This is a really bad contest for developers. Atari gets all the rights to anything that is submitted, and the winner only gets the full 100k if the game sells $5 million in the first year.
While Atari maintains control of the rights, Pong is their game after all, I think this is more of a gaming version of Top Chef. Bravo gets to keep all the crazy stuff contestants say and do, and do with as the producers see fit. But, it gets the name of the contestants, especially the winner, out there to make a name for themselves.
The winner of this contest would be similar. The 100K isn't anything hardly but it's the name recognition and what happens in the future with that, that's really important.
To summarize some bits of the Gamasutra article and some of its commenters, it wouldn't take much to make this a better contest. There is a link there to the much more friendly rules of a contest that Intel ran. There is a concern that this could set a precedent to what the market will bear, and it may take awhile to adjust to friendlier standards given the infrequency of major sponsored contests.
The tricky part is their Pong IP. I'd prefer if creators were allowed to keep ownership of their games if they didn't make it into the finals round, but then Atari would be allowing a lot of Pong clones on the market. What it comes down to is I think Atari ought to more generously compensate winners and finalists to make the risk of the time that creators put into it more worthwhile. It's not like the Pong IP is worth much, anyway.
If Square gave people the chance to legally reinterpret one of their games (imagine what people would make), it might be more worthwhile to accept more restrictive terms.
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The winner of this contest would be similar. The 100K isn't anything hardly but it's the name recognition and what happens in the future with that, that's really important.
The tricky part is their Pong IP. I'd prefer if creators were allowed to keep ownership of their games if they didn't make it into the finals round, but then Atari would be allowing a lot of Pong clones on the market. What it comes down to is I think Atari ought to more generously compensate winners and finalists to make the risk of the time that creators put into it more worthwhile. It's not like the Pong IP is worth much, anyway.
If Square gave people the chance to legally reinterpret one of their games (imagine what people would make), it might be more worthwhile to accept more restrictive terms.