Atari 2011 Annual Report Download - page 9

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
9
In order to develop games that are compatible with Nintendo, Microsoft or Sony consoles, the Group enters into
agreements with those manufacturers. These contracts are master agreements covering a specific type of console. They
are generally entered into for terms of three to five years and are automatically renewable.
Licenses on content and technology entail compliance with certain ethical, graphic and technical standards. A product's
release is contingent on prior approval by the copyright holder or the hardware manufacturer.
MATERIAL CONTRACTS
The principal agreements entered into by the Group over the past two years concern the use of intellectual property and
hardware (consoles). In brief, they consist of the following:
ONLINE AGREEMENT
On December 8, 2008, the Company signed a Stock Purchase and Transfer Agreement relating to the acquisition of
Cryptic Studios Inc. (“Cryptic”). As of March 31, 2011, Cryptic completed its earn-out period resulting in an earn-out
totaling €6.7 million of which €4.6 million in cash and €2.1 million value in shares (approximately 383,000 shares issued).
This earn-out was attributable to the performance of the Star Trek Online Video Game.
DISTRIBUTION AGREEMENTS
An agreement sets forth the terms and conditions for the distribution by Group subsidiaries of products published by the
Group or third parties. Among other provisions, Atari Inc. and Atari Europe SAS have granted each other reciprocal
exclusive distribution rights to the games they publish in their respective regions.
In September 2008, Atari Europe and Namco Bandai Games Europe SAS (Namco Bandai) signed a letter of intent to set
up a strategic distribution partnership. The transaction was completed in two phases, in February 2009, with Namco
Bandai acquiring a 34% interest in Namco Bandai Partners, and in July 2009 when Atari sold its remaining stake in to
Namco Bandai.
For a period of five years from the transaction’s completion date, Namco Bandai Partners has exclusive retail distribution
rights for video games produced by Atari in Europe, Asia (excluding Japan), Africa, the Middle East, Central and South
America, Australia and New Zealand.
HASBRO LICENSING AGREEMENT
Overtime, the Company had entered into various agreements with Hasbro. On July 18, 2007, the Company signed its
latest agreement with Hasbro, pertaining to:
• The extension until 2017 of the rights to the Dungeons & Dragons theme, under an exclusive license for all
interactive formats, including online and wireless. The agreement covers all existing and future products based on
that theme, which include NeverWinter Nights and Baldur’s Gate;
• The repurchase by Hasbro of online and wireless rights attached to various licenses (Monopoly, Scrabble, Risk,
Game of Life, Clue, Yahtzee, Battleship, Boggle and Simon), for €14.1 million (USD 19.3 million). This transaction
had only a negligible impact on revenue for Fiscal Year 2007/2008.
AGREEMENTS WITH CONSOLE MANUFACTURERS
The special relationship between the Group and console manufacturers is governed by agreements entered into by the
Company and/or its subsidiaries with Nintendo, Sony Computer Entertainment and Microsoft. The agreements concretely
authorize the Company to use these manufacturers’ technology for the purpose of manufacturing products compatible
with their respective hardware. The agreements include detailed provisions regarding the use of development kits,
publishing authorization procedures, royalties payable by the publisher to the manufacturer, the term of the relationship,
the territories concerned, manufacturing cost and the related logistics, payment terms and the parties’ respective
confidentiality obligations.
AGREEMENTS WITH MAJOR RETAILERS AND DISTRIBUTORS
The Group distributes its products through a centralized network made up of a series of major accounts. As of March 31,
2011, no single customer accounted for more than 15% of trade receivables outstanding. Risks stemming from
excessive dependency on certain customers are examined in the section of this Registration Document dealing with risks
to which the Group is exposed (see “Contractual risks”).