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Hard to say that Nintendo putting the kibosh on one arm of Atari's business "bled them to death" when all their other arms were bleeding from self-inflicted wounds.
EDIT: As pointed out below, I have mixed up Atari Corporation and Atari Games, so not all my criticism stands. Atari Games, publishing as Tengen, still largely put out ports of arcade games, but they were at least contemporary arcade games.
While the organization still presents as an odd-ball Japanese company with quirky qualities, it’s becoming more and more apparent they are commanded by MBA-types that are seeking to protect as much IP as possible, and squeeze out the last penny from fun.
Things I’ve purchased from them in the last little while are probably at my high-end of tolerance of what things should cost.
The somewhat oversimplified version of how it works is that the console and the cartridge having matching microcrontrollers that output the same bitstream given the same seed. The system compares these and if at any point they differ, the system resets once per second.
As you might guess, this is not a huge technical hurdle to overcome (although it was somewhat more difficult to reverse engineer in the 80's than today), but it was a pretty strong legal hurdle: Nintendo both patented the mechanism _and_ copyrighted the source code for this scheme, giving them (at least) two legal avenues to go after third-party game distributors who tried to work around it.
The predictable result is that unless a studio has a lottery-win statistically equivalent outlier or a $50m marketing budget, a new game is swallowed up by the shear volume of titles. 1 in 5 games on STEAM never even earn back the $100 deposit.