SecProbe.io

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                               [Atari Letterhead]

KRISTINA K. PAPPA
Corporate Legal Counsel
417 Fifth Avenue, 8th Floor
New York, NY 10016
Direct Dial:  212-726-4242
Fax:  212-726-4214
Email:  kristina.pappa@atari.com
        ------------------------

                                 October 4, 2005

VIA EDGAR
Stephen Krikorian
Accounting Branch Chief
Mail Stop 4561
Securities and Exchange Commission
Washington, DC 20549

     Re:  Atari, Inc.
          Form 10-K for the Fiscal Year Ended March 31, 2005
          File No. 000-27338

Dear Mr. Krikorian:

     This letter sets forth the response of Atari, Inc. ("Atari" or the
"Company") to the comment, and contains the information requested, (i) in the
letter dated September 15, 2005 from the Staff of the Securities and Exchange
Commission (the "Staff") with respect to the Annual Report on Form 10-K
referenced above, and (ii) on the September 26, 2005 conference call with
Melissa Walsh and Christopher White.

Form 10-K for the Fiscal Year Ended  March 31, 2005
---------------------------------------------------

Recapitalization, page F-15
---------------------------

Comment 1:

     We note your response to prior comment number 4 which indicates that the
change in conversion privileges to your related party convertible debt with IESA
was considered an inducement offer based on the criteria in paragraph 2 of SFAS
84. We further note your references to APB Opinion No. 26, paragraph 20 and EITF
Topic No. D-42 to support your classification of the incremental value of the
induced conversion as a reduction to net income to arrive at loss attributable
to common shareholders. Please tell us what consideration you gave to paragraph
2 of APB Opinion No. 26, as amended, paragraphs 1 and 5 of SFAS 84 and FASB
Technical Bulletin No. 80-1, when determining the appropriateness of applying
APB Opinion No. 26 to the inducement offer of your convertible debt. In this
regard, clarify why you have determined that APB Opinion No. 26, as amended,
should be applied to this transaction as it addresses the accounting for
extinguishment of debt, not the accounting for an induced

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conversion of convertible debt. Further, explain the basis for your
conclusion that the inducement of your convertible debt is a capital
transaction. We refer you to paragraphs 24 and 25 of SFAS 84. Additionally,
address why you believe that the nature of your relationship with the debt
holder impacts the classification of the incremental value of the induced
conversion.

Response 1:

     Your comment letter dated September 15, 2005 focused on the accounting for
our fiscal 2004 issuance of shares of common stock in satisfaction of
convertible indebtedness due to Infogrames Entertainment S.A. ("IESA"), our
parent company, and its wholly-owned subsidiary California U.S. Holdings, Inc.
("CUSH"). As discussed on our telephone call with Melissa Walsh and Christopher
White on September 26, 2005, this was only one of a group of related
transactions which resulted in the total recapitalization of the Company's debt
and equity structure. In accordance with what we said during that telephone
call, we are submitting this response letter to (a) describe the entire
recapitalization, no one element of which would have been done without the
others, and (b) provide a summary of how Atari accounted for the issuance of
shares in satisfaction of the convertible debt held by our parent company. As
requested on our phone call, we are also providing references to authoritative
literature which we believe support the accounting for transactions between a
parent and its subsidiary as capital transactions.

The  Recapitalization
---------------------

     In September 2003, Atari completed an overall recapitalization transaction,
as a result of which our stockholders' equity (deficit) position improved from a
deficit of $93.0 million at August 31, 2003 to equity of $108.2 million at
September 30, 2003 (the "Recapitalization"). The issuance of shares of Atari
common stock in satisfaction of convertible notes held by IESA or CUSH
represented approximately one-third of the value of the overall
recapitalization.

     Immediately prior to the Recapitalization, the Company's aggregate related
party debt totaled $212.4 million consisting of the following four separate
obligations to IESA or CUSH (hereinafter the "IESA Debt"):

             Medium Term Loan                     $48.3 million
             Revolving Credit Facility             44.8 million
             0% Subordinated Convertible Notes     46.3 million
             5% Subordinated Convertible Notes     73.0 million.

