Atari to acquire preservation and restoration studio Digital Eclipse for up to $20 million

Atari has agreed to acquire development and restoration studio Digital Eclipse for an initial $6.5 million in cash and newly-issued shares. An earn-out of up to $13.5 million tied to the future performance of Digital Eclipse over the next decade means the value of the deal could rise to $20 million.

Atari said the deal will serve to expand its internal development capabilities and enable it to utilize Digital Eclipse's "industry-leading" experience and proprietary technology.

Digital Eclipse was founded in 1992 with the goal of pioneering accurate video game re-releases by emulating vintage arcade games before 'emulation' had become commonplace. Now, the studio champions game preservation by developing archival releases and interactive documentaries, such as Street Fighter: 30th Anniversary, Mega Man Legacy Collection, and its acclaimed 'The Making of Karateka' retrospective.

"Digital Eclipse is one of a select few development studios recognized as leaders in retro-focused development," reads a press release from Atari. "Since inception, Digital Eclipse has produced over 250+ games and developed long-standing relationships with leading publishing and development partners in the industry to deliver amazing video games and collections. With its innovative proprietary technology, Digital Eclipse is now leading this category in sales, critical reception and innovation."

Atari CEO and chairman, Wade Rosen, described Digital Eclipse as the "best in the world at what they do," and said the studio is in "perfect alignment" with Atari's renewed retro-focused growth strategy.

Digital Eclipse says the "future is wide open" after Atari deal

Under the leadership of Rosen, the company has prioritized the commercialization of classic retro IP in a bid to reinvigorate its business. With that goal in mind, Atari has acquired the rights to over 100 classic titles including Bubsy and Hardball and purchased System Shock remake developer Nightdive Studios for $19.5 million.

Notably, the Digital Eclipse team said the deal won't affect their ability to seek out partners of their own choosing, explaining that "while we're certainly happy to have greater access to Atari's fantastic library, we still have the freedom to seek out projects with other parties."

In an FAQ on the Digital Eclipse website, the company said its experience working on the 'Atari 50' project with Atari showed the pair have a shared understanding.

"This looked like a great way for both organizations to accomplish a lot of our future goals better and faster together," wrote the Digital Eclipse team. "In addition to recent releases like Wizardry: Proving Grounds of the Mad Overlord and 'The Making of Karateka,' Digital Eclipse has a lot of unannounced projects in the works that do not involve Atari's IP, and those will carry on as planned. 

"The future is wide open, and we believe partnering with Atari will bring about even more opportunities."