A History of Atari

The current state of the Atari name and properties leads many people into a tangled web of confusion. It's not surprising, considering the amount of times the company has changed hands, and the multiple entities that use the name now.

Here, writer Martin Goldberg looks at the journey the brand and properties have undertaken, in light of yesterday's announcement that Phil Harrison has now joined David Gardner at the re-energised brand.

The original Atari Inc was founded in 1972 by Nolan Bushnell and Ted Dabney as an arcade engineering firm, dealing in pinball machines and the primordial arcade videogame market. After approaching the major arcade machine companies of the time to manufacture and distribute their new video arcade game Pong, they met resistance because of a perceived infancy and lack of viability in the market. Soon after deciding to manufacture and distribute the games on their own, the gamble paid off for Bushnell and Dabney, and the video arcade craze had started with Atari Inc at its forefront.

By 1975, Atari Inc entered the consumer electronics market by bringing Pong into the home, and in doing so it caught the eye of young media powerhouse, Warner Communications. By 1976 the two companies struck a deal, and Warner Communications purchased Atari Inc outright, soon transforming the engineering firm into the first key force in the early videogame industry.

Establishing itself with the Atari 2600, the company soon began expanding to home computers and setting up research into other consumer electronics-based industries. By 1982, Atari Inc accounted for over USD 2 billion in revenues, and 65 per cent of Warner's profit. Still pioneering the videogame business, Warner began wisely leveraging its other corporate assets to support Atari's growth, including lucrative partnerships with its DC Comics and Warner Bros. studios subsidiaries.

However, by 1983 the market was showing signs of problems, which climaxed in 1984. Atari Inc, being a large percentage of the market, was hit the hardest. Facing SEC problems and a large portion of their income gone, Warner began breaking up Atari Inc, selling its Consumer division to ex-Commodore founder Jack Tramiel. Despite initially retaining the arcade division, Warner eventually sold that as well, to Namco.

Combining the Atari Consumer properties with his own company, Tramiel Technology, he formed Atari Corporation in 1984. Initially concentrating on selling off the large back stock of Atari products and slashing unwanted projects, products and staff, by 1985 he entered head-on into the emerging GUI-based personal computer industry with the Atari ST - multiple successions of which remained the company's main product through the early nineties.

Tramiel also dabbled in videogames along the way by later releasing the Atari Inc-produced Atari 7800 as well as the externally-produced Atari Lynx - the first colour handheld game system in the industry.

But by 1993 it was clear that Atari Corp was losing more and more market share to the DOS-based PC compatibles and the emerging Wintel format thanks to the release of Windows 3.1 the previous year. Shifting all its efforts to what ultimately became its last product, the Atari Jaguar, they were soon stung by the release of the world-conquering Sony PlayStation in 1994.

In 1996, the last vestiges of what is known in the industry as the "real" Atari began winding down. After coming out of retirement to run Atari Corp following his son's heart attack, Jack Tramiel decided to close things down and take advantage of a merger offer with JTS.

Atari Corp had recently received a financial windfall from a number of settlements, which made such a deal very attractive to JTS, an up-and-coming drive manufacturer, in a move that would have allowed Tramiel to dump the floundering computer and videogame company.

Staying in the videogame market with its failed Jaguar or even re-entering the computer market would have squandered the money in a field now being dominated by Sony, Nintendo and SEGA, as well as the Wintel computer market dominated by Microsoft.

So, after the shareholders approved the process, Atari Corp reverse-merged with JTS becoming a division within the new JTS Corp. During this period, Atari consisted of one desk at JTS, doing minor support for the Jaguar, trying to move back stock and updating Atari's first website.

JTS started selling off some Atari patents, but within another year it became clear that one of the key tenets behind the of approval of the merger by the stock-holders was not being followed - continuing to release Atari-branded products.

Fearing lawsuits and facing its own financial problems due to its lack of success in the drive market, JTS sold off the Atari properties to Hasbro, which proceeded to fold the Atari properties under its Hasbro Interactive division, naming the holding company Atari Interactive.

