Generation: Gamerz Atari to End Production, Focus on Publishing

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Starting soon the Atari logo will be attached to a wide variety of games, but none of those will have been designed and developed in house according to a recent press release. The company will re-focus its operations on publishing and distribution in North America, completing its withdrawal from the production business.

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Atari Logo - VerticalWe all knew that Atari was restructuring to become profitable but some of us, myself included, had no idea the lengths they would go to in order to do that. 

Restructuring Initiative
Atari has determined to focus its resources on the publishing and distribution segments of the rapidly growing video game business. The Company's operations will involve title acquisition, sales and marketing, and physical distribution of products from IESA (Infogrames Entertainment S.A.), its 51% shareholder, and other selected partners.

This is good news/bad news I think. Atari itself has made some fantastic games in the past and not just been a publisher. Now any Atari licenses will have to be outsourced to a production studio. Sure this could breathe some new life into some of their titles but it could also erase the history of those titles as well.

Atari has agreed in principle with IESA to terminate its Production Services Agreement in the near future. As a result, Atari will no longer provide production and quality assurances services to IESA. Rather, Atari plans to transfer certain employees and contract other staff on a project basis for a limited period of time.

As part of the company restructuring, Atari, Inc. will reduce its current workforce in order to re-align the Company's cost structure with its on-going business base.

Test Drive Unlimited SplashScreen On top of that Atari sold off the Test Drive franchise license to IESA for a $5 million cash injection. Test Drive Unlimited, an award-winning product in 2006, together with the entire Test Drive franchise has been licensed to IESA under a 6-year agreement that provides for a $5 million advance royalty. The agreement allows IESA, whose Eden Studios originally developed Test Drive Unlimited for Atari, to develop and market at least two new releases of the franchise during the life of the license. It is anticipated that the deal, signed on Nov. 8, 2007, will assure the continued vitality of the franchise and will strengthen the relationship between Atari and its parent company while providing an important element in the on-going financial restructuring of Atari.

Honestly if IESA owns 51% of the company you really think "Atari" could make any of these decisions or IESA just made them?

    Curtis G. Solsvig III, Atari's Chief Restructuring Officer (appointed by IESA I might add), commented "Atari continues to take important steps to stream-line operations and establish a winning business plan. We expect that the actions we are undertaking today will position us for the future as a preferred business and distribution partner."

Well so much for my put people who love games and respect the Atari brand in place with a big enough budget to make a new hit plan I had proposed. It looks more like a strip out everything that is redundant within the IESA group and just make Atari a North American publishing and distributing branch of the company. It's not altogether bad. It will hopefully prevent Atari from being destroyed completely and having the pieces sold off to the highest bidders, though at this point I'm wondering if Atari actually owns any licenses anymore. But with the $5 mil from Test Drive and the recent $10mil line of credit (from a financing group that owns 20% of IESA) they have enough cash to make things happen. Now they need to do just that, so squeeze your thumbs, cross your fingers and hope for the best for Atari. 

In : PC

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