Atari CEO Wade Rosen says the company is done being a 'fast follower'

From the outside, you get the sense that Atari CEO Wade Rosen has steadied the ship since taking the helm in 2021. Before that, the company had struggled with uneven finances, struggled to realize its vision for the Atari VCS console (after allegedly failing to pay hardware manager Rob Wyatt) and began dabbling in the speculative world of blockchain.

Under Rosen, however, the company repositioned itself as a publisher and developer with a focus on preservation. It spent millions to acquire studios including Digital Eclipse AND Night studies While relaunch of historic brands such as InfogramesThe company also reaffirmed its commitment to the retro console market, All-New Atari 7800+ Debuts at Gamescom 2024By changing its business strategy, Atari managed to double its net sales during the last fiscal year, with Rosen arguing that the company is putting in place the “levers necessary for long-term success.”

For Rosen, that shift was driven by a desire to lead from the front. Speaking to Game Developer at Gamescom 2024, he agreed that the company was perhaps struggling when he took over and seemed content to be a “fast-follower in a lot of different categories.”

“We've never been a leader in any category,” he explains. “So we stopped and said, 'OK, if we want to be here we have to be the best in the world at something.' […] The first thing was to stop and say, “What are we doing? What can we be the best in the world at?” We looked at the brand. We looked at our internal capabilities. We looked at what we're passionate about. What came back to us was “retro gaming” and, specifically, “modern retro gaming.”

Atari Chief Says Digital Eclipse, Nightdive Acquisitions Became 'North Star' Deals

Rosen believes that the industry has perhaps responded well to this new, more refined iteration of Atari because the company has developed “specific expertise” in that specific market. He cites the acquisitions of Digital Eclipse and Nightdive as two examples of Atari expanding its presence in a way that makes sense for the brand, referring to those deals as a sort of “North Star” for the company.

Rosen says the situation at the company was “challenged” when he arrived. “The numbers didn’t look bad, but the liquidity in the company was a challenge,” he says. “That can happen in the video game industry for a multitude of reasons. People can report positive EBIT but they’ll show negative operating cash flow. So the other thing was to stop and say, ‘OK, how do we reverse this so we can focus more on building a sustainable business that generates cash flow and can exist for another 50 years?’”

When asked what the word “sustainability” means inside Atari in the context of broader layoffs and studio closures across the industry (often done in the name of “sustainable growth”), Rosen believes it’s about taking an even-handed approach to expansion. “Something that we wanted to aspire to as a company that had been through so many ups and downs, and so many of these hypercycles, was to reduce the cyclicality of that a little bit,” he adds. “This is a cyclical business, but how do we not get so swayed by that cyclical nature?”

Rosen says that means hiring slowly and expanding steadily, and refusing to overemphasize perceived industry booms that often result in overinvestment. “I think the challenge where sustainable growth [is concerned] is that a lot of companies will double or triple their development costs in one, two, three years,” he continues. “Then we see a contraction in the industry, but all those seeds were planted with the boom. I think if there’s a lesson, it’s that if there’s a boom, you have to be very skeptical.”

He argues that the video game industry’s biggest problem is taking the past and assuming it will become the future, even when there is no precedent. The obvious example, he says, is how everyone decided to invest more in video games during the COVID-19 pandemic, even though that period of high engagement and spending was the very definition of unprecedented.

“People were watching [at the industry during the pandemic] and they thought, “Oh, demand is increasing, we should invest more,” without realizing that everyone else was making the same decision at the same time. We make decisions that are going to be released two, three, five years later, so everyone was making the decision to increase production at the same time, and now we're releasing those things into a market that has declining demand and increasing supply.

“The pressure comes from demand, but I would say even more so from supply and the belief that if everyone increases supply the returns will say the same thing. It's a mistake to always look to the past and not look to the future. If demand had continued to increase it wouldn't have been so bad, but there would still have been problems because things were so profitable because of a market that wouldn't have existed in three years.”

Atari Focuses on Consistency on High-Risk Projects, But 'Wouldn't Say No' to More Studio Acquisitions

Rosen says Atari isn’t taking a similar high-risk strategy when it comes to its own release slate. Instead of banking on home runs, it wants to lean on games that can hit “singles and doubles.” Projects that “will succeed and have a chance of succeeding,” but that won’t live or die based on whether they hit the park.

What does this mean for the fate of the company's more speculative projects? Discussion Atari X–an ongoing web3 initiative that aims to “create a robust blockchain ecosystem that seamlessly integrates community, gaming, and utility” – Rosen said the segment is not a “major part of the business that we do.”

“As far as blockchain goes, it's just licensing with some of the larger players. It's just a small part of our business. That team is just licensing at this point, so there's really nothing to scale there,” he adds, referring to the company's decision to cut ties with a partner in that space in 2022.

In his latest fiscal reportAtari said that “the overall blockchain environment remained challenging” and said it had “expanded from a purely web3 focus to a broader community-driven initiative, including cross-collaborations with other Atari business lines and select partners, exclusive products, and the launch of Atari Club.”

The company added that it has ended its previously announced token project, blaming the “current regulatory and business environment” and its shifting “strategic priorities.” As for why Atari ventured into the web3 space, including launching new ventures under Rosen, he suggests that cynicism surrounding the technology is warranted, but says there are some who genuinely believe it can be used to create “useful and meaningful” experiences. However, he admits that those projects “have yet to be proven.”

“I think a lot of people saw it as the AI ​​of today, like, ‘Hey, this is where the money is, so let’s quickly move to that.’ It’s hard to sift through and really make sure that you’re trying to work with partners that believe in it,” he says. “Most of our licensing partners are working really hard to make sure that their coinbase is one of the few that you can do a lot with, and I think they’re really trying to create a cool ecosystem. Whether that goes anywhere or not remains to be seen.”

Looking to the future, Atari remains interested in acquiring more IP as it seeks to consolidate itself as a conservative publisher. Rosen adds that the company “wouldn't say no” to more studio acquisitions, but says Atari won't spend recklessly. “With a studio, you're bringing in capabilities but you're also bringing in people, and with that comes complexity and the potential for things to go wrong. What people don't consider is the opportunity cost, too,” he says.

“Once you do that, it takes a long time for your team to gel and start working together. That will come at the cost of doing something else. […] I have to remind myself constantly. It's not just the cost of paying, it's the fact that I paid a cost and now I have to give up an opportunity. Those [acquisitions] It makes sense, but they are few and far between. We are trying to stay focused on the main goal, which is sustainability.”

You can hear more from Rosen via checking the latest edition of the patch notes.