Atari reports financials, will announce Matrix sequel "soon"

As sales and profits fall year after year, CEO Bruno Bonnell talks up Driver 3 and unannounced D&D games; also talks down the loss of the Unreal franchise.

Today, Atari reported that sales in the first quarter of its fiscal year 2005 dropped compared to last year, down $41.1 million to $110.3 million. While the company still showed profits for the three-month period ending June 30, net income also dropped, falling from $23.8 million last year to $12.1 million this year.

Addressing the falling figures this year, Atari said that its first quarter lineup faced a tough comparison to last year, when it released the successful Enter the Matrix for all three consoles and the PC.

Speaking to analysts in a conference call after the earnings announcement, Atari CEO Bruno Bonnell tried to look on the bright side. He listed Transformers, Shadow Ops: Red Mercury, Duel Masters: Sempai Legends, and Driver 3 as the company's best-selling titles for the quarter. In particular, he pointed out that 50 percent of Driver 3 units shipped had sold, and the game was the number two best-selling PS2 title and number five Xbox title in the US in June.

Ironically, Bonnell also singled out the "critically acclaimed Unreal Tournament 2004" as among Atari's best first-quarter performers the day after its developer, Epic Games, announced that Midway Games would publish future Unreal titles. When asked by an analyst to comment on the unraveling of the Atari/Epic partnership, Bonnell said, "We definitely felt that--after all those years--that the proposal offered to [Atari] was not acceptable from a profit perspective." Bonnel continued, "I wish very good luck to Midway, but it was not acceptable for us to sign a deal [with Epic] with this structure…the relationship with Epic remains friendly, it's just sad that after all these years we were unable to reach an agreement." Bonnell did not mention if the dissolution was part of Atari's recently announced effort to lower its number of third-party distribution agreements overall.

Looking ahead, Atari expects to lose $19 million through September, even as it sees sales increase. The company's heavy hitters are scheduled for the holiday season, which includes RollerCoaster Tycoon 3 and Sid Meier's Pirates! The two games are expected to help support Atari's projected sales of $470 million and profits in the $25 million to $30 million range for the fiscal year. PC gamers will be pleased to learn Forgotten Realms: Demon Stone, the D&D game from Two Towers developer Stormfront Studios, is now also being released for the PC.

The company's release schedule is as follows:

FY Q2 2005 (July-September 2004)
Asterix & Obelix (PS2)
Backyard Skater (PC)
Deer Hunter 2005 (PC)
Forgotten Realms: Demon Stone (PS2)
Shadow Ops: Red Mercury (PC)
Terminator 3: The Redemption (PS2, Xbox, GameCube)
Test Drive: Eve of Destruction (PS2 and Xbox)
Unreal Tournament Editor's Choice (PC)
YuYu Hakusho: Dark Tournament (PS2)
Zoids: Battle Legends (GC) Zoids: Legacy (Game Boy Advance)

FY Q3 2005 (October-December 2004)
Axis & Allies (PC)
Backyard Basketball (GBA)
Dragon Ball Z: Budokai 3 (PS2)
Dragon Ball Z: Buu's Fury (GBA)
Duel Masters Cobalt (PS2)
Duel Masters 2: Kaijudo Showdown (GBA)
Forgotten Realms: Demon Stone (Xbox, PC)
Godzilla: Save the Earth (PS2, Xbox)
RollerCoaster Tycoon 3 (PC)
Sid Meier's Pirates! (PC)
YuYu Hakusho: Tournament Tactics (GBA)

For the fourth quarter, which runs January to March 2005, Atari stated that it plans to release several unannounced games "from both the lucrative Dragon Ball Z and Dungeons & Dragons franchises." Bonnell pointed out that Atari holds the game rights to all production from Hasbro--which owns the Dungeons & Dragons brand--for the next 13 years. However, he did not specify which D&D titles promised to be so profitable, fueling further rumors that Atari will announce the next generation of Neverwinter Nights--and possibly even Baldur's Gate 3--soon.

Bonnell also sparked speculation that a sequel to Enter the Matrix may be much closer than people think. After reminding skeptical analysts that Atari has "the rights to two more Enter the Matrix SKUs," Bonnell nonchalantly said that he hopes "to provide the public with more details in the next, short, coming weeks." Bonnell's comments come just days after a Wall Street Journal article quoted the agent of The Matrix directors, Andy and Larry Wachowski, as saying the pair was working on "an Xbox Matrix game for 2005."

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