Cost-cutting puts Atari in black--barely

After years of losses, publisher posts a quarterly profit--of $311,000; revenue slides 26 percent.

This February, then-Atari CEO Bruno Bonnell announced that he wanted his company to "refocus our creativity efforts on external studios, rather than internal development." Thus began a veritable fire sale of the ailing publisher's numerous in-house developers. First on the auction block was Stuntman developer Paradigm Entertainment, which was sold to THQ in May. In July, Ubisoft scooped up Reflections Interactive and its once-coveted Driver license for $21.6 million. Then, in late September, Enter the Matrix studio Shiny Entertainment was sold off to Foundation 9, a fast-growing consortium of development studios, for a paltry $1.6 million.

According to Bonnell, the idea behind the sell-off was twofold: to raise revenue and cut costs. Today, the tactic bore fruit. Atari announced a profit for the July-September 2006 quarter, its first in years. While notable, the size of the profit was less than impressive--just $311,000 during the quarter, which is the second of Atari's 2007 financial year. Still, that was better than the $25.2 million the company lost between July and September 2005.

While profit was up, overall revenue was down--way down. Atari took in $28.6 million for the quarter, a decrease from $38.4 million during the same period in 2005. The publisher's biggest release during the quarter was Test Drive Unlimited, an open-ended driving game for the Xbox 360. (It is due on the PC, PlayStation 2, and PlayStation Portable next year.) The game sold 96,804 copies between September 5 and 30, generating just under $3.9 million in revenue.

For the six months ending September 30, Atari lost $6.8 million, a major improvement over the $58.0 million shortfall it suffered during the same six months in 2005. Losses from continuing operations alone during the period were $14.1 million, down from $52.5 million the year before. To help pay for current operations, Atari today secured a three-year, $15 million loan from finance firm Guggenheim Corporate Funding, LLC.

"With the sale of the Shiny development studio, we have completed the divesture of our internal development studios streamlining our development operations," said David Pierce, Atari's newly appointed president and chief executive officer. "Finally, we are realizing the results of our previously announced cost reduction plans as general and administrative expenses are down 31 percent."

Atari's highest-profile fall release, the well-reviewed Neverwinter Nights 2 for PC, was released on October 31 during the company's third fiscal quarter. Notable releases for the rest of Atari's financial year, which ends on March 31, 2007, includes: Bullet Witch (Xbox 360 - Q1 2007), Dungeons and Dragons: Tactics (PSP - February 2007), and HOT PXL (PSP - February 2007). The company is supporting the Nintendo Wii launch with Dragon Ball Z: Budokai Tenkaichi 2, due out November 21. Atari is also releasing a tie-in with the Luc Besson-produced computer-animated kids' movie Arthur and the Invisibles for the PC, PS2, and Game Boy Advance in January. A previously planned PSP version of the game was not mentioned in Atari's earnings report.

84 Comments

  • marc5477

    Posted May 18, 2007 4:12 pm PT

    Atari is just a leech anyway. They piggyback on the success of hard working sub-companies. They then steal the game away from them and try to turn a buck using their games fame rather than try to actually make a good game. Atari has single handedly destroyed some franchises. Its time for them to shape up or shipout.

  • Darth_Bourkas

    Posted Mar 28, 2007 8:55 pm PT

    obsidian did not put of kotor 1 and its an insult to bioware to say that. Remember obsidian is the developper that feeds off of bioware's success. Bioware make Neverwinter nights and garners amazing reviews. Obsidian makes the sequels and garners good reviews. Bioware makes KOTOR and gets amazing reviews. Obsidian makes kotor 2 and gets pretty good reviews. Biowares games also sell more.

  • The_Consequence

    Posted Dec 24, 2006 8:41 pm PT

    Atari has struggled since Nintendo beat them out years ago. I'm glad to see they're finally picking up the slack and starting fresh, and cross_mr do you even know what Icewind Dale and Neverwinter Nights are? The only franchise they butchered was Dragon Ball, but the recent titles have actually been quite good. Atari's Obsidian studio is the one that put out Star Wars: Knights of The Old Republic 1&2, which were great.

  • skatefreak89

    Posted Nov 21, 2006 3:30 am PT

    I hope for a new Test drive

  • cross_mr

    Posted Nov 14, 2006 5:25 pm PT

    Good riddance. Atari has raped the D&D license since acquiring and I'm tired of seeing them sully its good name. I would really like to seem them post a huge loss next quarter and falter and fail.
    Maybe Hasboro would wake up and give it to a company that deserves it.

