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The Future of Atari - Part Two

David Gardner and Phil Harrison on rebuilding the business, terminating projects and enabling creativity

Last week saw part one of the Atari interview with David Gardner and Phil Harrison, talking about the company's London Studio and the distribution deal with Namco Bandai.

Here in the concluding part they discuss their progress in rebuilding the Atari business, the projects that were terminated as a result, and the importance of enabling creativity within the company.

Q: We're seeing a lot of publishers act to trim and refocus their business, undoubtedly in part due to being a listed company. Have you felt any pressure on the part of stockholders?

David Gardner: I would say that Infogrames in general has been on a mission in general to really rebuild itself, make itself a much more efficient company anyway. We started this process when I arrived and it's been an emerging process.

We've been working quickly, we've announced some specific cost savings - we've saved EUR 16 million this year. Some of that has been by reducing our employment by 100 people, some of it has been by a more efficient method of commissioning games - Phil terminated a lot of projects that we didn't feel were profitable, and we're setting much higher standards for the profitability of our games as well, which I think is something that should have been done a long time ago.

I think the worry - and my worry frankly - is will the broader catalogue of products sell well when consumers are careful about spending their money? Because I think now we're seeing maybe the top two games, and maybe the number three game sell well so far, but we're already hearing stories about games below that not selling as well as last year.

That will be a challenge for the industry - the traditional parts of the industry. I think when you're still a small company like us, we still have a lot of upside growth because we're not trying to grow a USD 3 billion business by 20 per cent. I think that it just means that we have to be careful about our investments when they happen, and that's really around the products - we've already had to start anyway, so we're well ahead of the economic situation on that front.

Q: So you don't feel under added stockholder pressure at this point?

David Gardner: We're feeling the pressure, but that's not from an economic situation that's happened and has been talked about for the last couple of months. We felt that pressure when we arrived, because Atari over its history had been delaying urgent things that needed improving in the company, so we've already started that.

We're making good progress on that, and as you can see our sales are well up [revenue is projected to rise by 12-18 per cent for this fiscal year] and our spending is down. We're trying to get the business profitable for next year.

Q: How many projects were terminated in the refocus?

Phil Harrison: Some were cancelled because the quality wasn't there, or the economic forecast wasn't going to allow us to be profitable. Some were on the plan, but not yet started, so we stopped them because they weren't going to fit our strategy or business model, and some were redirected to new business models.

So it's a little hard to answer in total, but those were the three basic conditions that were applied.

Q: You mentioned in the Q&A session that a lot of the stories written about Atari have been business stories, and not really positive ones - do you feel that since you and Phil have come in that there's been a bit of a grace period, that people are giving you room to see what you'll do?

Phil Harrison: People have been great, and it's wonderful that people are super-excited that there's a change, that change is an opportunity, and that the brand is incredibly loved. I put all the emails together, the love emails about the brand, which is wonderful.

People are bringing business opportunities to us because they're saying that they like our vision, they like what Phil and I have been saying, they love the brand - and everyone wants to help the company, which is really great. Definitely better than being upside-down the other way...

Q: As a company you're building up a compelling team leadership, and there's a buzz around that - how satisfying is it to get these people on board? They're clearly buying into your vision.

Phil Harrison: It's very kind of you to say, and I'm pleased to hear there is a buzz. We wanted to set out our stall and say that we wanted to hire very smart people who are not only going to share our vision, but amplify it and take it further than David and I ever could do on our own. We're just the ones giving them the shove, if you will.

Q: You're acting as enablers?

Phil Harrison: Enabling, exactly. And so we're heavily recruiting at the moment, and hopefully that will yield some high quality individuals who will come and join the team, both in the UK, but also in France, New York and California.

Q: You've spoken to the packaged goods from the company at this event - but not about the online portal plans. Is that because you wanted to send out a specific message to retailers, or have you just got nothing to add at this point?

David Gardner: I think for the audience that was assembled here, it was really about products to retail, and I think what people need to understand is that we will have other products that won't be at retail. But that should be okay - I think that just like we're not going to make a game for everyone to buy, we're going to make profitable games, we're going to make games for different groups, we'll also have different relationships with customers.

Sometimes that's through retail, sometimes not, and what we're trying to say to retail is that we also think there are opportunities like Eve, like Sam & Max, others that will come, that retailers are not involved in - and we can help bring that to retail.

So we don want to be a good partner, but it is going to be give and take. Sometimes there's going to be stuff that doesn't make sense for retail, and other times there's going to be sense in bringing it retail that hasn't been seen yet. So we're trying to actively pursue partners to do that.

But this wasn't our online coming out party - that day will come.

Q: Any idea on what sort of timescale on when that will be?

David Gardner: Not yet.

Q: Is that side of things the part you want to have in place by the end of the five-year vision?

David Gardner: In five years, obviously we can't wait that long to make progress on that, but I think if we were having this interview in five years we'd be talking about 70 per cent of online products and 30 per cent of the kind of stuff we talked about here.

It might not even be in the same interview - there'd maybe be a Districo presentation just like Namco Bandai was here presenting their products, we'd be doing the same thing, presenting our products that would be going through the retail channel.

And the stuff that wasn't for retail would be at another venue, and handled in another way.

David Gardner is CEO and Phil Harrison is president of Infogrames/Atari. Interview by Phil Elliott.

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