piece of code took even one cycle too long, the timing broke, causing the television screen to glitch, shake, or flicker.
(There's a book called 'Racing the beam' that explains this.)
It required creative genius to make games.
If Atari kept actually treated its best talent like factory workers, that talent would eventually flee.
And follow the path of his past life, in which Atari was a nostalgic name that never became a true competitor.
By establishing Activision as the 1st official third-party developer, Duke was creating a symbiotic ecosystem.
Atari would sell more hardware because the overall quality of the game library would skyrocket.
The independent developers would make money from their royalties, incentivizing them to push the hardware to its limits.
And most importantly, it solved Duke's political problems in Washington.
He could point to Activision as proof that Paramount was funding independent businesses and fostering a competitive marketplace.
In his past life, Tencent, the chinese Giant, did something very similar. Funding a lot of companies across China after regulators tried to attack them.
The four men sat in silence.
Duke slid a drafted term sheet across the table, outlining the investment structure.