  • ColdfireTrilogy

    Posted Nov 13, 2006 9:47 pm PT

    Oh well so is life ... will be a bummer if they go bankrupt but hey life must go on.

  • arc_salvo

    Posted Nov 13, 2006 9:21 pm PT

    I just hope Atari sticks around long enough to release an expansion for NWN2. Man was the campaign incomplete. They really rushed it out the door to get it out in time for Thanksgiving/Christmas.

  • vampiredust99

    Posted Nov 13, 2006 5:22 am PT

    I hope Atari comes back again, it would be a shame if it went bankrupt. Losing the Unreal franchise to Midway didn't help revenue, it needs to innovate more and build up its existing portfolio.

  • vampiredust99

    Posted Nov 13, 2006 5:22 am PT

    I hope Atari comes back again, it would be a shame if it went bankrupt. Losing the Unreal franchise to Midway didn't help revenue, it needs to innovate more and build up its existing portfolio.

  • thehailo

    Posted Nov 12, 2006 11:31 pm PT

    Too bad they cut Linux support from NWN2. The only reason I grabbed the first one was because it was Linux native, and it was what got me into RPG's. Sure wish I could play the sequel.

  • bigbrown69

    Posted Nov 12, 2006 10:39 pm PT

    cool

  • _Sam_

    Posted Nov 12, 2006 3:23 pm PT

    Hopefully they'll do better next time

  • ewmgreendawg

    Posted Nov 12, 2006 11:56 am PT

    their losing money because rockstar beat them to next-gen pong.

  • Bigboss232

    Posted Nov 12, 2006 10:23 am PT

    oh noes not attari first tecmo then acclaim now atari why why why why

  • R3VOLV360

    Posted Nov 12, 2006 5:54 am PT

    hehe, what the hell. they (yes all of them) have made good games.

  • Sam_Lowery

    Posted Nov 11, 2006 10:56 pm PT

    The best, and maybe ONLY good thing about Atari is the name. The company has been bought and sold so many times it's not even a shadow of it's former self.

    From WIki:
    The company that currently bears the Atari name was founded in 1993 under the name GT Interactive. GT Interactive was acquired by IESA in 1999, and renamed Infogrames, Inc. Infogrames acquired the Atari brand name from its purchase of Hasbro Interactive, which in turn had acquired it from JTS Corporation, which the original Atari had merged with in 1996. Initially Infogrames, Inc. intermittently used the Atari name as a brand name for selected titles before IESA officially changed the U.S. subsidiary's name to Atari, Inc. in 2003

  • whgresiak

    Posted Nov 11, 2006 5:43 pm PT

    lol i agree with joeamis

  • EMZayas

    Posted Nov 11, 2006 10:55 am PT

    Atari is my favorite game company, i'm glad they're starting to do good again. Lets hope their future gets brighter.

  • Mikey_PJ

    Posted Nov 11, 2006 10:11 am PT

    eh i never liked atari anyway

  • anamnawshad

    Posted Nov 11, 2006 9:38 am PT

    Hope they'll become good again.....

  • giraffepancakes

    Posted Nov 11, 2006 6:30 am PT

    the same shiny entertainment that created earthworm jim? i'd buy that for 1 million dollars.

  • lord-azrael

    Posted Nov 11, 2006 3:17 am PT

    Atari are a joke compared to their glory days

  • makaid

    Posted Nov 10, 2006 10:32 pm PT

    That's too bad. I the days have changed since pong.

  • VegetaMaelstrom

    Posted Nov 10, 2006 9:31 pm PT

    Stay alive Atari. If you go under who will put out my Neverwinter Nights 2 patches and *fingers crossed* hopefully an expansion pack or two?

  • Humorguy_basic

    Posted Nov 10, 2006 2:54 pm PT

    They had the guts to release Boiling Point - a great game when patched, so I give them points for doing that, but publisher after publisher are showing losses or huge profit declines and yet I still get flamed for saying 2007 is going to be a make or break year for PC gaming and to a smaller degree video gaming overall.

  • vjso2

    Posted Nov 10, 2006 2:46 pm PT

    If Atari wold just sit down a couple of weeks and create a great, new, atractive game, it would fly off the shelves. Unfortunately, the "brilliant" minds over at Atari don't have the balls to go beyond the limit and create a great new game. Alas, that's business.

  • neoand12

    Posted Nov 10, 2006 1:06 pm PT

    atari suck

  • joeamis

    Posted Nov 10, 2006 12:25 pm PT

    The Atari name and licenses will eventually be bought out by EA.

