Atari financial woes

[AAA177]

I happened to be reading in the news about Atari's recent financial problems (I guess too the modern VCS may possibly be ending or is in trouble if not ending entirely, but I am unclear on that, don't quote me). I believe these are recent articles, although sometimes much older ones pop up (the dates seem to be recent, but I am willing to stand corrected). 

 

I've been having a hard time interpreting an enterprise value for the company as it is foreign, but it can't be too much. Why do you think some other company hasn't stepped up to buy it? I know the CEO and his own company (not sure if that is an investment firm, I think it is called Irata, but again, hard to get good info that I can interpret properly) have announced and perhaps executed some sort of tender offer on friendly terms, but what I am getting at is, wouldn't Atari and its content library be attractive to some media/tech company? Activision Blizzard could buy it, and even after the MSFT acquisition. Netflix for certain reasons could or should be interested. Maybe a retail store like Walmart? What about Gamestop? Private equity, hedge fund? (The latter would not be ideal for us, though.) Some celebrity Atari fan, perhaps, whether multimillionaire or billionaire (Musk?)? Hasbro/Mattel? Toys R Us, Party City? Not a big deal, certainly, it is what it is, and we here focus on collecting/playing vintage items attached to the legacy company...more of a curiosity question, because I assume Atari is now firmly in rounding-error territory. Thanks. (If this topic is somewhere else, feel free to transport this post there.)

[+x=usr(1536)]

6 minutes ago, AAA177 said:

I happened to be reading in the news about Atari's recent financial problems

Can you provide links to the articles you were reading?  I'd like to take a look as well.  FWIW, Atari's financial problems are anything but recent: the company's been in various states of financially-screwed for years.

10 minutes ago, AAA177 said:

Why do you think some other company hasn't stepped up to buy it?

Because doing so would be a losing proposition.  The IP that they own doesn't have enough value to recover the costs of acquisition in a reasonable timeframe, and their revenue streams are short-term at best or insignificant in the long term.

[Rob Merritt]

27 minutes ago, AAA177 said:

Why do you think some other company hasn't stepped up to buy it? I know the CEO and his own company (not sure if that is an investment firm, I think it is called Irata, but again, hard to get good info that I can interpret properly) have announced and perhaps executed some sort of tender offer on friendly terms, but what I am getting at is, wouldn't Atari and its content library be attractive to some media/tech company?

From what I know, people and companies have been trying to buy Atari and it's IP regularly but the current owner's asking price is comically high. It's attractive but not at the price they are currently asking. 

[zzip]

3 hours ago, AAA177 said:

Activision Blizzard could buy it, and even after the MSFT acquisition

They don't seem interested in retro games these days, would hate to see someone buy the brand and not do anything with it.

[The Usotsuki]

If I had the money, I'd be on it like white on rice. At least then it'd be in the hands of someone who gives a damn about the legacy of the name.

[AAA177]

Thanks for these replies.

 

Here are the links:

 

Atari CEO makes 'friendly offer' to acquire control of struggling games publisher | PC Gamer

 

Atari’s New Gaming Console Isn’t Dead Yet (howtogeek.com)

 

Atari VCS in Jeopardy After Atari Pull Manufacturing Contracts (Updated) | Tom's Hardware (tomshardware.com)

 

Here is a sample of what I have read, by way of Google News search, simply using the keyword Atari and nothing else. I then used Yahoo finance to check out a couple of other stuff I am not necessarily clear on (especially enterprise value). 

 

Yes, I would bet too on Atari if I had the cash; that's what's odd, there's no one out in Hollywood, some celebrity actor, maybe an eccentric one, that grew up with Atari and would simply buy it? On the comically-high price: see, I can understand that, because that's what the guy is probably counting on: someone buying it out of love, and love can lead to irrational pricing beyond normal goodwill. What is the price in dollars that he wants, if you happen to know? 

 

Activision does not seem into retro games, you're correct. Besides licensing, the one direct thing I believe the company did in recent times was some sort of Wii game that took place at an amusement park that featured updated versions of a few titles...can't recall them necessarily, but were two of them maybe Kaboom! and Megamania? 

