If there is a Rasputin of the video game world, it’s Atari.
Like the Russian mystic who, according to legend, survived numerous attempts on his life, the long-time video game publisher keeps finding ways to survive after the video game industry has left it for dead.
The latest round of doubt about Atari’s longevity began a few weeks ago, when Atari sold the European publishing rights to "Ghostbusters: The Video Game" — the company’s biggest short-term release — to Sony. It intensified when word emerged that Atari had decided not to exhibit any of its games at the E3, the industry’s largest trade show, next month.
Ironically, Atari has a handful of upcoming titles that carry some hit potential. "Ghostbusters," set for release June 16, features a story written by Dan Aykroyd and Harold Ramis and voice work by key members of the film’s cast, including Bill Murray. And "Star Trek Online," currently set to launch this holiday season or early 2010, could piggyback off of renewed interest in the franchise to attract a significant number of players.
But the company’s purchase of developer Cryptic Studios late last year left many observers scratching their head. While the deal got Atari both "Star Trek Online" and the more imminent "Champions Online" (due in September), the price tag of $26.7 million took a big bite from the company’s coffers.
Beyond the price tag, buying a development studio that specialized in massively multiplayer games seemed to go against the business plan Atari had put forth: To become a content-led online game company, focusing largely on mass market, casual games.
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The widespread assumption among competitors and analysts was that meant free to play games, something Atari never confirmed. Under any other publisher, both of Cryptic’s titles would surely carry a monthly subscription fee, but whether Atari will follow that path is unclear.
The Atari of today is a far cry from the Atari that helped launch the video game industry. The name has been shuffled around to several companies who have used it to tap into a sense of nostalgia among both the core gamer and general public. It is currently owned by the French company Infogrames.
About a year ago, the company’s star was on the rise. Phil Harrison, a key Sony PlayStation executive, came on board as president of Infogrames. And David Gardner, who ran Electronic Arts' Worldwide Studios, signed on as CEO. Both men are kingpins in the industry and goodwill (and expectations) was suddenly high. The honeymoon, though, has ended.
While many in the industry have begun another death watch for Atari, it’s worth noting that while cash is tight, the company is still paying its development partners on time. And, if the "Ghostbusters" game proves to be a success, the cash infusion could buy the company more time to realign itself.
To keep the cash flowing until then, the company in March sold its majority share of a sales, marketing and retail distribution business to Namco Bandai.
Atari, when queried about the speculation about their sustainability, declined to comment.
Because the company is no longer publicly traded, analysts do not follow Atari on a day-to-day basis. Michael Pachter of Wedbush Morgan Securities has kept an eye on the publisher, though — and was one of the last analysts to follow Atari when it was traded on Nasdaq.
He’s less pessimistic about Atari than many developers are. The company is not hemorrhaging cash like it used to, he says, and the sale of numerous assets has made it a more streamlined organization.
"I think they’re quite close [to break even]," he says. "That said, I doubt they’re going to be immensely profitable this year."
Regarding the death watch, Pachter points to the Cryptic purchase as an argument against the rumors.
"They wouldn’t have spent that much money only to shut it all down," he says.