Atari's betting its future on gays and gamblers

"If I had a hole in New Mexico, maybe that one [the Project Runway game] would have made it there."

Todd Shallbetter, Atari's chief operating officer, is just joking of course. He's referencing the company's infamous 1983 move to bury countless amounts of unsold gaming hardware and E.T. game cartridges under a slab of cement in the desert. Shallbetter doesn't deny his company's rocky legacy. On the contrary, he embraces it, using its failures as a counterpoint for a new version of Atari he's helping to build. To push the company past the €31.7 million (about $42 million) in revenues it earned in the 2011-2012 fiscal year (PDF), Shallbetter is targeting markets that most companies would rather ignore; markets that represent hundreds of billions of dollars. Atari is going after gays and gamblers.

By December, Atari will release Pridefest, a mobile city-building game focused on the lesbian, gay, bisexual and transgender (LGBT) community. It's also launching an online casino service. Yes, both of these initiatives are coming from the same company responsible for Pong. But when you look at the amount of money those two seemingly disparate sectors represent, it's clear why Atari is making such a huge push in those directions. Online gambling may be having trouble gaining a foothold in the US due to regulatory laws, but it's booming in Europe. By 2015, the European Union predicts the industry will pull in some €13 billion (over $17 billion). Witeck Communications, which specializes in the LGBT consumer market, forecasted that 2013 would see the LGBT community's total buying power reach $830 billion in the United States alone. For a company that's been struggling for the better part of the last four decades, all of that money must look incredibly attractive -- regardless of where it comes from.

In the Asian board game Go, a checkers-like pastime favored by such game-industry luminaries as Nintendo's Hiroshi Yamauchi, calling "atari" is akin to putting someone in check in chess. Typically, this leaves the player with one last move before losing it all. And yet, as irony would have it, Atari -- the company named after such a move -- has consistently found itself on the other side of that call.

A woman plays a virtual reality demo for Atari's 64-bit Jaguar video game system at E3 in 1995.

It hasn't always been that way, though. Once upon a time, the company sold millions of its 2600 console and, despite competition in the early 1980s, it managed to become synonymous with video games. Its fall from that great height, however, was swift and it's now a well-documented bit of gaming history: New management took over and put profits ahead of quality. This strategic turn actually pushed the firm deep into the red, forcing it to bury unsold inventory in the New Mexico desert rather than pay to store it somewhere. In late 1982, then-CEO Ray Kassar dumped 5,000 shares of company stock mere minutes before issuing a press release that Atari's earnings would be "substantially" lower than expectations. This triggered the eye of the Securities and Exchange Commission and set the tenor for decades to come.

The company attempted to reenter the gaming hardware market twice. Once in 1989 with the Lynx handheld, and again in 1993 with the Jaguar home console -- both of which failed pretty spectacularly. Later, in 2008, Atari was delisted from the NASDAQ, something that happens when a stock's value drops below $1 per share. During that time, the company also made a bid to publish big-budget retail games -- an attempt to go toe to toe with the likes of Activision. Despite a few successes, this endeavor was ultimately weighed down by a number of high-profile failures, namely the aforementioned Project Runway. In 2013, Atari filed for, and exited, bankruptcy.

The logo for Pridefest, Atari's upcoming LGBT-themed city-builder game.

"We've done stuff over the years where we've been in some challenged positions," Shallbetter admitted. "We're not in those positions anymore." Despite its prior stumbles, Atari has managed to stay afloat thanks to being bought, sold and divvied up throughout its 40-plus year history. Shallbetter attributes the company's recent success, though, to loyalty. "Anybody could have bailed and walked away from this and let the thing fall to ashes," he said. But a core 11-person team in New York that's been with the company for over a decade is the reason why it hasn't, he said. "We have a love for the brand and a love for the company and the things it represents -- that's not bullshit; that's the truth."

Loyalty alone isn't enough to help Atari find a niche of its own. In fact, it appears as if the company has just been playing a game of follow the leader; taking direction from other, more successful companies' models for success. If Atari has an identity now, it feels like one of desperation -- throwing anything at the wall to see if something sticks, including a YouTube channel and unremarkable endless-runner games on the App Store.

At some point early this fall, Atari Casino will go online with both virtual- and real-money games where you can win, and almost assuredly lose, playing at blackjack and poker tables plastered in Asteroids and Centipede branding. It's an approach Shallbetter said would help to broaden the company's gaming culture. You don't need to have grown up playing Atari's classic hits to appreciate the irony of betting money on a company that's had more financial downs than it has ups. But Atari's wagering that the generation that did grow up on those titles has quite a bit of discretionary income that, coupled with a built-in nostalgia factor, could help pad its bottom line. Much like its forthcoming money-grab approach to the LGBT community, these branded casino games seem to be no more than a hastily applied veneer atop a proven framework.

On paper, at least, Pridefest reads like an uninspired checklist of "gay" culture; it's little more than Atari ticking several boxes off on a list of conditions for fiscal success. The game, a simulator, doesn't approach LGBT themes the way a cross-platform AAA blockbuster like Mass Effect 3 did. In that game, players had the option to create a range of avatars, including an openly gay or lesbian character. Or consider the example of indie hit Gone Home, the story of which centers on a teenage girl coming out to her family. There's a striking difference between these two notable approaches to LGBT themes and Atari's own: inclusive versus opportunistic. That's because the developers of those games were more motivated by providing players with a welcoming experience rather than making an obvious play for profits from an underrepresented segment.

