Atari says it may need additional funding to continue following VCS retro console flops and blockchain battles

Atari is in trouble, and has signaled that it may need additional cash to continue.

Reporting its half-year results to September 30, 2022, the Paris-based company admitted any delays in the development of its four activities, games, hardware, licensing and blockchain, or underperformance in its initiatives could cause it to make less money than expected, and in turn trigger “a liquidity shortfall and additional funding needs”.

It’s an “uncertain macro environment” for video games and blockchain, the latter of which Atari has weighed heavily in, and so the company reckons actually implementing its new strategy “may require additional funding resources”.

The options outlined include new loans with major shareholder Irata, a company controlled by current Atari chairman and CEO Wade Rosen, and/or raising new financing from elsewhere, which could 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 was yesterday. Atari is now involved in the likes of Web3, NFTs and blockchain on top of licensing and hardware manufacturing.

These initiatives struggle to succeed. For the first half of the fiscal year ended September, Atari revenue was €4.3 million, down 27 percent 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 the controversial VCS console, which suffered major delays before finally launching last year. In isolation, the hardware business’s revenue fell by 92 percent from €2.3 million to just €200,000.

However, gaming revenue increased by 10 percent on the back of RollerCoaster Tycoon and new games in the Recharged series. Licensing revenues fell by 18 percent, and blockchain revenues (NFT sales) increased from the low base of €400,000 to €700,000.

All told, Atari posted a net loss of €5.4 million, up from a €3.5 million loss in the same period last year.

Atari is betting, and in a statement issued to Tom’s Hardware insisted it “remains committed to the VCS platform”.

In April, Atari killed its ATRI token and Atari chain projects. At the time, Atari said it would explore creating a new token as a component of its blockchain roadmap, but even this sounds like it’s not happening — or if it is, it’s not happening anytime soon.

“This project is still at an early stage of development as Atari intends to thoroughly assess the various structuring options available and regulatory frameworks, as well as the current uncertainty surrounding the blockchain market environment, to make this project relevant to the community of fans and partners. ,” said Atari.

Meanwhile, Atari is sitting on 972 “land parcels” in the Sandbox metaverse. This formal property does nothing for the company and will not for at least the next 12 months.

In its gloomy outlook, Atari said it is too early to expect the “turnaround strategy” to have a significant impact on revenue and profitability.

“In a challenging macro environment for video games and blockchain initiatives, Atari intends to continue to focus on executing its roadmap and transforming operations across all four industries,” the company insisted.