When Frederic Chesnais took over the legendary Atari company in 2013, the new owners had about $34 million (€30 million) in debt and about $1 million in revenue. The Atari brand wasn’t much more than a T-shirt and nostalgia licensing entity.
Now, Atari has no debt and $20 million in revenue — and it is profitable, Chesnais said. It is also planning to go back into the hardware business with the 2019 launch of the Atari VCS home console. And Atari is making games again — from original titles like Days of Doom to classic remakes, such as Tempest 4000.
Atari is in better shape than it has been in the past because of the success of its Rollercoaster Tycoon simulation games, including Rollercoaster Tycoon Classic, launched in 2017. It had some good exposure for the Atari brand in the films Ready Player One and Blade Runner 2049.
The company still faces some challenges, including the reboot of the Atari VCS project during the past year. I talked to Chesnais about Atari’s plans, including a recent reorganization, in a recent interview.
Here’s an edited transcript of our interview.
GamesBeat: Tell me how you are doing.
Frederic Chesnais: We’ve been growing like crazy, but we’ve been growing at a very solid pace. A few weeks ago, we announced that we’ll have four business units. Management is not just going to be a one-man show.
The first unit is what we call Atari Games. It’s a bit broader than games. It’s really the software side of Atari, on mobile devices, the Internet, and consoles. It’s also exploiting each and every game in a multimedia environment. We’ll have the merchandising, the licensing, movies, and TV shows. It’s Atari Games in the broad sense, the exploitation of each and every piece of software we own. That’s run by the former head of world studios at Disney. That’s still the bulk of our revenue, 15 percent.
The best-selling game we have is Rollercoaster Tycoon Touch, nearing 200,000 daily active users. We have announced this morning that the game is on pre-order in China. We have a local publisher in Shanghai. They’re waiting for the final green light from the Chinese authorities.
We have two other games worth mentioning. The first is Days of Doom, a zombie survival game on mobile platforms. We’ve initiated social media coverage for that game, but it’s just started. It’s an interesting game, a survival game with some simulation elements. The second game we’re working on with Jonathan Cheban, who has more than three million followers on social media. It’s a very casual game, a match-three. You play against other players, and the winner gets more clients at his food truck. Jonathan has a great reach in the media.
A third game, which is in soft launch right now on the other side of the planet, is Citytopia, a city simulation game. We have good retention numbers already. We’re making some tweaks, but so far, the numbers are pretty good. Once we fix up the tutorial, we should be good to go with that one. That’s where we are on the game side. We’ve had great success with Rollercoaster Tycoon, and we have some interesting games coming up in the next few weeks.
The second business unit is close to games, but it’s a different type of games. That’s Atari Casino. It’s about real money gaming, so it’s not for the U.S. We’re developing in Europe and Africa. We have licensing arrangements, and we’ve generated revenue. The plan for us is to be direct in Europe and Africa next year. Everyone knows the brand. We’ve made multiple contacts in many countries in Europe. People say, “Oh, Atari, they’re still alive?” And if the game is good, they stay. So far, we’ve been pleased with the initial contacts.
I’m in charge of the Atari Casino division. That’s roughly 10 percent of our revenue last year, and we need to grow that more. It’s going to be more than 10 percent in the future. We’re thinking about slot machines, lottery games, scratch games for real money. Everything about social casino, virtual currency, we’ll license that out. Likewise esports, we’ll license that out. We don’t want to do that directly. What we want to do directly is real money games on mobile and Web platforms. I see that as a big division down the road because of the opportunity and the awareness of the brand. Africa is an amazing opportunity, with the number of people playing these types of games, and they all know the brand.
The third division is Atari VCS, which you know well already. We’ll keep pushing. We’ve sold 10,000 pre-order units and raised more than $3 million. We sold most of them at $295. We can get you exact numbers, with accessories and all. Our priority now is to set up distribution, finalize the production, and deliver the units, as well as of course create more content.
GamesBeat: Do you have a rough timeline for when you’re going to ship?
Chesnais: 2019. Then, we’ve announced a fourth division, which we call Atari Partners. That’s basically everything else [laughs]. The focus is simple, though. How can we best use the brand to take percentages of other companies and make limited investment in cash? This is a brand license agreement, just a few thousand dollars, give us some shares, and we’ll help you develop your company. For example, we’re developing our blockchain platform with Infinity Networks.
