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BraveNewWorld said:
The answer is yes. Atari could have controlled its own destiny.

1. Atari 2600 needed to have built-in measures to prevent unauthorized games from being developed.
2. Atari needed to have quality control for all games released on the system.
3. Atari needed to make the 5200 exceptionally better. It needed to be $120 cheaper and have a better and more practical controller.

There would have been no crash and Atari would have released the 7800 around the same time Nintendo would release the NES.



There would've been a crash regardless there we're still too many consoles on the market and the market on the whole was still incredibly unregulated, though I agree with you that Atari would've come out much better if they did what you stated.