The Atari 7800 remained officially active between 1986 and 1991. On January 1, 1992, Atari Corp. formally announced that production of the Atari 7800, the Atari 2600, the Atari 8-bit computer line, and the Atari XE Game System would cease. By the time of the cancellation, Nintendo's NES dominated the North American market, controlling 80% while Atari Corp. controlled just 12%.
Despite trailing the Nintendo Entertainment System in terms of number of units sold, the 7800 was a profitable enterprise for Atari Corp., benefiting largely from Atari’s name and the system's 2600 compatibility. Profits were strong owing to low investment in game development and marketing. Nonetheless, the 7800 failed to help Atari regain its dominance in the videogame industry.