Old is gone, new doesn’t come, what is the future of Atari’s Web3 strategy without tokens?

What is the future of Atari's Web3 strategy without tokens?

Author: Zen, LianGuaiNews

Recently, the veteran arcade game company Atari released its financial report for the fiscal year ending March 31, 2023. The company incurred a net loss of 9.5 million euros in the 2023 fiscal year and terminated its licensing agreement with the ATRI token. It has launched a new Web3 ecosystem plan called “Atari X” and will integrate and operate Atari Web3. Despite unfavorable market conditions in the blockchain industry, Atari stated that its Web3 revenue only decreased by 900,000 euros compared to the previous fiscal year, which is better than expected. Atari also stated that it will continue to execute its Web3 strategic roadmap and plans to launch the Web3 Technology Center “Atari Club” and expand more blockchain and Web3 partnerships.

Atari now positions gaming, licensing, hardware, and Web3 activities as its four major business lines, but its Web3 revenue composition is still relatively single, mainly coming from the sales of NFTs and other digital assets.

ATRI Token Comes to an End after Ups and Downs

In fact, Atari was one of the earliest traditional gaming companies to enter the cryptocurrency industry and adopt blockchain technology. As early as 2018, the Atari Group granted brand licensing to Infinity Networks, Ltd (“INL”) with the hope of creating the Atari token and a decentralized platform to provide various forms of digital entertainment, from video games to movies and music. However, due to slow project progress, Atari eventually terminated its agreement with INL and turned to collaborate with the ICICB Group in Gibraltar. In early 2020, Atari announced that it would launch the ATRI token and the Pong token named after its classic game Pong.

ATRI went public on the Bitcoin.com exchange in early November 2020, during which there were issues with order processing, funds not being credited, and withdrawal delays of up to 16 hours. By the time participants in the public sale received their tokens, the price of ATRI had already been cut in half. At that time, Atari stated that the mission of the Atari token was to bring decentralization and universality to the video game and interactive entertainment industry. ATRI would be used for various aspects of multiple video games and interactive entertainment, and it announced that the online multiplayer game Karma the Game of Destiny would use ATRI as an in-game currency for purchasing and trading.

The initial token sale encountered numerous problems, causing strong dissatisfaction among investors. Due to concerns about the lack of sufficient control and say in the management of the ATRI token, Atari announced in April 2022 the termination of all agreements with the ICICB Group and its subsidiaries. The Atari Chain and the ATRI token, as well as their related websites created in collaboration with the ICICB Group, no longer have any licensing rights, and ICICB no longer has the authority to represent Atari or its sub-brands in any way. Atari took a snapshot of the ATRI token holdings, and token holders will need to present their ATRI tokens in the future to participate in the exchange for “upcoming tokens.”

New Token Project Difficulties

The termination of partnerships has declared the failure of the ATRI token, but Atari is still enthusiastic about the future of blockchain-related plans. After breaking up with its former partner, it announced that it would create, distribute, and independently manage a new proprietary token, focusing on gaming, communities, and utilities. In May 2022, Atari launched Atari X, a project that integrates Atari’s blockchain interests into a unified operation, fully managed by Atari. Based on the development needs of We3, Atari has been continuously establishing strategic partnerships with companies in the crypto field, including The Sandbox, Nifty Labs, Co:Create, etc., and these companies also play a role in the handling of their respective tokens.

However, the plan cannot keep up with the changes, and the new token eventually fails to be delivered.

Recently, Atari released an announcement on token updates, stating that due to changes and developments in the regulatory and legal environment related to cryptocurrencies, its original plan to launch a new proprietary utility token was forced to be modified, and it will not launch a new Atari token. As the main development partner of Atari, Nifty Labs facilitated the snapshot and claiming of the ATRI token, actively participated in the development of the Atari 50th Anniversary NFT series, and was once the main developer driving the Atari’s new token project, exploring its utility, governance, and token economics together. Now, the new token project is “stillborn,” and Nifty Labs has been forced to stop its cooperation in the new token project.

As for compensation, Atari stated that it will provide each eligible ATRI holder identified in the snapshot taken on April 18, 2022, with a fixed amount of third-party SAND tokens for claiming. However, due to the limited quantity of SAND tokens, this claim will not be one-to-one, and the ratio of SAND tokens to ATRI tokens will be determined based on the total number of claims. The claims program will start on September 1, 2023, and run for two weeks. Atari also stated that ATRI holders can continue to freely trade their ATRI tokens and have no plans to sell the 259 million ATRI tokens owned by the team before December 16 of this year (equivalent to approximately $180,000 at the time of writing). Data shows that the circulating market value of ATRI once exceeded $200 million in April 2021, but as of the time of writing, its circulating market value is only about $980,000, and the token price has hit a historical low, with a decrease of about 20% in the past week.

Continuing Atari X and Relaunching Atari Club

Despite repeated failures, Atari is still unwilling to give up its Web3 strategy. After giving up its obsession with tokens, it still firmly believes that blockchain will continue to develop as an important component of its business and sees it as a new way to interact and collaborate with brand partners, players, and fans. Among them, Atari X, launched in May of last year, is the core project on which they are currently betting in the Web3 business. They seem to realize that Web3 games are the most effective way to engage with their brand and build communities.

Atari will be the first company to create tokens for Web3 games using the Co:Create platform. With the launch of the Co:Create platform, Atari can use Web3 to expand its ecosystem and promote deeper community engagement. Co:Create completed a $25 million seed round of financing in May of last year, with support from A16z crypto, VaynerFund, LianGuaicky McCormick’s Not Boring Capital, Amy Wu, and the teams behind RTFKT and Tessera (formerly fractional.art).

Co:Create’s technology provides building modules for token rewards and utility, as well as ongoing support to help projects create token plans that meet community expectations. With Co:Create, anyone can deploy EVM-compatible smart contracts through a no-code dashboard, enabling them to launch tokens on the testnet using only a web browser and connected wallet. The contracts are fully owned by the project, and the platform is free to use. In addition, Co:Create will add new features to its platform, including token reward and utility contract extensions, role-based contract permissions, and other developer tools.

Atari X’s next major plan is known to be the “recall” of the Atari Club, which was first launched by Atari in the 1980s. The new Club will become the center of the Atari X community, combining nostalgia, gaming, and underlying Web3 technology to unite players of all generations in a common ecosystem and provide exclusive prizes, merchandise, and experiences.

According to the annual report, Atari has conducted liquidity risk review and forecasting for all its gaming, hardware, licensing, and Web3 activities. Without any external financing, its liquidity can support Atari’s planned activities for the next year. Atari’s outlook for its Web3 strategy currently only involves continuing to develop the Atari Web3 ecosystem under Atari X, establishing partnerships and collaborations with leading blockchain and Web3 partners, without disclosing any plans to develop Web3 gaming projects.

As one of the earliest traditional gaming companies to participate in the Web3 industry, Atari, which seeks change and development, needs to deliver something substantial.