#1. The games on the atari were not games that you spent hours playing, they were very simple, space invader, pacman etc, and were not entirely that fun.
#2. Nintendo. Once the NES(1985) came out with mario bros. and duck hunt it was a like a tsunami of incredible game play that gamers had never experienced before besides maybe at the arcade. The games for the NES just kept getting better and better, Zelda, Mario Bros. 3 while the atari was languishing with its older technology and stable of boring games.
Atari fought back in terms of technology with the Jaguar(1993) but once again even with better technology you still need great games, and the jaguar did not have mario, zelda, and a host of other fun games that nintendo(snes had been out for two years now), and also genesis had. By that time the writing was on the wall and Atari was in its death throes.
So the trope of atari having a ton of unlicensed games being the demise of the 2600 platform is not true at all. I would have to say it really boils down to just the stable of quality games that nintendo and later genesis possessed and atari just didn't have access to.