Atari

Atari, Inc.
	File:Atari inc.gif
Company type	Public (Nasdaq: ATAR)
Industry	Computer and video games
Founded	1972; 1993 as GT Interactive
Headquarters	New York, N.Y., USA
Key people	Bruno Bonnell, Chairman, CEO and Chief Creative Officer; Diane Price Baker, Executive Vice President and Chief Financial Officer
Products	Dragon Ball, Alone in the Dark, Godzilla, RollerCoaster Tycoon, The Matrix
Revenue	$359.165 million USD (2005)
Net income	$5.692 million USD (2005)
Number of employees	1,800 (2005)
Website	www.atari.com

Atari, Inc. (Nasdaq: ATAR) is a majority owned subsidiary of Infogrames Entertainment SA (IESA), encompassing its North American operations. Atari develops, publishes and distributes games for all major video game consoles, as well as for the personal computer, and is currently one of the largest third-party publishers of video games in the United States.

The company that currently bears the Atari name was founded in 1993 under the name GT Interactive. GT Interactive was acquired by IESA in 1999 and renamed Infogrames, Inc. Infogrames acquired the Atari brand name from its purchase of Hasbro Interactive, which in turn had acquired it from JTS Corporation, which the original Atari had merged with in 1996. Infogrames, Inc. intermittently used the Atari name as a brand name for selected titles before IESA officially changed the U.S. subsidiary's name to Atari, Inc. in 2003.

The original Atari was a pioneer in arcade games, home video game consoles, and personal computers, and its dominance in those areas made it the major force in the computer entertainment industry from the 1970s to the mid-1980s. The brand has also been used at various times by Atari Games, a separate company split off in 1984.

History

Original Atari logo

Since the early days of coin operated machines, Atari has been responsible for home consoles such as the Atari 2600 (VCS); produced a series of eight-bit computers (Atari 400 & 800); taken part in the 16 bit computer revolution with the Atari ST; made the revolutionary (for its time) 64-bit Atari Jaguar; and released a hand held video game console, the Atari Lynx.

The 1970s: The rise of a video game empire

The second version of the Atari *Video Computer System*, sold from 1980 to 1981

In 1970 Nolan Bushnell saw Spacewar! for the first time at the University of Utah. Deciding there was commercial potential in a coin-op version, he hand-wired a custom computer capable of playing it on a black and white television in a single-player mode where the player shot at two orbiting UFOs. The resulting game, Computer Space, was released by an existing coin-op game company, Nutting Associates.

Computer Space did not fare well commercially when it was placed in Nutting's customary market, bars. Feeling that the game was simply too complex for the average (potentially drunk) customer, Bushnell started looking for new ideas. In 1971 he saw a demonstration of the Magnavox Odyssey, and quickly produced an arcade version, PONG. After negotiations with Nutting to release PONG through them broke down, Bushnell and his partner Ted Dabney decided to start their own company.

They originally wanted to call the company Syzygy, an astronomical term. However, as there already existed at least one company with that name (Bushnell stated in an official interview that it was a candle company), Bushnell wrote down several words from the game Go, eventually choosing Atari, a term that means that a stone or group of stones is in danger of being taken by one's opponent. Also, the name "Atari" is arguably more memorable than "Syzygy" in terms of spelling and pronunciation for most markets. Atari was incorporated in 1972. In 1973, Atari creates the first PONG out of a Black & White T.V. from Walgreens, and a coin- mech on the side and put it in a pub. PONG went on to be a massive hit, only more so in video game console form, far better known than the Odyssey that spawned it.

In 1973, Atari secretly spawned a "competitor" called Kee Games, headed by long-time partner Joe Keenan, to circumvent pinball distributors' insistence on exclusive distribution deals; both Atari and Kee could market (virtually) the same game to different distributors, with each getting an "exclusive" deal. Though Kee's relationship to Atari was discovered in 1974, Joe Keenan did such a good job managing the subsidiary that he was promoted to president of Atari that same year.

In 1975 Bushnell started an effort to produce a flexible video game console that was capable of playing all four of Atari's then-current games. Development took place at an offshoot engineering lab, who initially had serious difficulties trying to produce such a machine. However, in early 1976 the now-famous MOS Technology 6502 was released, and for the first time the team had a CPU with both the high-performance and low-cost needed to meet their needs. The result was the Atari 2600, which is one of the most successful consoles in history.

