Atari Games

When the Atari Inc. division of Warner Communications lost $500 million in the first three quarters of 1983, its arcade coin-op division was the only one to make money.[1] In 1984, Warner sold Atari's consumer products division to Jack Tramiel;[2] he named this company Atari Corporation. Warner retained the coin-op division and renamed it "Atari Games".[3] The agreement between Tramiel and Warner Communications was that Atari Games must always include the "Games" after "Atari" on its logo and that Atari Games could not use the Atari brand at all in the consumer market (computers and home consoles). Atari Games retained most of the same employees and managers that had worked at the old Atari Inc. It was able to carry on with many of its projects from before the transition. Atari Corp., in contrast, froze projects and streamlined staff and operations. In 1985, the controlling interest of Atari Games was sold to Namco, who soon lost interest in operating an American subsidiary. In 1987, Namco sold its shares, partly back to Warner and partly to a group of employees led by then-president Hideyuki Nakajima.[4]

Atari Games continued to manufacture arcade games and units, and starting in 1988, also sold cartridges for the Nintendo Entertainment System under the Tengen brand name, including a version of Tetris. The companies exchanged a number of lawsuits in the late 1980s related to disputes over the rights to Tetris and Tengen's circumvention of Nintendo's lockout chip, which prevented third parties from creating unauthorized games. (Atari Games' legal battles with Nintendo should not be confused with those of its former parent company; Atari Corporation also exchanged lawsuits with Nintendo in the late 1980s and early 1990s.) The suit finally reached a settlement in 1994, with Atari Games paying Nintendo cash damages and use of several patent licenses.[5]

In 1989, Warner Communications merged with Time Inc., forming Time Warner. In 1993, Time Warner bought a controlling interest in Atari Games and made it a subsidiary of its Time Warner Interactive division. While Atari Games maintained its identity under the new ownership, the Tengen brand had been dissolved in favor of the Time Warner Interactive label.[6] In mid-1994, the Atari Games, Tengen, and Time Warner Interactive names were all consolidated under the Time Warner Interactive banner.[7]

In April 1996, after an unsuccessful bid by Atari co-founder Nolan Bushnell, Atari Games was sold to WMS Industries, owners of the Williams, Bally and Midway arcade brands.[8][9] According to Atari Games president Dan Van Elderen, in 1995 Time Warner decided to exit the video game business and instructed the management at Atari Games to find a buyer for themselves, which surprised him because usually parent companies choose the buyers for their subsidiaries.[3]

On April 6, 1998, the video game assets of WMS Industries were spun off as a new independent company called Midway Games,[6] which then gained control of the Atari Games division. However, in early 1999, Hasbro Interactive began reviving the Atari name for the consumer games market after acquiring it from JTS Corporation.[10] To avoid further confusion, Atari Games was renamed Midway Games West,[11] on November 19, 1999,[6] thus the Atari Games name would no longer be used.

In 2001, Midway Games exited the arcade industry, due to a decline in the market. Despite this, Midway Games West continued to produce games for the home console market until it was disbanded on February 7, 2003,[6] after a slump in game sales. Although no longer in operation, Midway Games West continued to exist as a holding entity whose primary function was to be the copyright and trademark owner for its properties. In February 2009, Midway Games filed for Chapter 11 bankruptcy protection and in July 2009, most of Midway's assets were sold to Warner Bros. Interactive Entertainment, ultimately bringing all of the Atari Games properties back to Time Warner for at least one final time.[12] The entity, however, still existed for other legal reasons until October 2, 2013 when it was finally dissolved for good.

• Official website (from the Internet Archives Wayback Machine)
• Atari Games Museum.
• A History of Atari Games Corp. / Midway Games West