As Pong's popularity started to decline (coupled with the introduction of the Fairchild Channel F, the first system to have programmable "ROM" cartridges), Atari realized that the market for home videogame consoles that could only play one game was fading fast. So, in 1976, Atari frantically started working on project "Stella," a new cartridge-based home videogame system.
When the system was released in 1977 (US) the system was renamed to Video Computer System, or simply VCS. By the time Atari released the Atari 5200, the VCS was renamed the 2600.

The Atari 2600 was a great success and lasted several years. The Atari 2600 was famous for games like : Pac-Man, Space Invaders, Pitfall!, etc.)
Even in 1989, Atari was pushing the Atari 2600 Jr. in its "The Fun is Back... Under $50" campaign.

When Atari realized that they didn't have the money to finish project Stella, Nolan Bushnell(founder of Atari) decided to sell the company to Warner to get the extra money. Warner expected Stella (now dubbed the Video Computer System, or simply VCS) to be a huge success.

VCS sales were boosted by the deal Atari had already set up with Sears & Roebuck to distribute its Home Pong units. Under this continuing arrangement, Sears sold its own version of the VCS called the Sears Video Arcade, and VCS cartridges under its "Tele-Games" label. Atari, in turn, was able to get tremendous exposure for its console since Sears had hundreds of store locations nationwide.

In October 1977, the VCS was released with a retail price of $200. Nine games were available for its launch, and despite the Sears deal, initial sales were disappointing. This was partially due to the large numbers of inexpensive handheld electronic games, such as Simon, that were flooding the market.

The Atari wasn't breaking any sales records until 1980, when Atari became the first company to port an arcade game to cartridge. The game? Space Invaders. Many people bought the VCS just to play Space Invaders at home, as Warner had predicted. The future of Atari looked bright.

Videogames continued to rise in popularity, but with the Mattel Intellivision gaining followers and the next-generation ColecoVision console looming on the horizon, Atari decided to release its own high-powered machine in 1982. The Atari 5200 Supersystem was named for its part number in the Atari catalog, CX5200. Following this trend, Atari renamed the VCS the 2600.

Another boost came in 1982 when Atari released Pac-Man. The 2600 had become so popular and had such a large user base that competitors Coleco and Mattel both released add-on modules to allow their systems to play 2600 games.