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Finance

Atari drops Cryptic Studios

Wed 18 May 2011 7:47am GMT / 3:47am EDT / 12:47am PDT
FinanceDevelopment

Star Trek Online developer listed as "discontinued operations"

Atari

Atari group is a global creator, producer and publisher of interactive entertainment for interactive...

atari.com

Publisher Atari is to divest itself of its interests in Star Trek Online developer Cryptic studio, with the developer listed as "discontinued operations" in Atari's latest financial results.

Support for Star Trek Online and Champions Online will continue as normal, as well as development on Cryptic's new Dungeons & Dragons Neverwinter title.

"In line with the previously stated strategy of fewer but more profitable releases and further expansion into casual online and mobile games, the Company has determined that external development creates more flexibility in the changing marketplace," stated Atari in its full year financial results.

The divesture process is currently "underway", with Atari assumed to be seeking a buyer for the Californian developer.

Cryptic Studios generated €15.9 million ($22.7m) in revenues over the last 12 months, but made a loss €5.3 million ($7.5m). However, this represents an improvement on the €12.6 million ($17.9m) loss of the previous year.

The developer was acquired by Atari in 2008, following work on City Of Heroes for Korean publisher NCsoft. At the time Atari made an initial $26.7 million cash payment for the company, with a maximum earn-out of around $27.5 million, to be made up of cash and Infogrames/Atari shares.

6 Comments

Terence Gage Freelance writer

1,288 120 0.1
I feel bad for Cryptic - especially when Atari, as I recall, won a bidding war for the company, and were being all bullish about having such a quality MMO developer on board, and the two companies' future together and so on. Not to mention that Star Trek and Champions Online's revenues have both rocketed since becoming free-to-play.

Seems such a waste of a good developer who have been making money for their parent company.

Posted:3 years ago

#1
Having worked closely (prior to Atari) as the marketing and PR agency for Cryptic Studios on Champions and STO I can say this a talented group of developers. The Cryptic team will be fine, publishers need strong developers who can conceive, develop, and successfully launch games, something Cryptic has proven time and time again they can do.

Posted:3 years ago

#2

Jeffrey Kesselman CTO, Nphos

112 0 0.0
The fact of the matter is that Cryptic has underperformed. City of Heroes was ground breaking in its day in subject matter and engine, but content lacked and what little story there was had serious fascistic overtones.

Champions Online disappointed Champions fans by not using the Hero System rules to any great extent, but simply putting champions names on what was clearly already a game in deep production.

Star trek similarly was simply a dump of content into a pre-existing and inappropriate game engine and those fans were also disappointed.

Cryptic has made a lot of bad calls, and they are reaping the results. In this industry you perform or you are done, and the hail-mary play of going F2P to try to increase revenue almost never works. The average return per user on a subscription game is 10 to 30 times the return on an F2P game.

And trust me, if cryptic was a net positive cash flow on the book,s they wouldn't have cut them.

Edited 5 times. Last edit by Jeffrey Kesselman on 18th May 2011 6:09pm

Posted:3 years ago

#3

Terence Gage Freelance writer

1,288 120 0.1
Jeffrey - "In this industry you perform or you are done."

If only it were that straightforward. Did you see Sega's financial results last week which said Iron Man 2: The Videogame sold 1.5 million copies, and Vanquish 830,000 copies?

Sometimes performing well simply isn't enough, as in the case of Clover Studios, Bizarre Creations, Ion Storm, and so on. These days it seems like big games only succeed with a triple-A marketing budget, let alone anything else.

Posted:3 years ago

#4

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Terrence,

Granted, but that is a direct fallout of how much money games are consuming to get finished.

When I was privvy to such things, returns on a SKU after the retail chain was about $5.00. Using that figure, it means that IM2 brought in about 7.5 million dollars. That could EASILY be a loss against today's game budgets, which means it did not perform. Vanquish, though not burdened with the license costs of IM2 (which Im sure were hefty) brought back even less.

The amount of money we are spending to make games is a BIG industry problem. It effects everything, makes it hard to innovate and take chances, and puts incredibly high pressures on teams by raising the bar of acceptable performance so high that only blockbusters can beat it.

Edit: Btw I have been unable to tell by research if that is 1.5 million shipped into the supply chain, or 1.5 million sold through. There is a BIG difference. The chain can return unsold product. Its not a real sale until it hits a customer's hand. Age of Conan shipped out 700,000 units but ended up selling far less.

Slow sales on a highly anticipated product have actually hurt game companies by having eventual returns that exceed their expected hold back by a large margin, leading to dead inventory in their warehouse that has to be written off as a loss. Part of what killed TSR in the RPG industry was not understanding that the same mechanism exists in book retail.

Edited 5 times. Last edit by Jeffrey Kesselman on 18th May 2011 7:18pm

Posted:3 years ago

#5

Julian Cram Project Manager, Appster

50 28 0.6
2-3 years ago, MMOs were "the big money maker". Every publisher and their dog jumped on the bandwagon, hoping to make the next WoW killer and rake in an easy $15 a month from a few million players

Now, apart from WoW, who's making big money with MMOs? Sure, some are managing OK, but it's not the gravy train publishers once thought. Now that it has gone sour, they're dropping the MMO studios like flies.

And this will be the fate of most social/casual developers in 2-3 years time.

Posted:3 years ago

#6

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