Friday, January 25, 2013

The Death Of Atari — Iconic Video Game Maker Files For Bankruptcy

Atari files for bankruptcy

The iconic but long-troubled video game maker Atari has finally filed for bankruptcy in an effort to break free from their debt-laden French parent. After nearly 41 long and arduous years, its classic games (i.e. Pac-Man, Space Invaders, Centipede, Pitfall! etc.) and nostalgia is just about all the company is good for now n' days.

Although the classic brand is still known world-wide for its pioneering video games such as "Pong" and "Asteroids," Atari has been mired in financial problems for decades. Chief Executive Jim Wilson has been with Atari Inc. since 2008, and in 2010 became CEO of the French parent. 

Pong - One of the Earliest Video Games
The New York-based executive has attempted to rebuild the company, which has just 40 employees in the U.S., by developing games for smartphones and the Web based on well-known properties — among them a successful "greatest hits" compilation of arcade titles and an updated version of "Pong." He has also licensed the Atari logo for consumer products, a business that provides about 17% of the company's revenue.

But overall efforts to recapitalize the corporation have been unsuccessful, in part because of its complex structure as essentially an American business w/ a French public stock listing.


Founded in 1972 by Nolan Bushnell, the subsequent story of Atari is both complicated and filled w/ a mix of triumph and missteps. It was these earliest years, however, which delivered Atari's most beloved and important products. The most significant, of course, being Pong; the game that kicked everything-off in 1972.

The hand-assembled arcade units first shipped in November of that year and the home version followed in the holiday season of 1975. When it finally arrived on shelves, it amazed everyone that saw it and sold 150,000 units through Sears. 

After this, Bushnell began development of the Atari 2600 (imaginatively named for the unit's part number), but was unable to complete development with the funds of the existing company. He sold Atari to Warner Communications for $28 million in 1976 with the promise that the project, then known as "Stella," would be completed as soon as possible. 

Combat boasted having 27 games in one w/ variations on the
tank, biplane, and jet gameplay.
The console eventually shipped in 1977, priced at $199 with two of the system's iconic joysticks and a copy of the genre-defining tank game Combat. It sold a relatively disappointing 250,000 units that year. The real success didn't come until 1979 when it became the best-selling holiday gift in the United States, selling more than a million units that year. 
1979 was also a banner year for Atari's arcade division, and for video games in general, as it saw the release of Asteroids; arguably one of the most important arcade games ever made. It also has the distinction of being Atari's most successful game of all time. Other titles such as Tempest, Space Invaders, Centipede & Pac-Man all followed suit and their fan base grew exponentially.

A couple of years after Centipede, Atari's history starts to get complicated — as the story breaks into two distinct pathways when Commodore founder Jack Tramiel purchased the home computer and consumer electronics division of Atari from Warner Communications in 1984. 

Space Invaders
This new hardware company was dubbed "Atari Corp," while the parts of the original company that were left were rebranded as "Atari Games" and continued making arcade games. A year later, the Atari Games group was sold to Namco, which quickly lost interest in it. After another year, Atari Games was picked up again, and by 1987 was making games for the NES under the Tengen brand name, pissing-off Nintendo while it was doing so by side-stepping the lock-out that prevented unauthorized third-party products.

After lawsuits and other drama, the remaining parts of Atari Games were picked up by Warner Communications again in 1989, and got sucked into the on-going Time Warner merger. A few years later, the Atari Games brand was again sold, this time to WMS Industries, which owned Williams and Bally/Midway. The company eventually morphed into Midway Games West, which now finds itself as part of Warner Interactive's portfolio.

Nintendo Entertainment System (NES - 8-Bit)

Once Nintendo was released in the late-80's, the world according to Atari was just about over. In attempt to compete and stay relevant, Atari released the ill-fated 7800 console. In 1989, the company released the technically impressive Lynx handheld, but it was bulky (not pocket-friendly and ate batteries for breakfast — it ultimately destroyed by the Nintendo's Game Boy

We can go on & on about their subsequent failures but we'll spare the readers the sob stories & grief. Ultimately, they released the "64-bit" Atari Jaguar in 1993 to widespread apathy — pretty much the nail in their coffin.

Arguably the most valuable thing that remains in 2012 is the Atari name itself and that iconic three-stripe logo. Licensing the name for other products, like T-shirts and merchandise, ended up accounting for 17 percent of the company's revenue.

Ms. Pac Man

The historical significance of Atari has always been both a blessing and a curse to all those who have attempted to wield it. As the brand has been juggled like a hot potato over the past 30 years, its owners have each failed to really invest in expanding its portfolio beyond that of ancient history. 

Meanwhile, Activision--the first third-party publisher for the original Atari console--is now the largest and most powerful video games publisher in the world. The time has come to say goodbye and to remember the classics for what they were: important parts of our shared history that should be shown due reverence. The games are far more important than the company that bore them. Let's hope the Atari brand is spared any further indignity.

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