Published On: Wed, Jan 23rd, 2013

Atari runs out of coin, files for bankruptcy

Atari is a name that is synonymous with gaming. Even for young hipsters who were not even born when games like Pong, Missile Command and Centipede were all the rage, most of them will still have heard of this pioneering gaming brand. But the the Atari Inc that filed for Chapter 11 recently had precious little do with gaming and even less with the classic Atari from the golden age of arcades.

Don’t we all know a celebrity whom we thought to be long dead, gone from our memory, only to find out that they are still alive? Well, Atari is a bit like that. You see, for a company that made serious money making games way back, Atari also had a life like a gaming character: every time they died, they managed to come back and reboot, in one way or another. You could actually end up tearing out your hair in frustration trying to figure out the numerous break offs and mergers and acquisitions that Atari have been party to.

So here is an abridged version of the story to save your hairline. The company was founded just as Nixon was quitting the White House (read 1974). And incidentally, guess who were among its early employees? A couple of Steves who thankfully left their jobs at Atari to found their own little company named after a particular fruit later on. Atari rode on the early wave of video game craze, racking up $2 billion in revenues by 1982, only to nearly crash and burn in the “great North American video game crash” that followed. That was the first ‘game over’ for the company.

What came next is not pretty, and a lesson in what not to do with gaming franchises and brands. Warner Communications, Atari’s parent company, split it into three. The one that handled the arcade games became Atari Games Inc. They went on to make some pretty decent games in the mid to late ‘80s like Paperboy and Marble Madness. That Atari went through various ownerships and name changes in the 1990s and eventually died as Midway Games West in 2003.

The Atari that died recently was the bigger chunk left from that 1984 split. They were the ones that handled the hardware like the venerable Atari 2600. Named Atari Corp. they saw limited success in the mid ‘80s before becoming responsible for such game industry flops like the Atari Lynx and the Jaguar consoles. Soon the company went through a handful of ownership changes before ending up in the hands of the French game company Infogrames, who controlled a majority stake.

Gamers did come across the Atari logo in a few games, as Infogrames were the publishers of a few titles like the Matrix series, The Unreal Tournament Series and many more where they chose to use the famed Atari brand and logo. But in the real sense, Atari in the last decade has been a company living in the past. They were never really into making games or consoles as they were in their heyday. All everyone did, including themselves was cash in on the brand power that the Atari still commanded, almost 30 years past its prime. The American branch, Atari US has been in the green in recent years with modest profits. But as the France based parent, Atari SA (Infogrames renamed) hasn’t seen a profit in over a decade. This bankruptcy filing was Atari US’s desperate attempt to break free from the French.

This is surely not the last that we have seen of Atari. The US based company is looking for buyers who can develop them for the future while milking the Atari legacy to the end. And that end sure seems a long way off. In the meantime nostalgic old gamers from that golden era with coin to spare can look forward to buying up the IP rights to their favorite game as old Atari classic franchises like Pong, Missile Command and Asteroids go for auction under the Chapter 11 proceedings.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.