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The Euro Vision: 'Bye-Bye Bruno'
The Euro Vision: 'Bye-Bye Bruno'
April 11, 2007 | By Jon Jordan

April 11, 2007 | By Jon Jordan
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And so we mark the end of Bruno Bonnell; Infogrames' main man has faced the final curtain of involvement with the company he co-founded in 1983. Like Sinatra, his performance has been nothing short of mesmerizing - regrets, biting off more than he could chew, tears but also laughter, nothing done in a shy way, facing it all and standing tall - he certainly did it his way.

"People love the drama of speculating about Atari. But they should think of us as heroes. Our teams have done an incredible job in difficult times," he told UK trade paper MCV in early 2006.

Maybe, maybe not, but the industry will certainly be a grayer place for his decision to step aside to greener pastures, although whether he actually does go off to raise sheep in New Zealand as he told 1up.com in 2004 remains a moot point.

But his going does serve to highlight just how convoluted Infogrames', and by extension Bruno's, business dealings became. After all, this was a man who stood down from jobs including Chairman of the Board, Chief Creative Officer, Acting Chief Financial Officer, and director, all at US company Atari, not to mention Chief Executive Officer and director of its French parent Infogrames.

One outcome was an opportunity to give two valedictory speeches.

"Since 2000 I have had the privilege of carrying the Atari flag in our industry. I wish the very best to all the teams moving on with the company, and I have no doubt in their talent and experiences to bring Atari, Inc. to the top," Bruno said in his US press release.

Europeans got a more heartfelt outpouring. "It is with understandable emotions, but also reassured about its future, that I leave Infogrames after 24 years spent to build this group with the support of all its teams. Together, we have been able to show its strength and capacity to innovate, even in the worst situations. Time for business developers has logically come, after the entrepreneurial period. It's now time for Infogrames to conquer and progress on a market as promising as interactive entertainment business."

It's a perverse statement of course. Infogrames' future is nothing if not assured, and its post-Bruno progress seems equally unlikely. Still, looking back through the history of tangled financial affairs, what's remarkable is just how long Bruno managed to hold it all together, keeping Infogrames afloat and the company's debtors at bay.

It Started With Some Acquisitions

The story of Infogrames' incredible $500+ million buying spree between 1999 - 2002 is well known. What's perhaps less well understood is even before this kicked off, the company already had a reasonable amount of longterm debt. For example, at the end of FY98/99, debt was around €50 million ($55 million) on revenues of €224 million ($246 million), Infogrames previously having bought UK publisher Ocean as well as the distribution arm of Philips Media and two third of Australian publisher, Ozisoft.

Indeed, what's rarely understood about Bruno's longterm strategy for Infogrames was the importance of distribution to the publisher's longterm goals. It's not unique of course. Most US publishers have huge distribution muscle these days, but it's expensive to build up such infrastructure, particularly in North America. It's also a low margin business, so there's plenty of risk involved. And it was the desire to circumvent the problems of such organic growth, rather than to get its hands on high profile game licenses such as Test Drive, Driver and Unreal, that lead to the two acquisitions that, in 1999, woke up the American market to this French upstart.

First Infogrames bought 62 percent of failing US publisher/distributor Accolade for €45 million ($50 million), and then added 70 percent of failing US publisher/distributor GT Interactive for $135 million, plus Infogrames took on $75 million of GTi's debt. It was a lot of money for a couple of badly run companies, but Bruno and Infogrames were nothing if not ambitious.

The result was Infogrames’ headcount immediately doubled, and it got access to 20,000 US retail outlets. In the next financial year, US sales suddenly accounted for 52 percent of turnover. But it came at a heavy cost. On top of the acquisitions, Infogrames spent an amazing €133 million ($140 million) in FY1999/2000 reorganising its new US operations.

Combined with the 1999's acquisitions of UK publisher Gremlin and Australian developer Beam (renamed as Melbourne House), the company had to dig deeper into the debt mine. In May 1999, Infogrames issued €348 million ($365 million) in convertible bonds that would need to be paid back at some point in the future. It was this, more than any other event, that would result in Bruno's eventual downfall.

The Only Way Is Down

Still, during the following three years, things seemed to go well. Revenues grew year-on-year, up 70 percent in FY99/00, 29 percent in FY00/01, and 14 percent in FY01/02, when they peaked at €770.1 million.

At that stage, Infogrames was the third biggest publisher in the world after EA and Vivendi's game division. The only difference was that both those companies were making big profits, whereas Infogrames was experiencing its third consecutive year of losses - €79.4 million ($67 million) in this case. Its debt was now up to €580 million ($493 million).

Yet, there seemed plenty of reasons to be cheerful. Rebranding under the Atari name had been successful and titles such as Unreal II, Unreal Tournament 2003, Civilisation III, Stuntman and Neverwinter Nights had either just been released or would be soon, while the $65.7 million spent buying Shiny meant 2003 would see the release of Enter The Matrix game as well.

(In the intervening years, Infogrames had also spent $100 million buying publisher Hasbro Interactive, $19.5 million buying developer Paradigm, $5.6 million buying Canadian inflight entertainment developer D-T-I, €3.5 million ($4.1 million) on the 80 percent of developer Eden Studios it didn't already own and €4.3 million ($3.7 million) on the 37.5 percent of Ozisoft it didn't own.)

Whether Bruno knew it or not however, the peak had been reached. The following year, Infogrames' changed its financial year, making it hard to compare figures because of the nine month accounting period. But even with five million copies of Enter The Matrix sold, net losses had ballooned to €98.5 million ($89 million). And by FY03/04, the shift was clear. Revenues started to fall, while consecutive losses continued to mount up, making any substantial repayment of debt impossible.

Bruno wasn't beaten yet however. The restructuring of the company - US arm Atari was floated as a debt-free vehicle which held all of Infogrames' intellectual property - was a cunning move, but the $131 million raised wasn't anything like enough to make a dent when it came to Infogrames' repayment problems.

Even the shrewd deal in 2005, which saw Infogrames sell some of the rights it had originally bought off Hasbro in 2000, back to the company for $65 million - following a legal dispute, it had only paid $71 million for the whole of Hasbro Interactive in the first place - didn't substantially help matters. Nor did what eventually became a firesale of all assets that weren’t nailed down - Shiny went to Foundation 9, Reflections and Driver to THQ, the Civilization series rights to Take-Two, and so on.

Nevertheless, for FY05/06 (the last full year for which figures are available), Infogrames' revenues were down to €391 million ($525 million), losses were up €150 million ($201 million), and debts were €216 million ($290 million).

Adding up the entire business, between 1999 to 2006, Infogrames sold over €4 billion-worth of games, losing over €500 million in the process.

(NB: in this article, € to $ conversions have been carried out using the historic currency rates for the years concerned.)

[Jon Jordan is a freelance games journalist and photographer, based in Manchester, UK. He's never met Bruno Bonnell, but once interviewed him on the phone, and thought he sounded like a very clever man.]


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