Bushnell knew he had another potential hit on his hands, but bringing the machine to market would be extremely expensive. Looking for outside investors, in 1976 Bushnell sold Atari to Warner Communications for an estimated $28–$32 million, using part of the money to buy the Folgers Mansion. He departed from the division in 1979.

A project to design a successor to the 2600 started as soon as the system shipped. The original development team estimated the 2600 had a lifespan of about three years, and decided to build the most powerful machine they could given that time frame. By the middle of the effort's time-frame the home computer revolution was taking off, so the new machines were adapted with the addition of a keyboard and various inputs to produce the Atari 800, and its smaller cousin, the 400. Although a variety of issues made them less attractive than the Apple II for some users, the new machines had some level of success when they finally became available in quantity in 1980.

While part of Warner, Atari achieved its greatest success, selling millions of 2600s and computers. At its peak, Atari accounted for a third of Warner's annual income and was the fastest-growing company in the history of the United States at the time.

The 1980s: Hurdles ahead

Although the 2600 had garnered the lion's share of the home video game market, it experienced its first stiff competition in 1980 from Mattel's Intellivision, which featured ads touting its superior graphics capabilities relative to the 2600. Still, the 2600 remained the industry standard-bearer, because of its market superiority, and because of Atari featuring (by far) the greatest variety of game titles available.

However, Atari ran into problems in the early 1980s. Its home computer, video game console, and arcade divisions operated independently of one another and rarely cooperated. Faced with fierce competition and price wars in the game console and home computer markets, Atari was never able to duplicate the success of the 2600.

In 1982, Atari released disappointing versions of two highly publicized games, Pac-Man and E.T. the Extra-Terrestrial, causing a pileup of unsold inventory and depressing prices. (It is rumored that in 1983, in response to a massive number of returned orders from distributors, Atari buried millions of unsold game cartridges (the bulk of them consisting of those same two titles, Pac-Man and E.T.) in a New Mexico desert landfill.)
Also in 1982, Atari settled a court case with Activision, a competing game developer primarily composed of disgruntled Atari ex-employees, officially opening the 2600 to third-party development. The market quickly became saturated, depressing prices further.
In December of 1982, Atari executives Ray Kassar and Dennis Groth were investigated for allegations of insider trading (later found to be false).
Larry Emmons, employee No.3, retired in 1982. He was head of research and development of the small group of talented engineers in Grass Valley, California, who had designed the 2600 and home computers.
The Atari 5200 game console, released as a next-generation follow up to the 2600, was based on the Atari 800 computer (but was incompatible with Atari 800 game cartridges), and its sales never met the company's expectations.

Still, Atari held a formidable position in the world video game market. They were the number one console maker in every market except Japan; that market belonged to Nintendo, which had released their first game console, the Famicom (known to the rest of the world as the NES) in 1983. The system took Japan by storm, and Nintendo began to look to other markets. They approached Atari and offered a licensing deal: Atari would build and sell the system, paying Nintendo a royalty. The deal was in the works, and the two companies tentatively decided to sign the agreement at the 1983 Summer CES. Unfortunately, at that same show Coleco was showcasing their new Adam computer, and the display unit was running Nintendo's Donkey Kong. Atari CEO Ray Kassar was furious, as Atari owned the rights to publish Donkey Kong for computers, and he accused Nintendo of double dealing with the Donkey Kong license. Nintendo, in turn, tore into Coleco, who only owned the console rights to the game. In the coming month, Ray Kassar was forced to leave Atari, and executives involved in the Famicom deal were forced to start over again from scratch.

These problems were followed by the infamous video game crash of 1983, which caused losses that totaled more than $500 million. Warner's stock price slid from $60 to $20, and the company began searching for a buyer for its troubled division. As for Nintendo, Atari could no longer afford the Famicom deal. Although Nintendo were ultimately forced to market the Famicom themselves (as the NES), they managed to make a major success of the system without Atari's involvement (and their profit sharing).

