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Atari Parent Acquires Cryptic Studios
by David Jenkins
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December 9, 2008
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French publisher and Atari owner Infogrames has entered into a definitive agreement to fully acquire massively multiplayer online (MMO) game developer Cryptic Studios, with the former City Of Heroes developer acquired for $28 million and up to $48 million in sales-related incentives.
The deal, financed through bond issuance, includes all of Bay Area-based Cryptic’s propriety intellectual properties, tools, technology and current projects. Cryptic employs around 150 staff, all of whom will become Infogrames employees.
The company rose to prominence with the City of Heroes/Villains MMO for NCsoft, which has generated over $100 million in lifetime revenues and enjoyed up to 180,000 peak subscribers. NCSoft has set up its own studio to continue that title.
Cryptic is currently working on three MMO games, with Champions Online due to be completed in 2009, Star Trek Online in 2010 and a third unannounced title.
"The acquisition of Cryptic Studios brings to Infogrames an outstanding creative organization, with a proven track-record of success in the fast-growing MMO category," said Infogrames CEO David Gardner.
"Cryptic’s success is founded on leading-edge technology and the vision of a seasoned executive management team. I am impressed with the tools and technology that Cryptic has developed to make MMOs less expensive to build."
Gardner continued, "Creating vast worlds and interesting interactions can be very people intensive but with the use of Cryptic's toolset they have a proven way of cutting average production costs in half. This is exactly the type of company we wanted to acquire in order to build Atari for the 21st century."
"We share a common vision with Atari and their leadership team," said John Needham, CEO of Cryptic Studios. "With our game development and online platform technology skills, we’re very excited about the opportunities that this unique combination with Atari creates. I am committed to helping Atari grow into a leading online game company and look forward to being part of the team."
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The headline was a tad misleading; Atari isn't purchasing the company, their parent company Infogrames is.
In short: Cryptic is hard up for cash to stay afloat, so they sold themselves to Infogrames in exchange for some working capital (enough cash for 2-3 years worth of operations, by my calculations). If Cryptic can make some good headway on their IP (Star Trek, I'm lookin' at you!), they get more money. If not... well...
Long story short, I wouldn't worry about Cryptic going away JUST yet.
Best,
~David S.