July 01, 2013 at 02:00 PM EDT

We may never find out if Big Foot exists, who Carly Simon wrote “You’re So Vain” about, or whether Leonardo DiCaprio is dreaming at the end of Inception. But there is one pop culture mystery which might be cleared up in the near future. For decades, it has been rumored that Atari buried millions of copies of its E.T. videogame at a landfill site in Alamogordo, New Mexico. Now, the Alamogordo city council has given the Los Angeles-based Fuel Entertainment permission to search the site for a film project and find out if one of the videogame industry’s most enduring myths is fact or fiction. “The dumping of the E.T. cartridges has always been one of the biggest urban legends in videogame history,” says Mike Burns, cofounder and CEO of Fuel Entertainment’s parent company, Fuel Industries. “We wanted to find out what’s really in there and put an end to the rumors.”

This particular tall tale could be true. In the summer of 1982, Atari’s parent company Warner Communications (which would later merge with Time Inc. to become the Entertainment Weekly-owning Time Warner) reportedly paid $23m for the rights to make a videogame from Steven Spielberg’s movie E.T. the Extra-Terrestrial for its then wildly popular 2600 console. The film, of course, was a box office sensation when it hit screens in June, 1982, and Spielberg’s tale of a boy named Elliott and the adorable alien he befriends ultimately overtook Star Wars to become the most commercially successful film of all-time. But Atari’s E.T., which came out in the Fall following the film’s debut, was one of the most financially disastrous releases of all-time and is now widely regarded as among the worst.

On September 28, 1983, the New York Times reported that Atari had dumped “14 truckloads of discarded game cartridges and other computer equipment at the city landfill in Alamogordo, N.M.” and then poured a layer of concrete on top. An Atari spokesman told the newspaper the cartridges came from the company’s plant in El Paso, Tx., which had formerly made games but which had now been converted to recycling scrap. In time, the legend grew that the landfill site was now the subterranean home to a vast cache of E.T. games. In 2006, the Los Angeles band Wintergreen even shot a video for their song “When I Wake Up”, which found them searching for the stash of cartridges. Meanwhile, the plot of a forthcoming film called Angry Video Game Nerd: The Movie hinges around the titular character’s attempt to prove that the games are not buried in the landfill so that “maybe then everyone can forget about this game.”

Howard Scott Warshaw, the man who designed the E.T. videogame is actually happy for it to be remembered, even if those recollections are not always positive. “You know, 30 years after doing that piece of work, people are still talking about it,” he says. “And if you go with the Hollywood slogan of, ‘There’s no such thing as bad press,’ the fact is, I did a piece of software 30 years ago, that is still getting press notoriety. So when you do something that lives that long…Well, there’s something there.”

The Sunnyvale, CA.-based Atari was a notoriously work-hard-and-play hard company which encouraged creativity and individuality and turned a blind eye to, say, some creative individuals smoking weed in the office. In the mid-aughts, Warshaw would produce a documentary about the company called Once Upon Atari. Interviewees included game engineer Carla Meninsky who recalled, “Atari was a really crazy place. You had to look where you were going because otherwise you might be hit by a flying lemon—people were playing bocce lemons in the hallway. My first or second day there I saw all these men coming out of the women’s bathroom. I thought this was kind of odd. I found out that there was a little lounge room that was off the main bathroom, that they would all get in there to get stoned. That was Atari.”

In October 1976, Atari’s larger-than-life cofounder Nolan Bushnell sold the company to Warner Communications for $28m, but stayed on to oversee the launch of the company’s new game console, the VCS 2600, which was released a year later. Initially, the console sold poorly and Warners hired Ray Kassar, formerly an executive with the fabric manufacturer Burlington Industries, to consult at the company. For his first day at Atari, Kassar wore a suit and tie while Bushnell met him clad in a t-shirt emblazoned with the slogan “I love to f—.’ In January 1979, Bushnell left the company to concentrate on developing the Chuck E. Cheese chain of restaurants — a division of Atari whose rights he had bought back from Warner —  and Kassar was made chief executive. A year later, Atari released Space Invaders to the 2600, a game which would propel the company into the stratosphere. In 1982, the success of Space Invaders would be trumped by that of Pac-Man, whose sales would ultimately top 12 million worldwide. Virtually from nowhere, videogames had become a pop culture phenomenon and Atari a commercial juggernaut. Incredibly, the company was now contributing 70% of the profits of Warner whose sales, just as incredibly, had grown from $775m in 1976 to $4bn just half a decade later, despite the many economic problems affecting the country at the time. On November 8, 1981, the Washington Post published a story about Kassar’s golden goose which declared, “In the fun and games empire of Warner Communications, there’s no recession and no prospect of any because the company owns the surest antidote to economic hard times: a money machine. It’s name is Atari.”

Among those reaping the rewards of Atari’s phenomenal success was Warner Communications CEO Steve Ross. The Brooklyn-raised Ross was a legendary dealmaker who, as a child growing up in Flatbush, would borrow money from his father, buy cut-price cartons of cigarettes at the local supermarket, and then sell individual packs to his dad at a profit. In the ‘50s and 60s he merged together an array of diverse businesses, including a car rental firm and an office cleaning company. In 1969 he bought the Warner Brothers-Seven Arts film studio and record company for $400m and three years later renamed them Warner Communications. By 1982 Ross was keen to get into another business — the Steven Spielberg business. The director had started his career at Universal for whom he made the 1968 short film Amblin’ and many of his subsequent films, including Duel, Jaws, and E.T were also produced under the company’s auspices. Warner Bros., the film arm of Warner Communications, had a lean time of it in the preceding couple of years and Ross, a huge movie fan, was keen to lure Spielberg to the company. That desire would only have increased with the success of E.T., which opened at number one at the box office when it was released on June 11, 1982 and remained in pole position for the next five weeks.

According to author Connie Bruck’s 1995 biography of Ross, Master of the Game, he and Spielberg met in 1981 and developed a relationship. The director would later describe it as being “without agenda,” explaining that Ross never tried to persuade him to work for the studio. But it seems that by the time of the release of E.T. Spielberg had promised Ross that his company would have the first opportunity to get the rights to the film’s spin-off game. However, when Charles “Skip” Paul, the head of Atari’s coin-operated games division, offered MCA/Universal chief Sid Sheinberg $1m plus 7% of the game’s royalties he was turned down. “Then I was told that the deal had been done over a weekend, at East Hampton, between Steve and Steven—and that it was for $23m,” Paul is quoted as saying in Master of the Game.

Over the next few years, Spielberg directed and/or produced a large number of movies for Warner Bros., including Gremlins, Goonies, The Color Purple, and Empire of the Sun. But the timing of the deal would prove disastrous for Atari. In order for the game to be in stores for the all-important run-up to Christmas market it had to be finished by September 1. As the deal was not done until almost the end of July that left just five weeks for the game’s code to be written, a process which at the time usually took in the region of six months. To some at Atari, this seemed like not merely a difficult mission but an impossible one. “No one had really ever done a game in less than six months or so,” says Howard Scott Warshaw. “So, to do a game in five weeks was absurd. They called the head of the department and he just told them that five weeks is not enough time. Then Ray Kassar, the CEO of the company, called me, the only time he ever called me, and said, ‘Can you do a game in five weeks?’ And of course, I had the hubris to say, ‘Well, sure I can do it!’”

Next: “I’ve read articles saying E.T. is solely responsible for the crash of the videogame market. I would love to believe that I have that kind of power.”

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