And while inferences from numbers or how a game has been described are one thing, Shallbetter's words drive the real point home. In the same breath as talking about how the LGBT community is long overdue for a game to call its own, he said the following: "We're in business. We do love the craft, but, at the end of the day, we're trying to return something to the shareholders. [Pridefest] makes sense from a business perspective."

Attendees at this year's GaymerX2 convention dressed up as characters from the Super Mario Bros. franchise.

That profit-driven intention, though bold-faced, doesn't matter as much to prominent members of the LGBT community. What ultimately matters is that a firm of Atari's stature is even considering an LGBT-themed game at all. Regardless of perceived exploitation, the existence of Pridefest is viewed as progress. It's a coup for gay gamers everywhere.

"Even if it's a pure business decision, I think that it's actually a very strong step forward," Matt Conn, the CEO of MidBoss, said. MidBoss organizes the annual GaymerX convention, which celebrates the LGBTcommunity's place in the video game industry. Conn said that when you see companies like Atari or developer Naughty Dog including LGBT elements in their titles (the latter with its recent game, The Last of Us), it sends a larger message to the game industry that the community is worth representing.

By getting out in front of the topic, Atari is addressing an issue that some companies would either not acknowledge or pretend doesn't exist. Shallbetter emphasized this point, saying, "Don't think this LGBT thing isn't without risk."

Consider the recent controversy surrounding Nintendo, a company that prides itself on being a family-friendly brand. Its bizarre life-simulator Tomodachi Life recently came under fire when it was discovered that a glitch in the original Japanese release allowed same-sex marriage. The company moved quickly to patch this "error," urging players to download a software update if they noticed "human relations that became strange." That specific phrasing was Nintendo's indirect way of referencing occurrences of same-sex couplings -- e.g., male couples having kids and living together as heterosexuals would.

Nintendo's life-simulator, Tomodachi Life, courted controversy for patching the ability to pair same-sex couples.

When the bug resurfaced prior to the game's stateside release, Nintendo faced a different public reaction: an internet campaign for the company to include same-sex marriage as a future patch. The firm issued a comment saying that it never intended to make any form of social commentary with the game. But, after online uproar to what many perceived as a non-response, Nintendo apologized and bowed to the pressure, promising to make any potential sequel "more inclusive, and [to] better represent all players."

Whereas Nintendo intentionally sidestepped LGBT inclusion, and suffered a PR nightmare as a result, Atari is being proactive. Matt Kane, director of entertainment media for GLAAD, doesn't think this focus on the LGBT community should necessarily be seen as an underhanded move. "If they're specifically trying to attract LGBT gamers, well, there [are] worse things they could do in the world than that," Kane said, laughing.

Shallbetter is adamant that Pridefest isn't a shallow attempt at pandering to the gay community. He said that Atari worked with various Pride organizations around the country for input and collaboration on the game, though he didn't name any specifically. What's more, he thinks that Atari is uniquely positioned to tackle the project given the company's history with simulations like the long-running Civilization and Rollercoaster Tycoon franchises.

Based on his descriptions, Pridefest should play like a typical city-builder -- something along the lines of, say, SimCity. But despite its somewhat imminent end-of-year release, Atari wasn't able to share screenshots or videos of it in action. That's because the game is still in the early stages of development, making Shallbetter's 2014 launch promise a bit dubious.

Though he admitted that his descriptions of the game were vague, Shallbetter maintained that there was more to Pridefest than planting rainbow flags and building successful LGBT-owned-and-operated businesses. "We're certainly not reskinning FarmVille and calling it something else," he said. Players will be able to design their own parade floats, as well as solve puzzles -- there's even a planned social aspect to the game. Even though it sounds otherwise, Shallbetter said that Pridefest is more than just a rote laundry list of tasks seen in other titles, albeit with an inclusive theme.

Or is it? According to a prominent LGBT member of the game industry who has seen Pridefest in action, and agreed to speak under the condition of anonymity, Atari's secrecy could be justified: "It does seem like a reskinned Rollercoaster Tycoon kind of thing." The source also noted that the game felt like a way for the company to recycle an existing franchise into something that was LGBT-focused, adding, "I don't know how badly queer people are craving [the ability to design] their own Pride Festival."

"I don't think that it's made by the community," the source continued. "I think that it's made by a company that's predominantly straight, white dudes. I honestly don't have super-high expectations of its quality, but I don't think that [quality] is that important." It's a confirmation of the point Conn and Kane both expressed; that Pridefest exists at all is important because it's a positive LGBT portrayal from a major company.

Conn likens it to the iOS title based on RuPaul's Drag Race, Dragopolis, saying that simply having LGBT-themed games approved for Apple's App Store represents a major shift in attitudes toward the LGBT community. "I think you're going to see more iterations of that now," he said. "Even if [the games] aren't good, they're helping break down the wall [to positive mainstream representation]." This, however, could send the wrong message to companies in murky financial straits like Atari; that all you need to drive success and profits is a surface-level LGBT theme.

Shallbetter's aware that Pridefest has the potential to court controversy, and he defended the company's decision to go after that market, saying that Atari is "incredibly selective" with the products it produces. "We have to be sure that we're creating relevant products or we should just hang it up," he said. Given that the company recently transformed the classic Breakout into a game about Denny's breakfast food, though, those words ring somewhat hollow.

Update (1/27/2016): The game is now available on iOS (iTunes) and Android (Google Play) devices.

[Image credits: Marissa Roth/The LIFE Images Collection/Getty Images (Atari Jaguar VR); Atari (Pridefest logo); Matt Baume/MidBoss (GaymerX2); BagoGames/Flickr (Tomodachi Life)]