Times are hard but can Atari pull through?
In a Press Release issued today (see below) serious concerns have been raised over Atari's ability to continue as a "going concern" after a poor financial year.
Atari Chairman, CEO and Chief Creative Officer, Bruno Bonnell, obviously feels that Sony's delays with the PS3 and Microsoft's problematic XBox 360 launch have impacted upon sales as he cites a shortage of new hardware as one of the reasons for the $67.1 million USD net loss for the 2006 financial year.
Bonnell's comments would appear to agree with similar claims from high street retailers and e-tailers, who previously blamed a poor Christmas on lack of new hardware and severe shortages of launched hardware, namely the XBox 360, PSP and Nintendo DS. But whereas retailers can at least fall back on established platforms such as the PS2, XBox and GameBoy, publishers are stuck with what they have either recently published or in the pipeline.
Bonnell also cites some titles as under performing, naming The Matrix: Path of Neo and Marc Ecko's Getting Up: Contents Under Pressure as two key titles that didn't do as well as Atari obviously hoped. This comes as no surprise as the original Matirx game from Atari, Enter The Matrix was mediocre at best. Marc Ecko's Getting Up: Contents Under Pressure was always going to have little more than specialist appeal and ended up a mish-mash of styles with no real widespread appeal... and as Electronic Arts will tell you with their all-conquering Sims franchise, you can only do niche market games if you've got other cash cows in your stables... (Apologies for mixing my metaphors)
However, Bonnell appears optimistic about the future, as he mentions new products, licenses and IPs (Intellectual Properties) in the pipeline for the future. Besides the now streamlined line-up of titles, Atari will be looking to exploit their back catalogue of games onto new platforms, so you can probably expect to see Atari classics hitting the PSP as well as big titles such as Alone In The Dark, Neverwinter Nights 2 and Test Drive Unlimited still coming our way.
The big question is, has Atari's streamlining and restructuring done enough and do their remaining titles have the 'oomph' to save them?
Press Release
Atari, Inc., a leader in interactive entertainment, today announced financial results for the fiscal 2006 fourth quarter and year ended March 31, 2006.
Net revenue for the quarter ended March 31, 2006, was $54.7 million versus $64.4 million in the prior year's comparable quarter, reflecting the Company's release of fewer titles in this quarter compared to the prior year, as well as the impact on reserves caused by the Company's previously-announced GamersFIRST program which began June 1, 2006. The two-fold, consumer-oriented program includes a new price point of $19.95 on all existing titles for PS2 , Xbox, Nintendo GameCube, Game Boy Advance and Windows (excluding Dungeons & Dragons Online), and the digital distribution of Windows titles included in the program at Valve and Direct2Drive. Publishing net revenue was $47.1 million, compared to $52.7 million in the prior year. Distribution revenue was $7.6 million versus $11.7 million in the comparable year-earlier period.
Net loss for the fiscal 2006 fourth quarter was $4.3 million, or $0.03 per share, compared to $9.1 million, or $0.07 per share, in the year earlier period, which was net of a gain on sale of certain intellectual properties totaling $6.2 million in quarter. The Company previously announced on February 9, 2006, that it would begin to take steps to streamline its U.S. operations. In doing so, the Company recorded restructuring charges of $2.5 million in the fourth quarter of fiscal 2006. Excluding restructuring charges, the loss for the fourth quarter of fiscal 2006 would have been $1.8 million, or $0.01 per share.
Net revenue for the year ended March 31, 2006, was $218.7 million versus $407.8 million in the comparable year-earlier period. Publishing net revenue was $165.5 million versus $353.6 million in the prior year-end period, while distribution revenue was $53.2 million versus $54.2 million in the comparable year-earlier period.
Net loss for fiscal 2006 was $67.1 million, or $0.52 per share, compared to net income of $5.7 million, or $0.05 per share, in the year-earlier period, which was net of a gain on sale of certain intellectual properties totaling $6.2 million in quarter. The Company recorded restructuring charges of $8.9 million for the year-end period ended March 31, 2006. Excluding restructuring charges, the loss for the fiscal year would have been $58.2 million, or $0.45 per share. As the year-end results were substantially below the Company's expectations, the uncertainties resulting from the Company's financial condition raise substantial doubt about the Company's ability to continue as a going concern.
"Fiscal 2006 was a challenging year for the industry," stated Bruno Bonnell, Chairman, CEO and Chief Creative Officer of Atari. "A shortage of new hardware coupled with a softness in consumer demand for current generation games dramatically impacted results. In addition, titles such as The Matrix: Path of Neo and Marc Ecko's Getting Up: Contents Under Pressure performed below our expectations."
Mr. Bonnell continued, "The Atari brand has stood for innovation and pioneering spirit for more than 30 years. As Atari executes on its strategic objectives, we must recapture what made Atari an iconic brand. During fiscal 2007, we will focus our efforts on established franchises, new major motion picture licensed IP with significant marketing campaigns, online products and titles for portable devices."
Atari's product lineup for fiscal 2007 is expected to include the following new releases: Alone in the Dark 3 PS3, Xbox 360 video game and entertainment system from Microsoft and Windows, Arthur and the Minimoys, PS2, PSP, Nintendo DS, Game Boy Advance and Windows, BattleZone PSP, Dragon Ball Z: Budokai Tenkaichi 2 PS2 and Nintendo Wii, DUNGEONS & DRAGONS: Tactics PSP, Earthworm Jim PSP , HOT PXL PSP , Neverwinter Nights 2 Windows, Super DBZ PS2, and Test Drive Unlimited Xbox 360, PC, PS2, PSP, among others.
Mr. Bonnell concluded, "As the industry and consumer demands continue to change, Atari is evolving and adapting to the new interactive environment. We will continue to launch ground-breaking initiatives such as our GamersFIRST program in order to expand the marketplace and we plan to exploit our back catalog in new markets. Additionally, we believe our IP is a perfect fit to meet the broad scope of games that consumers are looking for on casual sites. We anticipate the execution of these new initiatives coupled with the continued development of titles for next-generation consoles will drive the Company toward profitability and return value to our shareholder."