 

I agree on a weighted-average-capital-cost/ROI basis (not an expert, mostly speaking metaphorically here) Atari is probably expensive and an on-paper losing proposition. But the catalysts for me would be simple, yet potentially innovative, ideas: aggressively license out IP, perhaps taking on risk by not asking for advances or very low ones, re-releasing the Atari systems including computers, selling to educational institutions Atari computer platforms (800, ST, etc.) with assembly languages to teach game programming as part of a game-designer/computer-science curriculum, and so on...all of which would rely on social media, especially Twitch and YouTube, to promote and propagate a new generation of hobbyists. I agree, though, I am very biased, and that is probably more risky than I care to admit (then again, Atari investing in crypto/blockchain was arguably goofy as well). I don't know, though...what if Atari launched new arcade/eatery establishments? What if it either opened or partnered with gyms to offer arcades that were free to use - using all the IP, of course - as an added incentive to join? Be no different than Amazon offering original/licensed content to attract Prime shipping subscribers, or Apple offering Apple TV+ gratis on hardware sales. 

 

I have to go back to rounding-error price tag though...Microsoft wouldn't buy it, or Netflix, or Apple? Two of those companies have incredible free cash flows. And the third, NFLX, is improving and honestly could see a lot of synergy with that IP and the fact that it does want to eventually get into streaming gaming (at least it seems that way); I would assume Atari 2600/5200/7800/800XL and so on titles would be technologically simple to stream. But I do understand: once you breakout a spreadsheet, Atari is doomed. (Someone should send a message to Musk asking him to buy it, but then again, would he really do right by it? Probably not. Too bad Atari Age couldn't crowd-fund an acquisition offer...)

[+x=usr(1536)]

Appreciate the links.  Quickly running through the points you've raised:

 

11 hours ago, AAA177 said:

I agree on a weighted-average-capital-cost/ROI basis (not an expert, mostly speaking metaphorically here) Atari is probably expensive and an on-paper losing proposition.

Thing is, with Atari having no real sway in the marketplace, that's about the only way to realistically look at the company.  When the headlines talk about the company's dire financial straits and ending all production of the VCS, there's not much to paint a rosy picture of either its value or long-term viability.  From an investor confidence standpoint, it doesn't engender any; from a potential purchaser standpoint, it suggests that the company is overvaluing itself.

11 hours ago, AAA177 said:

But the catalysts for me would be simple, yet potentially innovative, ideas: aggressively license out IP

This, historically, was a failure for them.  If anything, it led to brand dilution.

11 hours ago, AAA177 said:

perhaps taking on risk by not asking for advances or very low ones

Where do you see these advances being derived from?

11 hours ago, AAA177 said:

re-releasing the Atari systems including computers

The VCS was a failure.  There's no reason to believe that reissuing computers from 1979 and 1985 into today's market would do any better.

11 hours ago, AAA177 said:

selling to educational institutions Atari computer platforms (800, ST, etc.) with assembly languages to teach game programming as part of a game-designer/computer-science curriculum

For someone getting their first taste of programming, Python is probably the most accessible and available current language, and the Raspberry Pi is an excellent platform on which to learn it.  Assembly is great and all, but there's not a lot of call for it in the majority of modern game development.  In certain specific and/or specialised cases, yes, but it's not really something used extensively in today's context.

11 hours ago, AAA177 said:

and so on...all of which would rely on social media, especially Twitch and YouTube, to promote and propagate a new generation of hobbyists.

They tried that, sort of.  All it really did was demonstrate how inept Atari was (is?) at both communicating effectively and managing their social media presence.

11 hours ago, AAA177 said:

what if Atari launched new arcade/eatery establishments?

They don't have the capital or the experience.  They'd also be in competition with established giants in that space, such as Dave & Buster's.  It'd be an uphill battle that is difficult to see them being successful at.

11 hours ago, AAA177 said:

What if it either opened or partnered with gyms to offer arcades that were free to use - using all the IP, of course - as an added incentive to join?

Gyms are generally there for people to improve their level of fitness.  Playing video games doesn't really encourage that.  Mixed messaging at best.

11 hours ago, AAA177 said:

Be no different than Amazon offering original/licensed content to attract Prime shipping subscribers, or Apple offering Apple TV+ gratis on hardware sales.

Atari's name carries no weight in this day and age, and that is at the core of the company's problems.  There's some excellent IP there, but most of it means nothing to anyone under 45.  Over-reliance on the nostalgia market is a losing proposition when your target demographic is already dying off and there's nothing waiting in the wings to fill the vacuum that will leave.