In July 1984, Warner sold the home computing and game console divisions of Atari to Jack Tramiel, the recently ousted founder of Atari competitor Commodore International, under the name Atari Corporation for $240 million in stocks under the new company. Warner retained the arcade division, continuing it under the name Atari Games and eventually selling it to Namco in 1985. Warner also sold the fledgling Ataritel to Mitsubishi.

Under Tramiel's ownership, Atari Corp. used the remaining stock of game console inventory to keep the company afloat while they finished development of their 16-bit computer system, the Atari ST. In 1985 they released their update to the 8-bit computer line, the Atari XE series, as well as the 16-bit Atari ST line. Then, in 1986, Atari launched two consoles designed under the Warner Atari - Atari 2600jr and the Atari 7800 console (which saw limited release in 1984). Atari rebounded, producing a $25 million profit that year. The Atari ST line proved very successful (but mostly in Europe, not the U.S.), ultimately selling more than 4 million units. It was especially popular among musicians, as it had built in MIDI ports. Still, its closest competitor in the marketplace, the Commodore Amiga, outsold it 3 to 2. Atari eventually released a line of inexpensive IBM PC compatibles as well as an MS-DOS compatible palm computer called the Atari Portfolio.

In 1989, Atari also released the Atari Lynx, a handheld console with color graphics, to critical acclaim. However, a shortage of parts kept the system from being released nationwide for the 1989 Christmas season. As a result, the Lynx lost market share to Nintendo's Game Boy, which had only a black and white display but was widely available. Also in 1989, Atari Corp. sued Nintendo for $250 million, alleging it had an illegal monopoly. Atari lost.

The 1990s: Decline

As the fortunes of Atari's ST and PC compatible computers faded, consoles and software again became the company's main focus. In 1993, Atari released its last console, the Jaguar. After a period of initial success, it, too, failed to meet expectations. It was not nearly as powerful as Sony Computer Entertainment's PlayStation or Sega's Saturn and lacked the extensive third party support its Japanese competitors had easily secured for their consoles.

By 1996, a series of successful lawsuits followed by profitable investments had left Atari with millions of dollars in the bank, but the failure of the Lynx and Jaguar left Atari without any products to sell. In addition, Tramiel and his family wanted out. The result was a rapid succession of changes in ownership. In July 1996, Atari merged with JTS Inc.,a short-lived maker of hard disk drives, to form JTS Corp. Atari's role in the new company largely became a holder for the Atari properties and minor support, consequently the name largely disappeared from the market.

Although the original Atari ceased to exist, a large amount of underground development remains for Atari's game systems and computers of the 1970s and 1980s, and many of the retro-gaming conventions (such as World Of Atari, Classic Gaming Expo, Philly Classic, and the Midwest Gaming Classic), focus largely on Atari. There are also websites dedicated to the release of new products for the original Atari consoles and computers, such as AtariAge.

In March 1998, JTS sold the Atari name and assets to Hasbro Interactive for $5 million—less than a fifth of what Warner Communications had paid 22 years earlier. This transaction primarily involved the brand and intellectual property, which now fell under the Atari Interactive division of Hasbro Interactive. The brand name changed hands again in December 2000, when French software publisher Infogrames took over Hasbro Interactive.

In the meantime, Atari Games was bought out by its employees in 1986, who also founded Tengen to bring their arcade games in to the home. The new Time-Warner eventually started gaining more and more shares in the company until they eventually owned the company completely again by 1994. At that point Atari Games ceased to exist and became part of Time-Warner Interactive. By 1996, Time-Warner sold TWI to WMS Industries, Inc., owner of Midway at the time. WMS brought the properties under Midway (which it now renamed Midway Games Inc.), and re-instated the Atari Games name. In 1998, Midway was sold to its shareholders and spun off as a separate company. Over 1999-2000, Midway held closed door proceedings with Hasbro which ultimately led to Atari Games being renamed Midway Games West. Midway left the arcade industry in 2001, and shut down Midway Games West in 2003 - closing the chapter on what was left of the original Atari arcade division.

The 2000s: Revival and re-release of Atari classics

In October 2001, Infogrames announced that it was "reinventing" the Atari brand with the launch of three new games. On May 7, 2003, Infogrames officially reorganized its US subsidiary as a separate entity known as Atari, Inc.. It named its European operations to Atari Europe, and kept the main holdings company as Infogrames Entertainment.

