Atari to sell internal studios, cut workforce by 20 percent

[UPDATE] CEO Bruno Bonnell says troubled publisher will "refocus ... on external studios;" company later announces that one-fifth of its worldwide workforce will be let go.

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It has been a rough week for Atari. Since last Thursday's earnings statement, which showed the publisher's third-quarter revenue sink by more than a third, its share price has tumbled on multiple analyst downgrades and closed the day at $0.86. The rapid fall in fortunes has prompted such morbid headlines as "Atari creeps closer to death" on CNN/Money's Game Over column.

In an effort to revive its flagging finances, Atari is planning to sell some of its internal game studios. Speaking to British game-trade magazine MCV, CEO Bruno Bonnell revealed that the company has decided to "refocus our creativity efforts on external studios, rather than internal development."

The move means such shops as Reflections, currently finishing up Driver: Parallel Lines, and Shiny Entertainment, which made last year's Enter the Matrix: The Path of Neo, will eventually end up on the auction block. However, Bonnell stressed that all projects in development will be finished before said developers are sold. "We will be looking to sell our studios, but that doesn't mean that we're immediately putting a 'For Sale' sign on them. They still have important projects to finish for us."

Bonnell also declared that Atari was planning a major, Euro-centric reorganization of its subsidiary. "We have about 250 staff in the US, and that is too many," he said. "There has to be some adjustment. There will be none in Europe, though. They've had their pain already." But Atari's US holdings have seen their own purges, with internal studios in California and Massachusetts shut down last February.

[UPDATE] Later in the day, Atari issued a very short press release which said it "plans to cut its workforce by about 20 percent worldwide as part of its restructuring plan." It listed its current payroll at 490 employees, meaning approximately 98 people would be sent packing. "Today's decisive action will provide us with the flexibility necessary in a changing business environment," said Bonnell in a statement.

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