Nolan Bushnell bounds into his cluttered office with the enthusiasm of a young programmer. At 58, his hair and beard fading to gray, Mr. Bushnell is obviously not young, but he has good reason to be enthusiastic. He's back in the game.

Mr. Bushnell has returned to the industry he revolutionized in the '70s, when his company, Atari, brought video games to the coin-operated amusement business. His new firm, uWink, also aims to make millions in the coin-op games business -- a little bit at a time.

UWink occupies modest offices across the street from Los Angeles's only swamp. Mr. Bushnell's own windowless work space includes four computers that crowd his desk and, on the wall, an antique pinball game.

Back in 1970, when Mr. Bushnell founded Atari, pinball and other primitive arcade games were generating $1 billion annually. When video games arrived, coin-op exploded, generating $22 billion in 1979, according to one widely reported estimate. Mr. Bushnell sold Atari to Warner Communications in 1976 for $28 million, which then created an early home-video game system before fizzling. Coin-op fizzled too -- generating just $6.7 billion last year in U.S. revenue, according to the trade publication Play Meter.

Mr. Bushnell left Atari in 1978 to start other businesses, including the Chuck E. Cheese's restaurant chain. Two years ago he hit on the idea behind uWink: connecting game machines in bars and airports to the Internet.

Networking its machines allows uWink to track their income, replace unpopular games, and refresh genres, like trivia, that get stale. The network also lets uWink process credit cards, run lucrative tournaments, and target ads at players.

"We're at the point of consumption for tobacco and alcohol," Mr. Bushnell says. That means uWink can guarantee an over-21 audience to those industries, which have difficulty finding noncontroversial outlets for their ads. Advertising is expected to account for 15 percent of uWink revenue.

But the uWink network's real appeal is summed up by its biggest outside investor, former National Semiconductor chairman Peter Sprague: "Cash." Though the coin-op games business is not what it was, it's still a large market. Play Meter estimates there are 1.3 million game machines operating in U.S. bars, arcades, restaurants, and other outlets. The average machine grosses about $110 a week, which is usually split between the operator and the location owner.

But because uWink runs the networked games, credit card services, and Internet access, it can claim a cut of the take, which the company says is 25 to 30 percent higher than its nonnetworked competition gets.

"It sounds like [Mr. Bushnell] is having his cake and eating it too," says Edward Williams, senior vice president and research analyst at Gerard Klauer Mattison, a research investment bank. "If that's the case, it's a very intriguing model. I think conceptually it can work."

Multiply coin-drop revenue by 52 weeks a year, and that total by the 100,000 machines uWink says it hopes to be operating within 18 to 24 months. Throw in the modest profit it makes from selling its machines, ad sales, tournament sponsorships, and a little e-commerce, and uWink could indeed do quite well.

The company has brought in $7.5 million from investors, including MGM Grand chairman and CEO J. Terrence Lanni, Amadeus Capital Partners founder Hermann Hauser, and Nolan Securities managing director Bruce Kelly. It is considering another round.

UWink's competitors include the arcade giant Midway Home Entertainment and its Midway Tournament Network, and eCorp.com, a San Francisco startup that makes software to distribute games, music, and video clips on many platforms and has about 1,100 machines in the United States and Europe.

Of course, if uWink is a hit, more competition will surface, but Mr. Bushnell believes he has an advantage no other company does: himself. "Relationships with operators and distributors are difficult to establish," he says. "But they all know me and love me because I made them very rich in the '70s."

Write to david.bloom@redherring.com.

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