Atari Files For Bankruptcy
- Looking to find a buyer
- Wants to go private
- Start again with a "modest business model"
Video game legend Atari has filed for Chapter 11 bankruptcy. The application for bankruptcy, which also included three of Atari Inc's affiliate companies, was made in New York late on Sunday night.
- Looking to find a buyer
- Wants to go private
- Start again with a "modest business model"
Video game legend Atari has filed for Chapter 11 bankruptcy. The application for bankruptcy, which also included three of Atari Inc's affiliate companies, was made in New York late on Sunday night.
Atari Inc, which pioneered home video gaming in the 1970s with games like Pong and Asteroids, hopes that the filing will free it from its French parent company Atari S.A., which is struggling to manage its debt. The company fell into French hands in the year 2000, when it was bought out by the Infogrames company, which soon changed its name to Atari S.A. in a bid to capitalise on its more illustrious acquisition.
The iconic company now hopes that it can find a buyer to take it private and start again with a "modest business model" based on developing for mobile platforms, reports said.
Moreover, the New York-based arm of the company is said to be making a profit – $4m in fiscal year 2012 – by repackaging its classic catalogue for the smartphone and tablet era. There is evidence that the U.S. operation, which after the sale of other assets now makes up the bulk of Atari S.A.'s business, has been improving. The corporate parent has been profitable for the last two fiscal years, save for the effect of a money-losing French subsidiary, Eden Games, that has been up for sale. Before that, neither Atari S.A. nor Infogrames had been profitable for about a decade.
However, growth opportunities are limited due to its debt-ridden owners and the expiration of a AUD$26.6m credit facility with London-based financer BlueBay. Also, profits have been small ($11 million and $4 million, respectively, for the last two fiscal years) and revenue plummeted 34% in fiscal 2012 and 43% in fiscal 2011.
Chief Executive Jim Wilson has been with Atari Inc. since 2008, and in 2010 became CEO of the French parent. The New York-based executive has attempted to rebuild the company, which has just 40 employees in the U.S., by developing games for smartphones and the Web based on well-known properties — among them a successful "greatest hits" compilation of arcade titles and an updated version of "Pong." He has also licensed the Atari logo for consumer products, a business that provides about 17% of the company's revenue.
If the bankruptcy proceedings go in Atari Inc's favour then it could emerge with limited debt and its own cash to spend on developing titles new and old.