11 hours ago, AAA177 said:

I have to go back to rounding-error price tag though...Microsoft wouldn't buy it, or Netflix, or Apple?

What is the gain for them by doing so?

11 hours ago, AAA177 said:

And the third, NFLX, is improving and honestly could see a lot of synergy with that IP and the fact that it does want to eventually get into streaming gaming (at least it seems that way); I would assume Atari 2600/5200/7800/800XL and so on titles would be technologically simple to stream.

Easy to stream, sure.  But why would anyone choose to spend money to stream something they can obtain for free?  And how many different ways to play Centipede are really necessary - or profitable?  All of this also comes back to the issue of mass-market appeal, and retro in general doesn't have that.  We've seen it play out this way over the course of the past three decades on multiple occasions, and there's no good reason to think that this time would be any different.

11 hours ago, AAA177 said:

But I do understand: once you breakout a spreadsheet, Atari is doomed. (Someone should send a message to Musk asking him to buy it, but then again, would he really do right by it? Probably not. Too bad Atari Age couldn't crowd-fund an acquisition offer...)

Crowdfunding is a good chunk of what got Atari into the position they're in now, and doesn't exactly inspire confidence.  It also makes for a terrible financial foundation to build and operate a company on.

 

Best thing to do is to wait for the almost-inevitable bankruptcy and acquire it at fire-sale prices.

[DavidD]

Dumb question time...

 

What is the current status of "Atari" as a company?

 

The current Atari is still the shambling corpse of Infogrames, right?  Tied to that, there is currently "American subsidiary" of Atari named Atari Inc... but it's still a full subsidiary, right?

 

I was mildly confused as to whether the current CEO who wants to purchase Atari is trying to purchase the entire company or just spin-off the US subsidiary.

[+x=usr(1536)]

3 hours ago, DavidD said:

The current Atari is still the shambling corpse of Infogrames, right?

Sort of, but anyone involved with Infogrames is long gone.  I want to say that 2003 was when the Infogrames name was put out to pasture completely, and with the multiple changes of ownership, bankruptcy, etc. between then and now there's pretty much no connection to Infogrames.

3 hours ago, DavidD said:

Tied to that, there is currently "American subsidiary" of Atari named Atari Inc... but it's still a full subsidiary, right?

More or less, yes.  Atari, SA is the mothership; everything else hangs off of that.  There have also been a bunch of spinoff companies (Atari VCS, LLC; Breakout 1976, LLC d/b/a ATARI Hotels; etc.) intended to minimise liability for Atari, SA that have been set up to cover various ventures.

3 hours ago, DavidD said:

I was mildly confused as to whether the current CEO who wants to purchase Atari is trying to purchase the entire company or just spin-off the US subsidiary.

As far as anyone can tell, it's the entire company.  IMHO, there isn't enough separation between the subsidiaries and the main company to really untie one from the other.

[MrMaddog]

I'm not doing the whole doom & gloom thing like everyone else, but there is definitely another handoff of the Atari brand happening.  The VCS (hardware), hotel chains and cryptocurrency were all desperate attempts to raise money for the struggling company but ended up dragging the entire company down.  Only profitable ventures were the games sold by Atari Interactive and game licencing (now including MyArcade), which was the only strengths that Atari should had focused on instead of chasing rainbows on social media.

 

I hope that Rosen does succeed in taking Atari back to being private or at least be able to jettison the Atari Interactive division from that sinking mothership and make the brand respectable for once.  There might even be a way to save the VCS as a platform for publishing not only their own IPs but also 3rd party retro-indy games.  Why not take AtariOS and make it a container that can run on any Linux based gaming PC including Steam Decks? And maybe even have it as a digital storefront on Windows...  Current VCS owners will still have their machines supported with new games but at least the VCS platform will be as viable as the other support gaming platforms.  And if they are looking for a new OEM partner to manufacture the VCSs then they could be improved models that use the recent but afforable Ryzen chipset to make them more available.  Plus not only will current VCS games run but they can handle Atari's Triple A titles like Atari 50 & AtariMania.  There's still work to be done to like fixing server issues when a new game comes out, but with enough work it can be done.

 

All Atari needs is a single leader with a goal to reach and not a large group of executives who are constantly distracted by the latest get-rich-quick-schemes.

