I HEART CHAOS

Atari was one of the first big video game consoles to start invading living rooms in the 1980s, and even after they stopped making consoles, they continued to make and publish popular games. But that isn’t enough, as this week Atari US filed for chapter 11 bankruptcy protection to allow the company to try and restructure to avoid going down the tubes all together.

Its leaders hope to break the American business free from French parent Atari S.A. and in the next few months find a buyer to take the company private. They hope to grow a modest business focused on digital and mobile platforms, according to a knowledgeable person not authorized to discuss the matter publicly.

Although the 31-year-old brand is still known worldwide for its pioneering role with video games such as “Pong” and “Asteroids,” Atari has been mired in financial problems for decades. Since the early 2000s it has been closely tied to French company Infogrames, which changed its name to Atari S.A. in 2003 and in 2008 acquired all the gaming pioneer’s American assets.

Chief Executive Jim Wilson has been with Atari Inc. since 2008, and in 2010 became CEO of the French parent. The New York-based executive has attempted to rebuild the company, which has just 40 employees in the U.S., by developing games for smartphones and the Web based on well-known properties – among them a successful “greatest hits” compilation of arcade titles and an updated version of “Pong.” He has also licensed the Atari logo for consumer products, a business that provides about 17% of the company’s revenue.

There is evidence that the U.S. operation, which after the sale of other assets now makes up the bulk of Atari S.A.’s business, has been improving. The corporate parent has been profitable for the last two fiscal years, save for the effect of a money-losing French subsidiary, Eden Games, that has been up for sale. Before that, neither Atari S.A. nor Infogrames had been profitable for about a decade.

Still, its profits have been small ($11 million and $4 million, respectively, for the last two fiscal years) and revenue plummeted 34% in fiscal 2012 and 43% in fiscal 2011.

Via