These are long-term projects. They’re more like a venture initiative, so to speak. But when you say the word “venture,” people tend to think you’re going to spend a lot of money, burn through cash, so we called it Atari Partners instead. We want to develop new businesses, new products.
GamesBeat: Would the speaker hats be another good example?
Chesnais: Yeah, that’s a good example. The blockchain is another one. We’re working on a couple of other initiatives. Anything involving games — for example, we announced that Scott Sternberg, a TV producer, was working on a game show using Pong. That’s part of Atari Games. Atari Partners is everything about the brand. To give you an idea, somebody came to me and talked about making a phone for gamers, and they’d like to use the Atari name. That’s the type of project we’re looking at — very long term, with no significant cash investment on our end.
We’ve announced our books at the end of March. We’ve incurred some growth in terms of revenue. We’re profitable. For the first time, we had no debt on the balance sheet. We raised some money in April, 7.5 million euro, about 7 million euro after fees. But we have no more debt, some cash, and we’re profitable. Our next announcement will be on December 15 or 16. We’re technically listed on the OTC as part of the NASDAQ’s international program. I still have a few forms to fill out to have the shares be fully tradable on the OTC, but we’ll finalize this soon. It’ll be easier for U.S. investors to buy shares.
The holding company around these four divisions is still based in Paris. We’re not changing our business model. It’s still the same. We have the best team of executive producers capitalizing on the brand. We’re being careful when we do investment. Our priority isn’t to release the next Pong or even necessarily the next Missile Command. We’re more interested in a multimedia play on Atari as a brand. We’re known to people over 25. People younger come to us because they’re interested in the history of video games. They like what the brand [has] done. We’ll keep growing, and we’re going in the right direction.
GamesBeat: What part of the business or what game category do you think can really propel the brand back to a more historic level — or another level up?
Chesnais: We’re clearly doing well with simulation games like Rollercoaster Tycoon. We decided to capitalize on that engine, which is why we’re doing Citytopia. Days of Doom is a survival game, but it has a lot of simulation elements. We’re definitely focusing on simulation games. The interest from the board is not for me to burn money making a shooter or a fantasy game at the moment. We have something in our hands that’s working, and we want to keep capitalizing on that.
The second category is more the match-three games, the very casual games, like the Jonathan Cheban game. That’s our emphasis for the moment, simulation and casual games. After that, we’re making money with licensing. We’re making money in TV shows. What could be the third category — if we have success with a particular game or a TV show where we adapt a game, that’s a possibility. But we have a lot on our plates already. We have three more simulation games we’re looking at as far as allocating resources. These are games that require some investment for players, so players are tougher to get, but when you have them, they’re less likely to fall out of the game.
GamesBeat: As far as the most recent successes, how would you describe your biggest hits for the new Atari so far?
Chesnais: The biggest hit has been Rollercoaster Tycoon on mobile. We keep pushing that one, and we look forward to success in China. We’re about to launch in Korea, and we’re in soft launch in Japan. That’s been a big success for Atari in the last 18 months.
GamesBeat: I noticed that you have a lawsuit with Feargal Mac. Is that going to impact the VCS in any way?
Chesnais: If you’ve looked into the lawsuit, to use his own words, he withdrew from the project on December 14, 2017. We’re sad about that, but we’ll be able to deliver on the Indiegogo campaign. It should have no impact.
GamesBeat: You’ve reset the project, and you’re still going forward, then?
Chesnais: We did reset in December, after Feargal withdrew. We launched the Indiegogo campaign in May. We’ve been operating without Feargal since December of 2017.
GamesBeat: The approach for the hardware — I see there are different kinds of solutions out there. The Intellivision is a new one. They seem to be focused on reproducing the old games, mostly. But I wonder, do you still feel like the best strategy is to go for both modern games and old games?
Chesnais: Our strategy and criteria are a little different from that. We want to go with an open platform. Everything you find on the Internet that meets our criteria, meets our specs, you can play on our platform. It’s not really about content. It’s about making sure we provide an open platform. We don’t want to dictate content. We want to be as open as possible. It’s a streaming box, at the end of the day. It’s not a prop console. If it’s on the Internet, you can access it, whether it’s modern, old, antique, or futuristic.
