Atari CEO makes 'friendly offer' to acquire control of struggling games publisher
Flagging hardware business and blockchain ventures have left Atari in dire financial straits.
Wade Rosen, CEO of Atari, has made a bid to acquire control of the company after it reported "a liquidity shortfall and additional financing requirements" in its recent half-year financial report.
In a press release, Atari stated that a "friendly offer" had been "initiated to acquire control and increase the managing shareholder's capacity to support the Company's development ambitions". As part of this Atari's CEO "intends to further strengthen his interest in Atari's capital in order to support the Company with rolling out its transformation strategy."
Prior to this, the company has had a difficult couple of years. Reporting its semi-annual financial results, the company stated "consolidated net income showed a loss of €5.4m for the period compared to a loss of €3.5m in H1 21/22".
In broad terms, Atari puts its woes down to an "uncertain macro-environment" for video games and blockchain. Chief among its problems is the failure of its hardware business in the form of a new VCS console, which Atari has ceased production of after a drastic reduction in sales, with hardware revenues falling from €2.3m to €200,000, a drop of over 90%.
Games revenue, however, saw a slight increase of 10%, thanks mainly to RollerCoaster Tycoon, which Atari has agreed a 10-year license extension for with RCT's creator Chris Sawyer, and the launch of Gravitar: Recharged.
Atari's blockchain initiatives also fared better on paper, with revenue increasing from €400,000 to €700,000. However, the company is sitting on a ton of digital assets with highly questionable value. This includes 259 million ATRI Tokens, from a blockchain project which Atari terminated in April this year. In the report's digital asset holdings section, Atari states it "does not anticipate any revenues that would be generated by these ATRI tokens and that could impact the consolidated financial statements." The report does explain farther down that Atari is considering pursuing a new token, but first it "intends to thoroughly consider the various structuring options available."
On top of this, the company also owns "972 parcels of land in the Sandbox metaverse". According to Atari, it is "difficult to assign an aggregate value to these assets". It doesn't take a genius to figure out why it might be difficult to assign value to land in a highly nebulous virtual environment with a tiny userbase.
Rosen, a successful businessman who controls Irata LLC – the company leading the Atari bid – joined Atari as CEO in April 2021, and at present has a 30% stake in the business. Rosen seems to have a genuine appreciation of the company's historic significance within the games industry, and it's likely that Atari's ongoing problems represent an opportunity to wrest control of the company's future direction.