Bankruptcy doesn’t mean “Game Over” for Atari

Atari, one of the pioneer video game design companies, declared bankruptcy recently. But that doesn’t necessarily mean the end for the iconic brand.

In fact, many thought the company faded away years ago. Not the case. For nearly a decade, Atari has been owned by a French company, Infogrames Entertainment, which coincidentally, is also filing for bankruptcy. The move is seen as a way to separate U.S. operations from the financially troubled parent company.

For the past few years, Atari has been producing versions of its classic games for browsers and for mobile devices. Although not nearly as huge as the company was in the 1970s and 80s, Atari’s U.S. operations provided more than 70 percent of the company’s revenue.

The rise of Atari

Atari was founded in 1972, and the company began to manufacture an arcade game called Pong. It was a hit. Two years later, Atari began producing a home version with a console that connected to the TV.

Warner Communications purchased Atari in 1976 and oversaw the period of growth that made Atari the fastest growing company in the U.S.

The game design console that made Atari a household name hit the market in 1977. The first year, the video computer system was manufactured in Sunnyvale before moving overseas. By 1979, the Atari 2600 was the most popular Christmas gift of the year. Popular games such as Space Invaders, PacMan, Centipede, Breakout and Asteroids, among dozens more, helped Atari sell more than10 million units in 1982.


A number of factors contributed to the decline of Atari as an innovative technology company. Several entities that controlled it had financial problems, which meant that research and development suffered. The parent companies often refused to give credit to video game designers, which made for unhappy employees and high turnover.

The biggest factor contributing to Atari’s demise was the rise of the home computer system. Here’s an interesting fact: Bill Gates, Steve Jobs and Steve Wozniak all worked for Atari in the early days. No doubt their experience at Atari had an impact on their innovations. Job and Wozniak worked successfully on the system for the arcade version of Breakout, while Gates, hired to help simplify the system, was fired when the project was stalled for a year.

Many suspect that during that time, Gates was working on the DOS system that IBM used to propel the home computer revolution. By that time, Atari had fallen behind in the race to develop technology and the rest is history. The three former employees went on to form Apple and Microsoft, arguably two of the largest corporations in the world. With its Bay area location, a good number of Cogswell College engineering graduates also got their start at this iconic company.

Still lucrative

After separation from its French owned parent, the brand and intellectual rights could still be profitable for whichever company buys Atari. Like Hostess, there will still be demand for the games the first gamers grew up with. Compared to video games of today, they are quite simple, but nostalgia buffs find the mobile and browser versions just as addictive as they were back in the day. Which could mean a good return for the right investor.

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