Atari Games Corporation was an American producer of arcade games. It was originally the coin-operated arcade game division of Atari, Inc. and was split off into its own company in 1984. The company developed Gauntlet.
When the Atari Inc. division of Warner Communications lost $500 million in the first three quarters of 1983, its arcade coin-op division was the only one to make money. In 1984 Warner sold the Atari Consumer division of Atari Inc. (which included the video game divisions) to Jack Tramiel (who named his company Atari Corporation), but retained the arcade coin-op division (Atari Coin), renaming it "Atari Games". The agreement between Tramiel and Warner Communications was that Atari Games must always include the "Games" after "Atari" on its logo and that Atari Games could not use the Atari brand at all in the consumer market (computers and home consoles). Atari Games retained most of the same employees and managers that had worked at the old Atari Inc. It was able to carry on with many of its projects from before the transition. Atari Corp., in contrast, froze projects and streamlined staff and operations. In 1985, the controlling interest of Atari Games was sold to Namco, who soon lost interest in operating an American subsidiary. In 1986 a group of employees bought Namco's share.
Atari Games continued to manufacture arcade games and units, and starting in 1987, also sold cartridges for the Nintendo Entertainment System under the Tengen brand name, including a version of Tetris. The companies exchanged a number of lawsuits in the late 1980s related to disputes over the rights to Tetris and Tengen's circumvention of Nintendo's lockout chip, which prevented third parties from creating unauthorized games. (Atari Games' legal battles with Nintendo should not be confused with those of its former parent company—Atari also exchanged lawsuits with Nintendo in the late 1980s and early 1990s.) The suit finally reached a settlement in 1994, with Atari Games paying Nintendo cash damages and use of several patent licenses.
In 1989, Warner Communications merged with Time Inc., forming Time Warner. In 1993, Time Warner bought a controlling interest in Atari Games and made it a subsidiary of its Time Warner Interactive division. While Atari Games maintained its identity under the new ownership, its consumer division Tengen, on the other hand, had been removed from the map in favor of the Time Warner Interactive label. In mid-1994 Atari Games, Tengen, and Time Warner Interactive Group were all consolidated as Time Warner Interactive. In April 1996, after an unsuccessful bid by Atari founder Nolan Bushnell, Atari Games was sold to WMS Industries (owners of the Williams, and Bally/Midway arcade brands). When Hasbro Interactive bought the remains of Atari Corporation, the console manufacturer, and resurrected the Atari name in the home software arena, Atari Games was renamed Midway Games West by parent company Midway Games to avoid confusing two Atari brands. Midway left the arcade market to concentrate on home systems in 2001, ending at the same time Atari Games' influence in the arcade industry. Midway Games West produced games for home systems, but was disbanded by Midway in early 2003 after a slump in game sales, ending the existence of Atari Games.
Until 2009, Midway Games West still existed as a holding entity whose primary function was to be the copyright and trademark owner for its franchises. In July 2009, all of the intellectual property of Midway was sold to Warner Bros. Entertainment, ultimately bringing the Atari Games properties and history back to Warner one final time.