Atari files for bankruptcy, finally spends last quarter we gave them in 1983

If you’re part of Generation X,,there are few brand names more etched in your memory than Atari. Sure, Nintendo took the crown from them by the late 1980s, but come on. This is the company that brought you Pole Position, Tempest, Lunar Lander, Battle Zone… if they hadn’t come on the scene in the 1970s there would have been no video arcades.

Atari wasn’t the first with a cartridge-based home video system (and far from the last) but if you weren’t old enough to be interested in the opposite sex by the spring of 1980, your biggest hope was to find an Atari game system (they didn’t call them the 2600s until later) waiting for you on your holiday of choice. Aside: smart consumers went for the slightly lower-priced but identical Sears Tele-Games system.

Atari hit the skids in the 1990s after being broken up and sold to various interests, including former Commodore head Jack Tramiel. By Y2K it was nothing but an software company, having passed through several owners.

A funny thing happened, as 8-bit became cool again. Atari started making the bulk of its money licensing its logo and images to people too young to enjoy them the first time. It must not have been enough coin though… as the news has come that Atari will be filing Chapter 11 bankruptcy. The Los Angeles Times reports that Atari’s fortunes actually haven’t been that bad lately, but it seems their European operations have been dragging them down.They’ve gotten $5 million in financing (presumably all of it in quarters) in order to keep operating for 3 or 4 more months. The goal is to sell off all those 8-bit assets and anything that still has value.

It’s sad, but remember at this point all of the original Atari folk are long gone, either having moved on to other enterprises (like founder Nolan Bushnell who oddly went from Atari to founding Chuck E. Cheese) or like most simply retired. Let’s hope the new owners at least find a way to keep the brand name alive.

Looking for the press release? Insert 25 cents to continue. (Yeah, that’s four coin-op jokes in the same piece.)

Iconic Brand Seeks to Restructure and Secure Independent Capital for Future

Today Atari Inc., Atari Interactive Inc., Humongous, Inc. and California US Holdings, Inc. (collectively, the “Companies”) filed petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. With this move, the U.S.-based Atari operations seek to
separate from the structural financial encumbrances of their French parent holding company, Atari S.A. (formerly Infogrames S.A.) and secure independent capital for future growth, primarily in the areas of digital and mobile games.

Within the next 90-120 days, the Companies expect to effectuate a sale of all, or substantially all, of their assets in a “sale free and clear” under section 363 of the Bankruptcy Code or to confirm plans of reorganization that accomplish substantially the same result. These assets include not only one of the most widely recognized brand logos, which is familiar to 90% of Americans, according to a recent survey, but also legendary game titles including Pong, Asteroids, Centipede, Missile Command, Battlezone and Tempest. Other recognized brands
include Test Drive, Backyard Sportsand Humongous.

Under current management, Atari Inc. has shifted its business from traditional retail games to digital games and licensing with an increased focus on developing mobile games based on some of Atari’s most iconic and enduring franchises. With these moves, the company has added new revenue models, including digital download and advertising. As a result, Atari Inc. has become a growth engine for Atari S.A., which in turn has reported consecutive annual profits in 2011 and 2012.

The company has recently launched a slew of chart-topping titles for iOS and Android mobile platforms, including Atari Greatest Hits, Outlaw, Breakout and Asteroids Gunner. The company has previously announced upcoming mobile and tablet games based upon the popular Rollercoaster Tycoon franchise and Atari Casino.

The Chapter 11 process constitutes the most strategic option for Atari’s U.S. operations, as they look to preserve their inherent value and unlock revenue potential unrealized while under the control of Atari S.A. During this period, the company expects to conduct its normal business operations.

The U.S. companies are also seeking approval to obtain $5.25 million in debtor-in-possession financing from one or more funds managed by Tenor Capital Management, a firm specializing in convertible arbitrage and special situations. Each unit has filed a number of traditional “first-day” pleadings, which are intended to minimize any disruption of their day-to-day operations.

About the Author

Stuart Sweet
Stuart Sweet is the editor-in-chief of The Solid Signal Blog and a "master plumber" at Signal Group, LLC. He is the author of over 8,000 articles and longform tutorials including many posted here. Reach him by clicking on "Contact the Editor" at the bottom of this page.