GamesBeat: The Ready Player One deal, did you wind up making much money from something like that?
Chesnais: We don’t disclose the details of negotiations or deals like that. But it’s great for the image. It brought us a lot of awareness. It’s indirect. Blade Runner was the same way. We’re very proud to be the only games available in Teslas. How much it’s worth, well, who knows? Dwayne Johnson is apparently charging a million bucks for a tweet these days. Most of these deals are deals whereby we benefit indirectly from the interaction. We don’t necessarily just do it for a check. We do it because it will put the brand on a different level. I think that’s what happened with Tesla.
GamesBeat: It looks like you still have a pretty good mix of branded Atari games and original games.
Chesnais: That’s true. Sometimes, it’s difficult to create a new Atari game, to take one of those classic IPs and turn it into a new game. We’re very cautious, and we’re flexible. We think that this three-part vision — Atari Games is the multimedia approach. We have the casino games. You could say that a slot machine is a new game, but at the same time, it’s branded Atari. We have a Star Raiders slot machine that’s doing quite well.
We prefer to think broadly, by business unit, and decide what’s the best use of a product or a property. For instance, in building the Atari brand, we decided to start with a movie, a feature film, which is why we granted the license to George Furla. We thought it was a good idea, and George wanted to do it, so let’s do it. At the same time, with other games or other properties, it might be better to start with a game show — like with Pong. It’s a very flexible approach. At the end of the day, it’s all under the Atari umbrella, which is what matters.
GamesBeat: The question still seems to be, just how powerful is the Atari brand?
Chesnais: You might look at it the other way around, which is — without the brand, would we have been able to make it back out of bankruptcy? I don’t think so. Remember where we’re coming from. You’ve seen the deck, the table that shows we started in 2013 with €1 million in revenue and more than €30 million in debt. Today, we have €18 million in revenue and no debt. We’re profitable. Without the brand, that would have been very difficult.
The brand helps us in two different ways. One, it helps to be able to contact someone by saying, “We’re Atari. We’d like to do this. Would you like to have a meeting?” Most people will say, “Wow, you guys are still alive? Sure, just stop by.” It opens doors. Second, it still has a lot of awareness, a lot of following. We’ve been able to make licensing arrangements with advances and minimum guarantees. It helps a lot there. When you have a product like Atari Flashback, it’s good to have the brand going with it. It’s helped us make licensing agreements and get cash when we needed it. Let’s get this license signed and get $600,000. Maybe it’s not the best deal ever, but we need $600,000. Let’s swallow that and move on. I’m grateful for that.
The third advantage of the brand — we want to create some great projects and pull together a lot of partners. We’ve been able to gather a lot of resources and expertise for our new projects like the Atari VCS. If you look at the VCS, you can ask yourself: Without the Atari brand, would that have been possible? I’m not sure. The brand provided the design, some cool elements there. The brand has a lot of strength in that area.
GamesBeat: What do you think of the game industry in general right now? Why not, say, go into a new field and start a blockchain or crypto company instead?
Chesnais: We have, to some extent. We started the Atari blockchain company. We think we still have a lot of growth ahead of us. At the same time, the game industry is very competitive. Someone can show up and create a great game without too much money, necessarily. It’s unique that way. The barrier to entry is sometimes very low.
We all love it here. But at the same time, the game industry is becoming more and more of an unfamiliar industry. We’re seeing more and more interaction between games, esports, TV shows. We’re all coming after the same thing, which is the interaction with the users. People are connected 24/7 now. With kids, it might even be more than 24/7 because they’re multi-tasking all the time. But we all covet the same thing, the time and attention that users can give us.
When they’re on Facebook, they’re not playing games. When they’re on YouTube, they’re not playing games. When they’re on Snapchat or Instagram, they’re not playing games. The time that’s spent on entertainment is very broadly defined. That’s why I always say that something like Facebook is a competitor to the gaming industry at large. It takes minutes away from our players. It’s a much broader competition now. Something like TV is less of an issue today, as millennials watch less and less TV. We have competition within the industry like we always have, and we have new forms of competition outside the industry.
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