  • Vizhonary

    Posted Nov 10, 2006 11:29 am PT

    It isn't really Atari anyway, so I don't much care. The software end of Atari died before a lot of you were even playing games and the real Atari was reborn under the name Activision.... Atari became a brand name of Warner Brothers. Since then, Atari has just been a trademark bought and sold between companies and it is currently being used by Infogrames. If they go belly up, the name will just be sold to someone else. . . Atari was at one time a real company but today they are just a logo and a name.

  • AnubanUT

    Posted Nov 10, 2006 10:50 am PT

    Never write off Atari ... they have more lives than a whole roomful of cats.

  • Megavideogamer

    Posted Nov 10, 2006 10:41 am PT

    Looks like Atari will flatline soon. Too bad.

  • EnderSR388

    Posted Nov 10, 2006 9:56 am PT

    Good for Atari! I'm really gonna miss them if they fold.

  • hemakm3

    Posted Nov 10, 2006 9:21 am PT

    Hang in there.

  • CaptainDingo

    Posted Nov 10, 2006 9:12 am PT

    "All Atari sold were there own development studios which were the reason they had fallen so far anyways, they all made terrible games."

    Yep, that's pretty much it. Look at Shiny, for instance: Enter the Matrix would have been a great game, if the "gold" version was actually an alpha. It was clearly unfinished.

    Atari needs something big to link themselves to. All the games they publish that are somewhat high-profile are things like the aforementioned Neverwinter Nights 2, which probably won't sell ALL that well to begin with. The rest is garbage, throwaway titles like Arthur and the Invisibles or Dungeons and Dragons.

  • ironman288

    Posted Nov 10, 2006 8:45 am PT

    selling off failed development studios isnt going to hurt anyone. All Atari sold were there own development studios which were the reason they had fallen so far anyways, they all made terrible games.

    now they can let other people make better games and publish them for independent developers, which will help the industry a lot and help Atari more.

  • MrPMPisBeefy

    Posted Nov 10, 2006 8:31 am PT

    It's not good that Atari is selling off its assets to make money. Thats some very bad business. I'm hoping they get a better management team because currently the one they have is terrible. For a company that used to be so good its sad to see where they have ended up. I hope they turn this situation around.

  • Gmacrusher

    Posted Nov 10, 2006 8:20 am PT

    Thats not good that Atari is goging to a better place...that is to a different kind of job.

  • Dolacide

    Posted Nov 10, 2006 8:11 am PT

    They are no longer the legend, that died years ago.

  • Destroyeron13

    Posted Nov 10, 2006 8:03 am PT

    Atari is still dieing.

  • SystemShock2

    Posted Nov 10, 2006 7:47 am PT

    it's so depressing seeing such a legend in this much of a struggle. They really need to come up with another good game

  • nobeaner

    Posted Nov 10, 2006 7:27 am PT

    Live ATARI! LIVE!!!

  • peeweeshift

    Posted Nov 10, 2006 7:24 am PT

    atari better not sell in. it is one of the father companies of gaming and all they do is create rehashes and games that are obscure with cruddy graphics. i relly hope they create a hit game that will p=ull them back up.

  • Oni

    Posted Nov 10, 2006 7:18 am PT

    Ballistic90, I don't think anything is going to stop EA from eventually eating up all the competition thus destroying the industry for American game developers. Let's hope just my pessimistic views are wrong.

  • demonik_360

    Posted Nov 10, 2006 6:51 am PT

    Ballistic90-i agree completly with you.

  • LordAndrew

    Posted Nov 10, 2006 6:50 am PT

    Don't die now, Atari. Just put out good games.

  • Ballistic90

    Posted Nov 10, 2006 6:12 am PT

    I hate to see publishers fold right now. We need more of them around to keep EA from owning everything.

  • GsR_lives

    Posted Nov 10, 2006 5:59 am PT

    Foundation 9 must have a bunch of worthless licenses. They were the developer of Earthworm Jim series & Matrix series. Jeez...they gave up too much with that sale. They lost millions compared with what they bought it for a few years back.

  • Rhubarb9

    Posted Nov 10, 2006 4:24 am PT

    omgz now they can make an Atari 3000 console!

  • KingofTrolls

    Posted Nov 10, 2006 4:23 am PT

    Just fold already Atari because you make trash games anyways. . sell your franchises to a developer worthy of correcting your screw ups.

  • damariofan

    Posted Nov 10, 2006 4:10 am PT

    that is just SAD

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