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Atari (PINK:ATAR), one of the grand old names of computer gaming (their logo even appeared in the film Bladerunner) seems to be in a terminal condition. With Q2 losses of $7.7 million on turnover of $13.3 million, following on from a Q1 loss of $11.9 million, they are obviously in an unsustainable position.

Recent changes to top management and selling off all remaining development assets to retain liquidity both look like rearranging the deckchairs on the Titanic.

For part of the time that I was at Codemasters we used Atari for our North American distribution and they were good. Good enough for us to get a US PC number one with Operation Flashpoint. But the problem they face is they are too small now to have the economies of scale of a large publisher. So they are uncompetitive in just about everything that they do. Which, to me, spells the end.

Of course Atari’s position is complicated by their relationship with Infogrames, who themselves are not in the rudest of healths. Atari say that their strategy to recover includes casual games, on-line sites, and digital downloading. The problem with these is that they take years to build, and Atari doesn’t have years.

What they do have is their brand, but even that is being tarnished and so devalued by the day. The way forward seems to be a close-down of operations and a sell off of the brand to someone who can better use it. Because continuing as they are they are just digging a deeper and deeper hole.

Source: Atari: Time to Say Goodbye