From Sega Retro
Activision was founded in 1979 by four programmers at Atari after they wanted more money and more recognition for the games that they created for the Atari 2600. A sales sheet, intended to list what type of games sold best so the programmers would make more like those, showed that the four of them made over 60% of the company's sales at the time, over $60 million. Atari president Ray Kassar dismissed their contract renegotiations and at that point they left.
David Crane, Alan Miller, Robert Whitehead, Larry Kaplan, and former record industry executive Jim Levy founded Activision, and their games would have a biography and their signature at the end of the instruction booklets. This took off, and Activision made millions in sales. It also marked the start of third-party publishing and development, as previously the owner of the hardware also made all the games for it.
The name of the company was chosen because they wanted a name that was higher up alphabetically than Atari in order to show that it was superior.
In 1984, sales began to fall as the video game crash happened (in late 1983), there was a split on the direction of the company on whether to keep going with video games or computer games. Over the next few year, key employees at Activision left and formed their own companies. Many of these new companies chose names alphabetically above Activision (such as Accolade, Acclaim and Absolute Entertainment.) With sales dropping and Jim Levy's style of crediting individuals in the games becoming less effective, he left the company in 1985.
In 1989, they started focusing on other computer software and changed their name to Mediagenic. In 1991, Mediagenic filed for bankruptcy, eventually they changed their name back to Activision, and in 1993, they surfaced again. Since then, Activision has been turned into the second largest publishing company in the United States. Today the formal company name is Activision Publishing, Inc.