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Atari Keeps Winning with Acquisition of Digital Eclipse

Atari Keeps Winning with Acquisition of Digital Eclipse
Atari + Digital Eclipse: A match made in heaven?

Atari Just Keeps Collecting W's

If 2023 has been the year of gaming comebacks, then Atari is at the forefront of this resurgence. Ever since Michael Artz left the company as COO, it's seemingly been on the rebound. In a string of savvy moves that further cement its retro-focused growth strategy, the gaming icon has announced its agreement to acquire Digital Eclipse, a renowned game development studio that specializes in the digital restoration of classic video games.

Expanding Capabilities Through Strategic Acquisitions

This acquisition comes on the heels of announcing the Atari 2600+ console, and Atari's earlier acquisitions of and Nightdive Studios. By integrating Digital Eclipse into its fold, Atari is ramping up its internal development capabilities and expanding its portfolio in a significant way. Digital Eclipse brings a wealth of industry experience and innovative proprietary technology to the table.

Founded in 1992, Digital Eclipse is best known by remastering some classic retro games with releases like Teenage Mutant Ninja Turtles: The Cowabunga Collection, the Disney Classic Games Collection and the SNK 40th Anniversary Collection. Their recent projects such as "Street Fighter: 30th Anniversary," "Mega Man Legacy Collection," and especially "Atari 50: The Anniversary Collection," have garnered critical acclaim and commercial success.

Alignment in Ethos and Expertise

Wade Rosen, Chairman and CEO of Atari, hailed Digital Eclipse as "the best in the world at what they do" underlining how the studio's focus on the history and preservation of the gaming industry perfectly aligns with Atari's renewed mission. Not only does the acquisition bolster Atari's internal development power, but it also adds an impressive portfolio of past and potential future hits.

In a FAQ released by Digital Eclipse, the studio emphasized the synergy between both companies, noting that their collaboration on the "Atari 50" project was particularly harmonious. Digital Eclipse will maintain operational autonomy, continuing projects that do not involve Atari's IP, and will also seek collaborations with other parties. The Gold Master Series and other ongoing projects like "Wizardry: Proving Grounds of the Mad Overlord" will not be adversely affected. For Fig investors in Digital Eclipse, the dividend schedule remains unchanged. Both companies see the partnership as a pathway to accomplishing mutual long-term goals more effectively.

Financials and Future Outlook

The acquisition deal is valued at an initial $6.5 million—split between $4.0 million in cash and $2.5 million in newly issued Atari shares—with an additional earn-out of up to $13.5 million based on Digital Eclipse’s future performance. The majority of Digital Eclipse shareholders have agreed to a 1-year lock-up on their Atari shares, showcasing confidence in this strategic partnership.

The Bigger Picture: Atari’s Strategic Genius

Atari seems to be on an unstoppable roll. After previous years that saw the brand grappling with challenges, its latest moves indicate a deep understanding of its legacy and the current market dynamics. The acquisition of Digital Eclipse not only enriches its in-house development capabilities but also enables it to hold a commanding presence in the retro gaming sphere, an increasingly lucrative market segment. With a clear vision and a series of calculated, successful moves, Atari is once again proving why it remains a force to be reckoned with in the gaming industry.

As the acquisition nears completion in the coming days, one thing is clear: Atari has its finger on the pulse of what retro gamers want, and it shows no signs of slowing down its winning streak.



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