Released October 1977 in the USA at a price of US$199.99, the Atari Video Computer System (VCS) was the first successful video game console to use interchangeable cartridges rather than having one or more games built into internal ROM chips. The system came bundled with a Combat cartridge, 2 joysticks, the Paddle controller, power cable and RF modulator. About 6 additional games were available for purchase.
The system was developed by Atari's Cyan Engineering - a group of engineers formed in 1975 to research next-generation video game systems. They had developed a working prototype named "Stella" which, unlike earlier machines (that used custom logic to play a limited amount of games), was a combination of a complete CPU (an MOS Technologies 6507, a cut-down version of their 6502 microprocessor) combined with a display and sound chip, which they named TIA (Television Interface Adaptor). The 6507 processor included less memory pins than the 6502 (13 instead of 16) so it could fit into a smaller 28-pin package. This was an important factor in the cost of the system and because of the high cost of memory at the time, the small 4KB memory space was not going to be all used anyway. Atari got a deal on 24-pin connectors for the cartridge socket and therefore limited the games to 2K.
The design for the VCS was not originally going to be cartridge-based, but they realised they could place games onto cartridges essentially for the price of the connector and packaging after seeing the "fake" cartridge system used in the Magnavox Odyssey.