Transforming the look of the logo, Hasbro proceeded to release its 3D-based retro-remake products under the Atari label, until they took a hit when the dot-com bubble burst in 2000. The Atari name and properties were then sold to French videogames publisher Infogrames via its purchase of the entire Hasbro Interactive division, renaming it Infogrames Interactive in the process.

Infogrames, and its founder Bruno Bonnell, had been on a buying spree in the late nineties and into the next decade, buying up a multitude of videogame companies and their properties. The most important of these deals was its purchase of a controlling interest in American publisher GT Interactive.

Soon having the company renamed Infogrames North America, Infogrames began using it for all its North American development and publishing operations. With the purchase of the US-based Hasbro Interactive, Bonnell decided to focus on the Atari name and properties.

The plan was to use the name to associate his business with the former glory that many older gamers remembered fondly while trying to build the name up with younger gamers who were more familiar with Nintendo and Sony.

He proceeded to rebrand Infogrames Interactive to Atari Interactive, then rename all of his worldwide subsidiaries to Atari spin-offs, such as "Atari Europe". Infogrames NA, the former GT Interactive, was forced to lease the name and pay royalties on any Atari properties it used. It subsequently renamed itself Atari Inc, something of an ill omen, as history began to repeat itself.

As with the original Atari Inc twenty years previously, the company began a downward spiral in earnings that affected parent Infogrames as well. Bringing in former Sony Music management, unfamiliar with the videogame industry, did not help.

Infogrames sold off much of its acquired properties during the mid-2000s, and even struck a credit agreement with financial juggernaut BlueBay, who wound up taking controlling interest of Infogrames. With a succession in management personnel that even included Bonnell himself for a time before he was forced out of Infogrames, the problems continued to mount with Atari Inc.

When BlueBay installed Patrick Leleu on the Infogrames board, it immediately began pushing for Atari Inc to become a publishing-only firm. BlueBay's stranglehold was further strengthened when they forced Atari Inc's last CEO, David Pearce, to leave as well as dismissing Atari Inc's board and installing its own last October.

It proceeded to 'lend' money to Atari Inc with terms that would have been impossible to pay back given their financial situation, and consequently Atari Inc has been in default and should find out soon what its future will hold.

Atari Inc has also been in notice for delisting from NASDAQ, the deadline of which also falls shortly. A large number of staff exits from the firm have taken place in the last six months and it's unclear who still remains in the ghost town that was once a busy mass of cubicles.

Meanwhile Infogrames has been trying to insulate itself income-wise from Atari Inc and moved to start up its own publishing and development operations again. It 'unlicensed' the Atari.com website back to itself, as well as taking over some of Atari Inc's original development projects from the past year.

Interestingly, Infogrames has continued to refer to itself as "Atari" in interviews, when it really means its direct divisions like Atari Interactive and Atari Europe rather than Atari Inc, a matter which has often caused confusion.

Most recently Patrick Leleu was forced to resign as Infogrames CEO, and the respected former Electronic Arts executive David Gardner was been brought in to replace him. By the end of last month GamesIndustry.biz first reported the news that key industry figure Phil Harrison was leaving Sony to join up with Gardner at Infogrames.

This was followed by an announcement of the company's planned move to an online gaming model, which although hailed by many as something new, in reality was a similar idea to one proposed when Bonnell was at the helm.

While momentum is gathering with Infogrames/Atari Europe, the chances of Atari Inc's survival in the US are slim. It has no way to bring in any sizeable income, and as a distributor cannot compete with companies with more established channels, such as Mecca and Alliance.

The default on its loan from BlueBay and its impending delisting also form part of a very steep mountain, especially when Atari Inc already reversed a stock split last year - a move Infogrames recently set in motion itself.

Ultimately, the modern-day "Tale of Two Ataris" is unlikely to yield a happy ending for both organisations, but while Atari Inc founders under a debt mountain with no obvious way out, Infogrames/Atari looks on rather more solid ground.

Martin Goldberg is a freelance writer and programmer - in addition to being a long-time staff member at ClassicGaming.Com, he also co-organises the Midwest Gaming Classic, one of the largest consumer-based industry shows in the US.