Atari Looks To Reinvent Itself As A Mobile Games Company; Hires Former iWON/Marvel Exec As EVP

Founded in 1972 by Nolan Bushnell and Ted Dabney, Atari played a central role in the early history of video games, going on to create what are still some of the most recognizable arcade games on the planet, like Centipede, Breakout and Pong, to name a few. Not to mention the fact that its joystick-controlled Atari 2600 console was pretty much synonymous with “video games” in the 1980s.

Although Atari remains a recognizable brand around the globe, the company struggled through the video games crash of 1983, financial issues, and various assets have fallen under a number of different ownership and leadership regimes, including Warner Communications and Hasbro — among many others.

Today, Atari is a 65-person company, with headquarters in New York and France. The company looks a lot different than it did two decades ago, but the current leadership team is focused on leveraging Atari’s assets, its strong brand recognition and global distribution, to reinvent it as a mobile and social games company.

But doing so is no easy task. EA, one of the largest and most recognizable video games companies, also has the benefit of strong brand recognition and a number of successful and popular titles, like Battlefield, Need for Speed, Mass Effect, FIFA and Madden, to name a few. EA has recognized that it can’t hope to compete with the likes of Zynga simply by remaining a console company and pumping out sequels to popular titles. Over the last few years, EA has gotten busy porting its flagship games into social and mobile channels. Of course, even that’s not enough. (More here.)

As Atari CEO Jim Wilson said, the key to success for any company is creating quality, original products. “There’s no other way to maintain long-term viability”, he said. “Atari can’t rest on its laurels, we have to stay relevant”.

In refocusing on mobile and social as the two-headed future of gaming, Atari released “Greatest Hits” for iOS back in April, which is an 18-title sample course of Atari’s classic games. Earlier this month, Atari launched Greatest Hits on Android. And two weeks ago, the company brought its Asteroids franchise to iOS, tailoring the retro game for a new medium.

Asteroids: Gunner became a top ten bestseller on the App Store for its first two weeks, and Greatest Hits has racked up over 3.5 million downloads across platforms since its release in April. So, the veteran games company has found some success in moving its classic games to mobile, just as EA and others had found before it.

On December 8th, Atari will continue its release of its classic games on mobile, as it will launch “Breakout: Boost”, an amped-up version of the 1976 arcade classic, on iOS. The game will include the traditional five levels, along with 200 additional levels of brick-breaking that can be unlocked through in-app purchases.

Breakout will also see new control features that allow gamers to change ball speed to ramp up the difficulty, as well as power-ups, “Grenade Balls” (and ball upgrades), brick varieties, the ability to save progress, and OpenFeint and Game Center integration.

To back up the retooling of its games for mobile devices, Atari has also made some additions to its executive leadership, including the recent hiring of Gui Karyo, a gaming and entertainment industry veteran, as EVP of Development & Operations. Karyo has previously held senior executive positions at Mindspark, Majesco, and Marvel and has taken over day-to-day oversight of the company’s product development, operations, and in an effort to accelerate the development of its mobile and online strategies.

Leadership with prior experience in social and mobile game development and restructuring business processes and products around these growing channels is key as Atari goes after a new freemium, microtransaction-driven rebranding. Atari has miles to go before it can ever compete with the bigs in social gaming, but as a relatively lean company, it may have an easier time transitioning into the mobile and casual game space than some other heavier companies that have come before it.

Of course, leadership is only the start. To build a successful modern mobile gaming company, Atari has to internally become a company comprised of developers, engineers, and designers that specialize in mobile. They’re on their way, and the Atari CEO says that the company is constructing initiatives that will increase outreach to the developer community to drum up interest around modernizing Atari’s games.

Atari is happily the owner and/or manager of an extensive library of more than 200 games and franchises that include brands like Centipede, Missile Command, Pong, Test Drive, Backyard Sports, and Deer Hunter. Moving forward, Wilson says that the company is looking to evolve these games for a new generation of gamers — updating their look — while maintaining gameplay identity.

But more important will be launching, new original titles. Atari can coast on its brand and classic arcade games and probably continue to cash in on brand recognition, retooling its games for any and all new channels that manifest over the years. But without creating new, relevant products, Atari’s reinvention as a mobile company will really only be skin deep.

And looking at Atari’s current financials, it seems that this reinvention as a mobile and digital operation is now a must. The company’s digital revenue (for the first half of the year) comprised 63.6 percent of its total net revenue — compared to 20.1 percent in the first half of last year. Digital revenues were $10.5 million in the first half of the year, an increase of $6.3 million over the prior year. This has led the company to cut its operating loss to about $2.6 million, a 61.2 percent improvement over the same period last year.

Revenues are still low, but focusing on fewer and more profitable games has helped the company see improvement in its gross margin; and while ramping up its spend on R&D and marketing for its new digital games has contributed to lower numbers, Wilson and team are hoping that these kind of investments can help push its mobile transition forward.

To that end, the CEO also said the company is currently hiring, and is now going after “the best and brightest” to help steer its new mobile/social trajectory. If the company can learn from Zynga’s metrics-driven approach to customer retention, while baking freemium, location, and social elements into their new titles, Atari could be poised to lift itself out of replay mode.

What do you think?