Atari: From Irrelevance to Resurgence?

The sorry state of Atari under previous management

The Atari brand has had a tumultuous journey in recent decades, with multiple incarnations and a variety of questionable business ventures. Despite its iconic status in the early days of the games industry, Atari has struggled to maintain relevance and profitability.

The most recent management team, led by CEO Frederic Chesnais, attempted to move Atari beyond its legacy as a retro gaming brand. However, their efforts resulted in a string of ill-advised ventures, including forays into gambling, blockchain, and even the LGBT industry. These misguided endeavors led to a tarnished reputation and financial losses.

Furthermore, Atari faced legal disputes with business partners, such as a lawsuit filed by Frontier Developments over unpaid royalties and a legal battle with Tin Giant over breach of contract. These issues only added to Atari’s troubles and further dampened its prospects.

A change in leadership and a shift in strategy

In March 2020, Wade Rosen, the current CEO of Atari, acquired a significant stake in the company and was named chairman of the board. Subsequently, Rosen took over as CEO, replacing Chesnais in April 2021. This change in leadership marked a turning point for Atari.

Rosen wasted no time in reevaluating Atari’s gaming strategy. The company shifted its focus away from free-to-play and mobile games, opting instead to concentrate on premium PC and console titles. Atari also divested from its ventures in gambling and blockchain, recognizing the lack of clarity and industry adoption in those fields.

Furthermore, Rosen made a series of strategic acquisitions that aligned with Atari’s core competencies and nostalgic appeal. The company acquired Nightdive Studios, known for its retro game remasters, as well as Digital Eclipse, a specialist in retro game compilations. These acquisitions brought valuable expertise and IP into the Atari fold.

A return to Atari’s roots

Under Rosen’s leadership, Atari embraced its retro gaming heritage and doubled down on catering to the growing market for nostalgic gaming experiences. The company released modern remakes of its classic games, such as Asteroids, Centipede, and Yars’ Revenge, under the Recharged series.

In addition to game development, Atari also made strategic moves in the retro hardware and IP space. The company invested in the Polymega retro gaming system and acquired Atari-themed hotels to capitalize on the nostalgia-driven consumer demand.

Moreover, Atari expanded its IP portfolio by acquiring rights to classic games from Stern, Accolade, GTI, and other publishers. These acquisitions positioned Atari as a key player in the retro gaming market and allowed the company to leverage its rich gaming history.

A cautious approach to blockchain and Web3

While Atari initially dabbled in the blockchain and Web3 space, the company has taken a more cautious approach under Rosen’s leadership. Recognizing the lack of clarity and industry adoption, Atari has scaled back its involvement in these technologies.

Rosen openly acknowledged the challenges and uncertainties surrounding Web3 and mentioned that Atari is reducing its active engagement in the blockchain sector. This approach aligns with the company’s renewed focus on its core competencies and the retro gaming market.

The potential risks and rewards

Despite Atari’s promising strategic moves under Rosen, the company still faces risks and uncertainties. Financial losses persisted under his leadership, and the success of Atari’s new direction remains to be seen.

However, if Atari can successfully execute its turnaround strategy, the brand stands to gain significant value. By repositioning itself as a prominent player in the retro gaming market, Atari could leverage its rich history and secure a loyal fanbase.

While there are potential worst-case scenarios, such as the failure of key acquisitions or the loss of community-driven platforms like AtariAge, the overall trajectory seems more positive for the Atari brand under Rosen’s leadership.

The industry’s propensity for risky expansion

Atari’s previous missteps were not unique in an industry prone to taking big swings and diversifying beyond core competencies. Many companies have faced similar challenges and setbacks when venturing into new business areas.

Unity, for example, experienced layoffs after expanding into non-core businesses, demonstrating the risks associated with straying too far from one’s strengths. Other companies, such as Amazon Games and Lifestyle brand 100 Thieves, also had to reassess their business ventures and make tough decisions to refocus on their core offerings.

However, Atari’s recent moves differentiate it from these cautionary tales. The company is leveraging its retro appeal and targeting a neglected market segment, rather than diluting its brand or chasing uncertain opportunities.

A glimmer of hope for the Atari brand

For the first time in over a decade, Atari seems to be prioritizing the value-add to its brand over extracting value from it. By embracing its retro gaming heritage, making strategic acquisitions, and refocusing on core competencies, Atari is carving out a unique position in the gaming market.

While the outcome is uncertain, Atari’s current strategy appears to resonate with nostalgic gamers and has the potential to revitalize the brand’s relevance. The journey from irrelevance to resurgence will not be easy, but Atari’s recent moves offer a glimmer of hope for this iconic gaming brand.

Other highlights from the week

• Embracer’s restructuring resulted in layoffs for 50 Fishlabs employees.
• UK physical game sales during Black Friday saw a 7% increase from the previous year, according to GfK.
• According to Niko Partners’ report, the East Asia PC and mobile games market is projected to grow at a compound annual rate of 0.6% from 2022 to 2027.
• An ESA survey found that 22% of kids expressed a desire for physical games for Christmas, while subscriptions, consoles, accessories, and in-game currency were also popular choices.

While the gaming industry as a whole is expected to grow slightly this year, with strong consumer spending, the prevalence of layoffs remains concerning.

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