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The slow fall of Atari.
The Atari of old offered games and a home console � the Atari 2600 � that could be found in the living rooms of cool kids everywhere. The Atari of today is plagued by a revolving door in the executive suite and boasts a questionable line-up of upcoming games.
Fourth-quarter losses for the firm, reported earlier this week, came in at $9.1 million � better than last year's $17.3 million loss, but hardly confidence inspiring. And the comments from company executives in the conference call following the earnings announcement weren't exactly upbeat.
"When we can stop shooting ourselves in the foot ...Atari's going to be a spectacular company," said Diane Baker, chief financial officer.
Bruno Bonnell, chairman and interim chief executive, didn't give investors reason to cheer either. "We remain optimistic about Atari's future," he said, "but at the same time we recognized the challenges ahead."
Some of those challenges are the company's own doing. Atari's two biggest titles for this holiday season haven't created any sort of buzz in the gaming world. "Mark Ecko's Getting Up: Contents Under Pressure," which blends fighting with graffiti, offers something different, which usually gets gamers excited. Judging by message board chatter, though, the game hasn't pinged too many radars. "The Matrix: Path of Neo," meanwhile, may be leaning too heavily on a Hollywood license that has lost its appeal.
Granted, 2003's "Enter the Matrix" is one of the best selling games in Atari's history (2.5 million copies sold in the first month) but audiences at the time were salivating over the forthcoming movie sequels. Now they've seen the films � and most wonder why they were ever excited in the first place. And, to be frank, "Enter the Matrix" was a pretty bad game, something gamers will remember.
Some foreshadowing might be found in another game set in the "Matrix" universe. "The Matrix Online," published by Sega, has only sold 43,100 copies since its launch in late March, according to The NPD Group.
Atari (Research) has made some public mea culpas over the past year, bringing in a new management team and vowing to put things right. Confidence in that turnaround took a nosedive, though, when CEO Jim Caparro abruptly left the company last week - after just seven months in the job - to run Glenayre Technologies' Entertainment Distribution division. Calls to Caparro about the reasons behind his departure were not returned.
Last year, Atari lost a key partner with Epic Games (makers of the phenomenally popular "Unreal" franchise) jumped to rival Midway (Research) Games. Earlier this year, the company gave up publishing rights to the Xbox version of "Sid Meier's Pirates!" � even though development on the game was nearly complete.
Despite this, Atari seems to be struggling mightily to position itself as a publisher of mature (though not necessarily mature-rated) games. This week, it announced plans to jettison the Humongous Entertainment studio, makers of the "Backyard" line of sports games for children.
This positioning, along with at least one unannounced title that is generating some quiet excitement among developers, might make the company more attractive to buyers, but is it the right move?
Atari has a strong history with younger audiences. It has been wisely tapping into its past with sales of the Atari Flashback, a plug-and-play device that lets you play classic Atari 2600 games on your TV. It has also, in the past few years, put out games for Tonka, Thomas the Tank Engine, Blues Clues and Dora the Explorer, among others.
While making children's games might make Atari a little less "cool" in some eyes, it's an underserved market. THQ (Research), for years, has made a fortune off of games using Scooby Doo, and Hot Wheels as well as the Disney and Nickelodeon licenses. It's only in the last couple of years that the company has begun a serious push for older gamers.
Certainly, several hot licenses for children's games are locked tight for now, but contracts expire � and new hot shows spring up all the time.
Atari would be wise to follow the THQ model: Establish a strong financial base in a lucrative, though less popular sub-genre, still putting out the occasional game for the more mature audience. Then, years down the road, carefully begin dipping its toes into the adult gaming field again � only this time, less Neo and more Neat-o. |
Posted by CNN Money on June 18.
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