File:Atari Classics 10 in 1 TV Games.jpg

Atari 10-in-1 TV Game

File:Atari Flashback Console.jpg

Atari Flashback Console

In 2002, Jakks Pacific, a toy making company, released a plug-and-play video game console called the Atari 10-in-1 TV Game, believed by many to arouse interest in the concept of self-contained entertainment devices that did not require separate hardware to operate. It was battery-operated and shaped similarly to an Atari 2600 joystick, and included A/V ports. In 2004, the same company created a device called Atari Paddle Games, in the shape of one of the 2600's "paddle" controllers with appropriate titles included. However, as stated, neither of the games was directly released by Atari.

The same year that the Paddle Games were released, Atari released a TV game of their own which they called the Atari Flashback Console. The device they produced looked like a minute version of the Atari 7800 console originally released in 1984, 20 years previously. The two controllers were small as well, having a joystick and two red buttons on each side. Twenty titles were built into the system. Unlike most plug-and-plays, the Flashback was not powered by batteries, but an (included) AC adaptor instead. The Flashback did fairly well in sales; however, many Atari fans felt disappointed. Many people felt that the device itself was far too small, and the joysticks felt very dissimilar to those of the 7800. Since the games were all recreated on hardware more closely resembling the Nintendo Entertainment System than the 7800, some of the aspects of certain games concerning the sound, graphics, or gameplay were either changed or omitted. Overall, many enthusiasts believed that the Flashback did not capture the true Atari experience.

Because of popular demand, Atari released a new version of the Flashback console, titled Atari Flashback 2, in August 2005.

Also, in late October 2005, Atari released one of two collections of its classic arcade games only for the Nokia N-Gage console, titled Atari Masterpieces. Atari Masterpieces Volume I includes classic arcade games: Asteroids, Battlezone, Black Widow, Millipede, Missile Command, Red Baron, Lunar Lander and Super Breakout, and features an exclusive interview with Nolan Bushnell. Atari Masterpieces Volume II is scheduled to be released in March 2006.

On May 5th, 2006, Atari and Hasbro stopped Bioware and DLA from further development of premium modules and publishing near-completed premium modules for Neverwinter Nights. No reason was stated, but it was likely in anticipation of the upcoming sequel, Neverwinter Nights 2, which would lack features from these modules.

Atari's new titles and direction

Recently, Atari's top-selling titles have been the Dragon Ball Z games based on the popular anime license from Toei Animation in Japan. These include the Dragon Ball Z: Budokai series of games for next-generation console systems and the Dragon Ball Z: The Legacy of Goku series of games for the Game Boy Advance. These games have topped the best-seller charts for numerous console platforms since the release of Atari's first Dragon Ball Z game, The Legacy of Goku in 2002, which was the first Dragon Ball game to be made by an American company, Webfoot Technologies, and is one of the best-selling Game Boy Advance games of all time (#16). The best selling Budokai series is developed in Japan by Dimps and includes Dragon Ball Z: Budokai, Dragon Ball Z: Budokai 2, Dragon Ball Z: Budokai 3 and Dragon Ball Z: Budokai Tenkaichi. Following the success of the Budokai and Legacy of Goku series, Atari has released numerous other Dragon Ball titles including Dragon Ball Z: Supersonic Warriors, Dragon Ball Z: Super Sonic Warriors 2, Dragon Ball Z: Sagas, Dragon Ball GT: Transformation and Dragon Ball GT: Final Bout.

Atari also released a series of games based on the smash-hit The Matrix movie trilogy including Enter the Matrix and The Matrix: Path of Neo. These titles represent some of the most expensive video games ever developed. Enter the Matrix, which was developed by Shiny Entertainment, sold 1.38 million units for the Sony PlayStation 2 and 1 million units for the Nintendo GameCube, making it one of the best selling computer and video games.

Other currently popular titles for Atari include the RollerCoaster Tycoon, Godzilla games, Alone in the Dark (series) and Driver series (recently sold to Ubisoft for a reported $24 million^[1]).