Atari US files for Chapter 11 bankruptcy

by Kenny Hemphill on January 21, 2013

The US business of iconic video games firm Atari has filed for Chapter 11 bankruptcy, according to the LA Times. The Times reports that the move is a bid to split Atari Inc’s US business from that of its European parent company; Atari was bought by French firm Infogrames in 2003.

According to the Times, Atari Inc’s management:

hope to break the American business free from French parent Atari SA 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 authorised to discuss the matter privately.

In recent years, Atari Inc has had some success in re-packaging classic games such as Pong, Breakout, and Centipede for smartphones and tablets. The US business is profitable, but, said the Times, the French parent company is hampered by a reliance on London-based financiers, BlueBay Asset Management for capital. It’s credit agreement with BlueBay expired on 31 December.

A short history of Atari

Atari was founded in 1972 by Nolan Bushnell and Ted Dabney. Fired by the vision of taking mainframe computer game, Spacewar! to the masses, Bushnell and Dabney had already released Computer Space and were working on Pong, the title that launched arcade video games. Pong was followed by classics like Asteroids, Breakout, Centipede, and Pole Position.

It was during that period that Steve Jobs left Reed College and took a job at Atari. It was clear to Bushnell, who called Jobs ‘the ultimate passionate guy,’ that managing his protegé wasn’t going to be easy. And, thanks in part to complaints about Jobs lack of personal hygene and inability to work with colleagues, he was soon moved to the nightshift.

It was while working nights that Jobs was given the task of engineering the game that would become Breakout. He famously outsourced the work to Steve Wozniak for a fraction of the fee he was being paid by Atari.

By 1976, having released a home version of Pong, Atari needed investment for its next project, the Video Console System, and Bushnell and Dabney sold the company to Warner Communications. The VCS, later known as the Atari 2600, was the first console which allowed users to swap cartridges to change games and paved the way for Sega, Nintendo, Sony and Microsoft.

Bushnell left Atari in 1978 after falling out with Warner, and six years later, after a slump in video games sales in the US, the company was sold to Jack Tramiel, the man who gave the world the Commodore 64.

In 1985, eighteen months after Apple launched the Macintosh, Atari produced the ST. Like the Mac, the ST had a graphical user interface and its similarities to the Apple machine led to it being nicknamed the Jackintosh. The ST was the only home computer at the time which had support for MIDI, something which led to it being used on stage by musicians such as Jean Michel Jarre and Tangerine Dream.

The ST was popular with musicians and carved out a niche in the small business market in Germany, but was never able to compete with the Commodore Amiga, the Mac, nor IBM-compatible PCs. Atari eventually left the hardware business altogether and the name is now owned by games publisher Infogrames which changed its name to Atari in 2009.

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