 

[Smell Dawg]

Newer indie games are my favorite part of dinking around on the Evercade - and if Evercade can manage profitability, a more-focused Atari can, too.

[zzip]

23 minutes ago, MrMaddog said:

Why not take AtariOS and make it a container that can run on any Linux based gaming PC including Steam Decks? And maybe even have it as a digital storefront on Windows... 

But why, when most of the games available in the Atari store are available in Steam too?

 

24 minutes ago, MrMaddog said:

affordable Ryzen chipset to make them more available.  Plus not only will current VCS games run but they can handle Atari's Triple A titles like Atari 50 & AtariMania.

The VCS doesn't have issues playing these games,  the issues were related to large downloads hanging after awhile (fixed in OS update) and limited space on eMMC--  if I user bought a bunch of games and didn't expand their storage they might not be able to download Atari 50

 

However a cheap parts means being able to bring down the cost, and we see a flurry of new buyers ever time there's a price drop so it might be worth doing for that.

[Video]

Yeah, stocks wise, Atari is doing pretty miserable. I had hopes vcs would give a nudge I the right direction, and it appeared to be so, they had a system with modest interest, and even attached it to a real business...

 

...then covid hit. Game stops folded left and right, and this console perfect to weather the pandemic basically disappeared. No game stops mean no availability, and it wasn't at the time in households yet. Their stock slipped back to the sub ten cent range (it hit a dollar plus just as the pandemic hit.

 

I had no interest in "yet another set top android box, but had hoped it would do good enough to warrant a newer actual console. Its nice enough, powerful enough to run modern games, has access to a wide variety of classics, and satisfied our itch for " an Atari product" but now, I doubt there will be another, and despite what I've been told, I also have doubts to its longevity.

[+x=usr(1536)]

7 hours ago, Video said:

Yeah, stocks wise, Atari is doing pretty miserable. I had hopes vcs would give a nudge I the right direction, and it appeared to be so, they had a system with modest interest, and even attached it to a real business...

Unfortunately, the business it was attached to was run by incompetents.  I won't rehash everything that happened leading up to its release, but they completely bungled what could have been a moderately-successful product within its own niche market.

7 hours ago, Video said:

 

...then covid hit. Game stops folded left and right, and this console perfect to weather the pandemic basically disappeared. No game stops mean no availability, and it wasn't at the time in households yet. Their stock slipped back to the sub ten cent range (it hit a dollar plus just as the pandemic hit.

Which was a part of the problem, definitely.  But Atari, SA couldn't get their act together enough to finalise the hardware design until after COVID happened, and manufacturing followed by shipping to backers barely took place.  That any retailer (eventually) received units to put on shelves was something of a miracle in and of itself - but even when they did, there was virtually zero advertising to let people know they were available to purchase.  These were problems that were set in motion before the pandemic hit, and continued after it not as much because of COVID, but because the company was utterly mismanaged.

7 hours ago, Video said:

I had no interest in "yet another set top android box, but had hoped it would do good enough to warrant a newer actual console. Its nice enough, powerful enough to run modern games, has access to a wide variety of classics, and satisfied our itch for " an Atari product" but now, I doubt there will be another, and despite what I've been told, I also have doubts to its longevity.

See, that's the thing: despite my pessimism regarding the VCS, I would actually like to see a new hardware platform from Atari.  However, my pessimism comes from not only watching Atari fail at this, but many, many other retro consoles before it.

 

My belief that there is no money in retro remains.  The Flashback consoles are a good example of this: they've been repackaging the same titles for how many revisions now?  Every Christmas, people go out and buy one for that person in their life with the weird love of old computers because they don't know what else to get them.  There's also a sales spike from enthusiasts when a new unit is released, but it trails off pretty quickly.  Even downloadable content follows this pattern.  After that, the revenue stream is a trickle at best.  It's basically a seasonal industry with two seasons: release day and Christmas.

 

The way that people purchase and play video games has changed significantly over the course of the last 45 years, as has the competitive landscape.  Seeking to continue sales and marketing methods from that time will not work in today's environment, and the dominant players are so entrenched that even Google couldn't keep a foot in the door of that market (N.B.: I'll admit that Stadia had problems of its own unrelated to the market, but Google had - and still has - the resources to address and rectify those issues.  They didn't, choosing instead to let it die).  If a company operating at that scale can't do it, there's little hope for even niche players such as Atari.

