Atari U.S. files for Ch. 11 bankruptcy

The Atari 2600 video game console. / Wikimedia Commons

NEW YORK Video game maker Atari's U.S. operations have filed for Chapter 11 bankruptcy protection in an effort to separate from their French parent company, which is filing a similar motion separately in France.

In a statement, Atari says the move is necessary to secure investments it needs to grow in mobile and downloadable video games.

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Atari's U.S. operations have shifted to focus on digital games and licensing, including developing mobile games, and have become a growth engine for its owner. France's Infogrames Entertainment first took a stake in Atari in 2000. It acquired the remaining stake in 2008 and changed its name to Atari S.A.

But the U.S. operations have been better performing than the rest of the company. In fiscal 2012 digital and licensing revenue both grew significantly and contributed 70 percent of revenue, while sales in bricks-and-mortar stores declined.

In December, Atari S.A. said a credit agreement it entered into with investor BlueBay - its main shareholder and only lender - would lapse at the end of the year and the company was seeking other ways to raise capital. It added that it expects to report a "significant loss" for fiscal 2012.

On Monday, Atari S.A. said it and its European operations would file related bankruptcy procedures in France concurrent with the U.S. bankruptcy filing.

CEO Jim Wilson said the moves were the "best decision to protect the company and its shareholders." The auction process in U.S. bankruptcy proceedings will "maximize the proceeds" going to shareholders, he added.

Creditors include accounting firm Deloitte & Touche, and retail stores Kmart and Wal-Mart Stores, although none are owed more than $250,000. Blue Bay is not listed as one of the U.S. operations' creditors.

Atari, which turned 40 last year, was a videogame pioneer with games like "Pong" and "Centipede," but has changed ownership several times amid financial problems. In its filing with the U.S. Bankruptcy Court in the Southern District of New York, Atari said it had $1 million to $10 million in assets and $10 million to $50 million in debt. It is seeking approval for $5.25 million in debtor-in-possession financing from investment firm Tenor Capital Management.

Atari said it expects to sell its assets or confirm a restructuring plan within the next three to six months.

Atari S.A., which trades on the Euronext Paris market of NYSE Euronext, has requested trading of its shares be suspended.

[Scimajor]

Hopefully a once proud and powerful company with come back stronger than before. Good luck guys.

[hypnotoad72]

Damn unions...

Just kidding.

When more complex games to appease people with short attention spans have to be sold for 99 cents each but require months of planning, development, recording, etc... most people out here in consumerville have no stinking clue about the reality of WORK. And the new normal lack of value thereof.


BTW: Atari was bought by Hasbro some time ago. Did Atari split off since then?

[MrBoomshadow]

If that's the case, then how are so many app makers doing quite well on iOS and Android, and so many other game makers still succeeding on console game platforms? Games have consistently had to improve and cost less over the 40 years they have been available at retail. A console game that cost 60 dollars in 1985 SHOULD cost 99 cents now, if that. The $60 games of today SHOULD be better than those of yesteryear, as most of the successful ones are--and there are many.

The problem hasn't been the cost. It's been twofold: the constant changes in ownership and the stupid assumption from multiple Atari owners that flashy graphics will make up for poor control, bad gameplay, lack of concept, poor functionality (especially on PC), and nonexistent support.

Atari does have some very nice apps, as it happens--but then they also have "Pong World," which actually won a contest to design the next generation Pong game, despite being a virtually non-playable money grab.

Atari was bought by JTS in 1996. Hasbro bought the remaining Atari brands and intellectual property in 1998, after it became clear that the Atari Jaguar console would not succeed against the N64 and Playstation. Infogrames then bought Hasbro Interactive from Hasbro, which at that time included Atari and a slew of intellectual property from other smaller video game companies in 2001. After Infogrames made a hash of it all, Hasbro then bought Hasbro Interactive BACK from Infogrames in 2005.

With all that, especially considering how few people in charge knew squat about video games, it's amazing Atari has lasted this long in any context other than historical.

[atarimuseum]

Facing tough times is nothing new to Atari, it almost went belly up in 1974 due to horrendously poor management that was put into place... Atari has had quite a roller coaster existence, if you want to know more about Atari from its beginnings you should head over to amazon and look up - Atari Inc Business is Fun, its a new book that details from the inside, just how the cornerstone of the video game industry got off the ground and how it crash horrendously and then was sold and split up in 1984... its a great read, well worth picking up.

[HobartSchmenge]

The reason the video game industry crashed in the early 80s is because my friends and I graduated high school and went off to college, and could no longer spend all our time and money in video arcades. True story.

[hypnotoad72]

HobartSchmenge - a lot of games leading up to the crash were outright rubbish, too...

[mfs6278]

Word to Atari Start Making computers agian. The Falcon030 was Ahead of its time and you can still use it today. We need inovative hardware! Put Atari back on the map. I would support it and many others.

[hypnotoad72]

The Commodore Amiga blew the Atari line out of the water.

Hardware has been dead for YEARS.

The fact that Apple moved to Intel seals that non-argument. The XBox uses Intel and AMD. The Cell processor (an innovation on the defunct PowerPC CPU) on the Playstation might be nixed for an Intel CPU for Playstation 4 as well.

The game is over: Hardware is pretty much dead. It doesn't matter how many reasons one fathoms and/or cites. Innovators like Jay Miner do not exist. Only shameless marketers that manipulate the system and then blame those living in the system.)

Especially when hardware is more or less software put on a piece of silicon. It's easier to change code than it is to throw out and make new chips, never mind the recycling issue...