Game over for Atari? One life left as biz files for bankruptcy protection

Atari Interactive Inc has sought protection from US creditors, 41 years after Nolan Bushnell’s gaming legend was born with Pong.

Atari has entered Chapter 11 bankruptcy protection, a provision in US law that’ll enable the struggling biz to operate and potentially restructure without those it owes calling in their debts.

The reason for the timing is not clear, but a massive credit deal with financier BlueBay Asset Management lapsed last year. The pair of companies announced a $26m (€20m) credit facility ha ended in September following negotiations over Atari’s debt. Without the safety net, Atari seemed simply unable to afford any more work on its in-development games.

Atari today is not the company Bushnell co-founded in 1972, which pioneered both console hardware and games titles that were the genesis of the home gaming market.

What’s left of Atari today makes games for smartphones and other mobile devices, PCs, Sony PlayStations and Microsoft Xboxes. That’s done via Atari Interactive Inc in the US and parent Atari SA, the French company that bought the Atari brand at the end of decades of corporate takeovers and rebranding.

Many will remember Atari for the Video Computer System (VCS), used to blow away space invaders and evade ghosts in the maze of Pac-Man. But before the VCS, the company made Home Pong, the tennis-like game created on a shoestring budget of $500. It sold 150,000 units in Christmas 1975, helping Atari to $3m in profits.

The VCS was launched in 1977, but a year later then-CEO Bushnell left the business,although he returned in 2010. After Bushnell's swift departure, the games market crashed and prices dropped, hitting profits hard. The company, meanwhile, struggled to develop new titles with compelling game play, and suffered from a propensity to overhype and under-deliver on products.

Bushnell’s company was eventually split in 1984 to create Atari Consumer Electronics and Atari Games; the former was sold in a reverse takeover to computer hard-drive maker JT Storage. Atari Games reserved the rights to use the Atari logo and brand, and use the games hardware developed between 1972 and 1984.

Hasbro Interactive bought what was left of Atari in 1998 and sold that to Infogrames Entertainment in 1999 for $95m in stock and $5m in cash. Atari SA was the name eventually adopted by Infogrames, which promised to revitalize the brand.

You can read more on the 40-year history of Atari here. ®