[MrMaddog]

23 hours ago, zzip said:

But why, when most of the games available in the Atari store are available in Steam too?

 

That's a very good point...unless someone has a Steam Deck or a Linux only gaming PC, and you don't those passionate people tell them to "just use Windows".

 

Besides VCS owners could run AtariOS right from the "PC Mode" distro and even moved it onto other computers, so why not just make it legit?  It's more money & users for Atari so how could it hurt?

 

And if some PC gamers refuse to use anything other than Steam then Atari has them covered there too.

Edited January 7, 2023 by MrMaddog
I did check Atari's Steam page, only the Recharged games have native Linux versions, not the rest like Atari 50 which is still Windows only.

[mimo]

Is there another bunch-o-crap heading our way from nottreallyAtari?

https://retrododo.com/atari-my-arcade/

[jhd]

On 1/5/2023 at 11:16 PM, x=usr(1536) said:

Atari's name carries no weight in this day and age, and that is at the core of the company's problems.  There's some excellent IP there, but most of it means nothing to anyone under 45.  Over-reliance on the nostalgia market is a losing proposition when your target demographic is already dying off and there's nothing waiting in the wings to fill the vacuum that will leave.

 

This! I wonder how much value actually remains in Atari's IP back-catalogue. All of the recognizable games have been released and re-released in various compilations over the past several years, so anybody who cares already has them in multiple formats. This has got to have a negative effect on the value. 

 

Personally, I own a Flashback and compilations for the PC and PS 2. I used to have an Android version of the Atari Greatest Hits (whatever it was called), but I upgraded my phone and it is no longer available to purchase.  Stella does not count, of course.     

 

A few titles (e.g. Centipede, Asteroids) will always retain some value, but who is willing to pay an on-trivial for primitive sports games (e.g. Homerun) educational titles (e.g. Basic Math). As others have correctly noted, most of the flagship titles (e.g. Pac-Man, Dig Dug, Space Invaders) were all licensed from other companies and so they are not Atari property. 

[+x=usr(1536)]

2 hours ago, mimo said:

Is there another bunch-o-crap heading our way from nottreallyAtari?

https://retrododo.com/atari-my-arcade/

"Gamestation Plus".

 

Really?  Absolutely had to ride the coattails of the PlayStation name?  I thought Chesnais was gone.

[Mockduck]

1 hour ago, x=usr(1536) said:

"Gamestation Plus".

 

Really?  Absolutely had to ride the coattails of the PlayStation name?  I thought Chesnais was gone.

That's the name MyArcade is using for all of their Gamestations, not just the Atari one. Has nothing to do with Atari specifically re: the name of it. 

[+x=usr(1536)]

3 hours ago, Mockduck said:

That's the name MyArcade is using for all of their Gamestations, not just the Atari one. Has nothing to do with Atari specifically re: the name of it. 

That's all well and good, but it doesn't change the fact that it's still riding Sony's coattails.  If anything, it makes it worse since it's more than just the one product that's doing it.

[+Stephen]

18 minutes ago, x=usr(1536) said:

That's all well and good, but it doesn't change the fact that it's still riding Sony's coattails.  If anything, it makes it worse since it's more than just the one product that's doing it.

If you're gonna steal, steal from the best right? 

[Lord Mushroom]

7 hours ago, jhd said:

I wonder how much value actually remains in Atari's IP back-catalogue. All of the recognizable games have been released and re-released in various compilations over the past several years, so anybody who cares already has them in multiple formats. This has got to have a negative effect on the value.

According to Atari, their intangible assets (which include IP, crypto-assets and other stuff) are valued at 8.4 million euro. But I think Wade Rosen is pulling a reverse Frederic Chesnais, and is undervaluing them.

[Lord Mushroom]

8 hours ago, mimo said:

Is there another bunch-o-crap heading our way from nottreallyAtari?

https://retrododo.com/atari-my-arcade/

It is hard to say before we know what games they have and what quality the devices have. But if I had to guess, I would say that they look like something enough people would want for it to be profitable. Especially the Gamestation should do well with a decent library of games. They are not going to break any sales records of course, though.

[+x=usr(1536)]

5 hours ago, Stephen said:

If you're gonna steal, steal from the best right? 

For fans of Cold War espionage, that phrase was also one of the best easter eggs ever left in a computer.