Alone in the Dark delayed as Atari lessens losses

Troubled publisher's red ink lessens on lower income from property sell-off; horror series expanding onto new platforms in 2007.

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In June, Atari reported its earnings for its 2006 fiscal year, which turned out to be one of its worst on record. For the 12 months ending March 31, it lost $67.1 million on total revenues of $218.7 million. Both figures are dramatically worse than what Atari reported the previous year, when it posted $407.8 in revenues and an annual profit of $5.7 million.

While some of its developers spoke to game journalists in Las Vegas, the company's New York office reported results for the first quarter of its 2007 fiscal year, which ended on June 30. On the bright side, the France-based publisher's losses were $7.1 million, $25.7 million less than the $32.8 million shortfall it reported for the April-June quarter the prior year.

However, net revenue for the quarter was also down, dropping $4.4 million from $19.5 million to $23.9 million year-on-year. Of that figure, $9 million was from "the purchase and sale agreement with a third party to sell and assign all rights, title, and interest in the Stuntman franchise."

The "third" party in question was THQ, which picked up both the Stuntman license and its developer, Paradigm, in May. Two months later, Atari sold off an even bigger car-centric franchise, its troubled Driver series, to Ubisoft for $24 million. That income will be counted as part of the company's earnings for its next fiscal quarter, which ends on September 30.

September will also see the release of Test Drive Unlimited for the Xbox 360; the game will arrive on the PC and PlayStation 2 the following month and on the PlayStation Portable in November. In Atari's initial earnings statement, its chairman, CEO, and chief creative officer, Bruno Bonnell, touted the heavily hyped title as being key to "improving profitability" at the publisher.

Later, though, Bonnell told analysts in a conference call that another of Atari's top games won't be out until its 2008 fiscal year, which runs from April 2007 to March 2008. "We are announcing effectively Alone in the Dark as one of our franchisees for the future," he said during a post-earnings report conference call. "It will be probably the hit of our next year."

After confirming that the game was coming to the Xbox 360 and PlayStation 3, Bonnell talked about the future of the brand. "We actually are extending Alone in the Dark to some other formats right now we have not even announced yet," he said. "I don't want to be forward, but it will be announced shortly." Bonnell did not mention the PC version of the game.

Bonnell also mentioned the Driver/Reflections and Stuntman/Paradigm deals as being part of the latest chapters in Atari's ongoing property sell-off saga, which also included the April sale of TimeShift to Vivendi Games. Bonnell said all three deals raised a combined $37 million--putting TimeShift's price tag at around $4 million.

Bonnell also offered some upbeat assessments about making games for the next generation of consoles. "The Xbox 360 or the PS3 or the Wii are so powerful that, surprisingly, it will be easier to use...[game-development] middleware," he told analysts. "I would not be surprised to see actually a price that is fairly consistent with a prior generation on an average basis. Of course, there will be some massive title with crazy costs. But, on an average basis, I would say that using in a smart way the power of this machine is probably going to help us on the cost side."

That said, the executive also warned that, due to the complexity of next-gen machines, porting between consoles will become increasingly difficult, meaning more exclusives could be likely. "The sad part is ports are going to be a little more difficult because the machines are becoming more and more specific," he said. "So probably we have to anticipate that the cost of porting a product from one platform to the other is actually going to go higher than in the prior generation of machines."

Atari released its report after the markets closed on Wall Street. Its share price ended the day at $0.66, less than a quarter above its 52-week low of $0.47. In after-hours trading, it had risen $0.005 as of press time.

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