Atari Announces Layoffs, Looks to Lighten Load

Following Atari's troubled financial situation announced last week, the company is looking to sell its development studios, presumably to focus on publishing. These days, Atari itself is essentially the North American label for French corporation Infogrames. The layoffs will apply to the North American operation. CNN/Money's Chris Morris reports on what Wedbush Morgan analyst Michael Pachter is saying about the decision, and the gist of it is that it's not a good one. If anything, Pachter says, the company should be keeping its North American development operations and trimming the marketing and publishing teams in France.
"I think [selling studios] is not the right move," said Michael Pachter, an analyst with Wedbush Morgan Securities. "The first thing the company should do is shut down everything in Europe. [Atari CEO] Bruno (Bonnell) is out to lunch. ... The guys in the U.S. make games. The guys in Europe just sell them."
Bonnell did not indicate whether Atari would be willing to sell the rights to some of its more popular games. The "Driver" franchise, for instance, still has a loyal following (despite a truly awful last installment of the game). It might be a moot question, though, as Atari would be unlikely to find any serious bidders.
"Nobody comes in to bid on that," said Pachter. "They wait for the body to stop twitching, then swoop down and pick the meat off the carcass."

If Atari does in fact hold on to franchises such as Driver, one wonders how easily they would be able to sell studios such as Reflections, which is responsible for the Driver series. Selling those franchises, though, diminishes what little leverage Atari has left at this point. While the Atari name still carries huge significance in gaming history and is well known among gamers and non-gamers alike, it simply does not have a current day reputation among people who buy games.

CEO Bruno Bonnell points out that Atari still has games in development at its various studios, and will not be selling those studios until current projects have seen completion. What exactly the company plans to do after it does sell those studios is anybody's guess at this point. It hasn't had the best track record managing studios; Shiny, the studio most famous for well-loved games such as Earthworm Jim and MDK, hasn't done so well with its The Matrix licensed games under Atari. The first two entries in Reflections' Driver series were well-received, but Driver 3 (aka Driv3r), developed after Atari acquired Reflections parent GT Interactive, received a legendary critical drubbing.

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  • reply
    February 17, 2006 2:22 PM

    Atari should never have sold Humongous Entertainment to their parent company, Infogrames. There is a large market for children's games, and THQ has done pretty well pumping out children franchised GBA games. While some of these moves are going in the right direction, it's just not enough. Consumers are wary of Atari, and they have good reason to. Most of Atari's games are buggy and incomplete, and gamers are realizing this.

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      February 17, 2006 3:26 PM

      wait, I thought Atari was just Infogrames renamed?

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        February 17, 2006 3:39 PM

        It is. Maybe he means someone else.

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        February 17, 2006 3:40 PM

        No, that was never the case. Infogrames bought Hasbro Electronic Entertainment (which was formed formed from GT Interactive and Microprose.) Infogrames set it up as its own international company called Atari. (a company that it owned 60% of) While it popular to say this Atari isn't "Atari", some of the studios and US staff were from the Atari days. They even released a true version of the Atari 2600 (The Flashback II, not the first one)
        Also they apparently have money problems, JUST LIKE THE REAL Atari! :)

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          February 17, 2006 3:55 PM

          Call me informed!

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          February 17, 2006 4:09 PM

          Yeah, Infogrames owns 51% of Atari, and has a lot of control over it. It sort of hurts Atari because they're basically forced to do whatever Inforgrames wants. In fact, a board member even resigned last year because of this problem. If Atari had more freedom over their own company they may be making better decisions.

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            February 17, 2006 4:11 PM

            Worse than a board member, it was CFO Diane Baker. Last year she expressed frustration that the company was "shooting ourselves in the foot."

            I think Atari is part of the problem too though, not just Infogrames. I really don't think Atari's producers are very good at the actual hands on game management, which is something that's done stateside, not over in Europe by Infogrames. Franchises seem to go to shit under Atari.

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              February 17, 2006 4:49 PM

              Atari is part of the problem too, yes. They make far too many mistakes, and love shoveling products out of the door. But one of the first things they need to do is gain control of their assets instead of having Infogrames seize them up.

              And it wasn't Diane Baker who I was referring to, she only resigned this year. It was another member of the board who resigned several months prior. I have a copy of his resignation letter somewhere, I'll try to find it. It's a very interesting read in which he claims that Infogrames holds too much power in Atari and as such makes decisions that benefit themselves, not Atari US.

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                February 17, 2006 5:59 PM

                You have a copy of the resignation letter? Are you a stock holder of Atari and/or Infogrames?

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                  February 17, 2006 6:34 PM

                  No, it got distributed beyond the board members for some reason. It was Thomas Mitchell who resigned, stating that he had concerns the two companies were too closely tied. And a month later, Atari sold Humongous Entertainment to Infogrames, which kind of proved his point. Happened in July 2005, I believe.

                  An excerpt of his statement is found here:

                  Like I said, Atari really needs to get some freedom from Infogrames. Mitchell was the independent director for Atari's audit committe, and when someone like that states that there is a big problem involving the intertwining management, it's usually pretty serious.

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                    February 17, 2006 6:35 PM

                    Also, I'd probably be crying if I was a stock holder in either Infogrames or Atari right now ;)

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                    February 17, 2006 6:41 PM

                    Crazy stuff, thanks for the clarifications! I wouldn't mind a copy of that letter, seems pretty interesting.

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      February 18, 2006 9:58 AM

      Inforgrames is the holding company.

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