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    Atari Inc. Filed for Bankruptcy to Begin Its Comeback

    Written by

    Derek Mead


    In 2013, Atari still has a ton of brand recognition, despite trading on nostalgia for years. But today, Atari's US-based operation made a large step forward towards a comeback: The firm filed for bankruptcy in New York in an attempt to break itself away from Atari's parent company, called Atari SA, which is based in France. It's a good time to do it, as Bloomberg reports that Atari's French operation hasn't turned a profit since 1999 and projected further losses in 2012-2013.

    Atari SA, formerly known as Infogames, changed its name in 2003 and formally acquired all of Atari's US assets in 2008, a move that has done little for either company. According to the LA Times, the American operation, Atari Inc., has fairly favorable financing deals and has "secured a commitment for $5.25 million dollars in debtor-in-possession financing to continue operations and release games." Additionally, it could emerge from Chapter 11 with little debt to Atari SA's main creditor, London-based BlueBay Asset Management. 

    Can Atari actually make a comeback? That's a more difficult proposition. In recent years, Atari has focused on repurposing its classic games for mobile gamers, which is a smart move, but unlikely to be sustainable. The company needs to develop a new audience, which requires new games, and to do that it needs to decide whether it wants to focus on becoming a Zynga competitor, develop arcade-style games for mobile, or jump headlong into consoles and PC gaming. Creating its own take on mobile is probably the safest first step for Atari, but it's also a very crowded space. Atari's brand equity could pay off in rising above the clutter, but it'll still be tough to pull off. But at least by filing for bankruptcy, Atari Inc. is giving itself a shot.