Video Game Pioneer Atari Files for Chapter 11 Bankruptcy Relief
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Video Game Pioneer Atari Files for Chapter 11 Bankruptcy Relief

January 25, 2013

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Atari, the video game pioneer responsible for legendary games such as "Pong" and "Asteroids," has filed for bankruptcy help, according to a report this week from CNN.

The American branch of the company, according to sources, is looking to separate itself from Atari S.A., its French parent company, which has failed to turn a profit for more than a decade, and has seen its stock price plummet over the past 12 months.

In a written statement released this week, Atari officials said the American subsidiary is hoping to "secure independent capital for future growth, primarily in the areas of digital and mobile games."

In recent years, Atari has tried to reinvent itself by expanding into the digital and mobile markets. Specifically, the company has created modern versions of its iconic legacy games, in an effort to lure nostalgic adults to its product line.

But despite experiencing some success with its latest innovations, the New York-based subsidiary is eager to escape from the influence of its French parent company, according to sources.

Atari S.A. has reportedly been unprofitable for years, and sources note that it issued to its shareholders an ominous warning of a "significant loss" in 2013.

During the bankruptcy process, Atari will be able to continue its "normal business operations" with the help of a $5 million loan from Tenor Capital, which helps distressed companies survive through lean financial times.

And over the next few weeks, Atari officials will look for buyers for a select number of its most prized assets, including the company’s logo and rights to the company’s extensive collection of games.

Sources note that Atari owns at least 200 separate games. Of course, Atari’s financial troubles are not an isolated incident. Sources say the video game industry has been devastated by the expansion of the gaming world into mobile applications and other computer platforms.

When Atari was founded in 1972, gaming was limited to specific consoles, and brands like Atari and its rival, Nintendo, held a virtual monopoly on the market.

Today, Atari is known more for its work three decades ago than its current products. Company officials, however, hope that bankruptcy will provide the financial tonic that Atari needs.


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