Atari is in trouble and has indicated it may need additional funding to continue.
The Paris-based company reported its half-year results through September 30, 2022, admitting that any development delays in its four businesses, gaming, hardware, licensing and blockchain, or underperformance in its initiatives could result in it making less money than expected , and in turn create “a liquidity shortage and additional financing needs”.
There’s an “uncertain macro environment” for video games and blockchain, the latter of which Atari has gone into heavily, which is why the company thinks actually implementing its new strategy “may require additional funding.”
The options outlined include new loans with its major shareholder Irata, a company controlled by current Atari Chairman and CEO Wade Rosen, and/or raising new funding from elsewhere, which may include a “public offering… to meet capital needs and refinance the company’s debt”.
It all sounds like tough times for Atari, which is of course a different company now than it used to be. Today’s Atari is involved in Web3, NFTs and the blockchain, among others, in addition to licensing and hardware production.
These initiatives compete for success. For the first half of the financial year ending September, Atari’s revenue was $4.3 million, a 27 percent decrease from the $6.0 million it generated in the same period last year.
Atari said this was mainly due to the failure of its hardware business and its controversial VCS console, which suffered heavy delays before finally launching last year. Taken alone, revenue from the hardware business fell 92 percent from $2.3 million to just $200,000.
However, game revenue was up 10 percent thanks to RollerCoaster Tycoon and new games in the Recharged series. License revenue fell 18 percent and blockchain revenue (NFT sales) rose from the low base of $400,000 to $700,000.
All told, Atari suffered a net loss of €5.4 million, up from a loss of €3.5 million in the same period last year.
Atari is soldering on, and in a statement to Tom’s Hardware, it insisted it “remain committed to the VCS platform.”
In April, Atari killed its ATRI token and Atari Chain projects. At the time, Atari said it would look into creating a new token as part of its blockchain roadmap, but even this sounds like it’s not happening – or if it does, it won’t happen any time soon.
“This project is still in an early stage of development as Atari intends to thoroughly consider the various structuring options available and the regulatory framework, as well as the current uncertainty surrounding the blockchain market environment, to make this project relevant to its community of fans. and partners,” Atari said.
Meanwhile, Atari sits on 972 “lots” in the Sandbox metaverse. This fictitious property is not doing anything for the company and it won’t be for the next 12 months.
Atari said in its gloomy outlook that it is too early to expect its “turnaround strategy” to have a significant impact on sales and profitability.
“In a challenging macro environment for video games and blockchain initiatives, Atari intends to continue to focus on executing on its roadmap and transforming its business across all four businesses,” the company stressed.