     The 0% Subordinated Convertible Notes and the 5% Subordinated Convertible
Notes were convertible into shares of the Company's common stock at the
conversion prices of $20.00 per share and $9.25 per share, respectively. The
remainder of the debt was not convertible.

     As part of the Recapitalization, on September 4, 2003, Atari, IESA and CUSH
entered into an Agreement Regarding Satisfaction of Debt and License Amendment
(filed as Exhibit 10.70 to our Registration Statement on Form S-2 (File No.
333-107819)). Pursuant to that Agreement, Atari agreed to satisfy its then
outstanding indebtedness to IESA and CUSH by:

     (1) transferring to IESA the entire indebtedness owed from Atari
Interactive, Inc. and Atari Australia Pty. Ltd. (each a subsidiary of IESA) to
Atari (such indebtedness totaling $46.6 million) in satisfaction of the 0%
Subordinated Convertible Notes, with any excess being applied against amounts
due under the 5% Subordinated Convertible Notes; and

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     (2) issuing shares of common stock of Atari in satisfaction of any
remaining outstanding indebtedness from Atari to IESA or its subsidiaries, which
equaled $165.9 million.

     The applicable provisions of the Agreement Regarding Satisfaction of Debt
and License Amendment are attached to this letter as Exhibit A (note that the
amounts included in Exhibit A are as of June 30, 2003 and the amounts in this
response are as of the transaction date).

     Significantly, only a portion of the convertible debt was satisfied by the
issuance of shares of Atari stock and almost 60% of the debt that was satisfied
by issuance of Atari shares was not convertible debt.

     The Company's recapitalization was structured in this manner at the
parent's request. The initially contemplated structure of the recapitalization
was for Atari to have satisfied $100 million of debt to IESA and its
subsidiaries with cash (in addition to transferring indebtedness from IESA's
subsidiaries), with only the remainder to have been satisfied with Atari stock.
The $100 million would have come from part of the proceeds of Atari's public
offering of its shares. However, at IESA's request, this was changed so that
Atari would issue an additional $100 million of shares directly to IESA and IESA
would immediately sell those shares as part of the Atari public offering. If
Atari had used the offering proceeds to repay a portion of its indebtedness to
IESA, the convertible indebtedness would have been satisfied in its entirety
with cash or by assignment of sums owed to Atari by IESA subsidiaries. It was
only because of the restructuring of the transaction that part of the
convertible indebtedness was satisfied by Atari's issuing shares to IESA.

     The Company strongly believes that the accounting impact of the two
alternative transaction structures should be similar. Further, we believe that
either way this entire transaction was capital in nature and therefore should
not impact net income. Not only did Atari view the debt satisfaction as a
recapitalization but it described the debt satisfaction under the heading
"Recapitalization" in the Prospectus for the September 2003 stock offering.

     Ultimately, on September 18, 2003, we issued an aggregate of 39,029,877
shares of our common stock, valued at the then current market value of $4.25 per
share, in satisfaction of all the IESA Debt outstanding, after applying the
$46.6 million of indebtedness from IESA subsidiaries to Atari against the 0%
Notes and a nominal amount of the 5% Notes. The number of shares issued included
9,259,163 "incremental shares" issued in regard to the 5% Note over the number
of shares that would have been issued had the 5% Notes been converted at their
original $9.25 conversion price. On September 24, 2003 and October 21, 2003,
IESA sold an aggregate of 21,034,812 of the shares it received in the settlement
of debt in a public offering at $4.25 per share, for total proceeds of $89.4
million.

Accounting Analysis of the Settlement of Our Related Party Debt
---------------------------------------------------------------

     The Company believes the guidance provided in APB Opinion No. 26, footnote
1 is an underlying principle to be generally applied to debt extinguishments
between entities under common control. It expressly states that "extinguishment
transactions between related entities may be in essence capital transactions."
As identified below, this notion is stated even more strongly in the SEC
Division of Corporate Finance Training Manual as well as the interpretative
guidance included in ASPEN Accounting Research Manager, a leading reference
manual for preparers and auditors alike. The SEC Training Manual says
"[f]orgiveness of debt by a related party typically should be considered a
capital transaction." This is the underlying principle in transactions involving
debt between a parent and its subsidiary because, as the parent controls the

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subsidiary, the extinguishment of debt can occur in numerous ways, all of which
should not affect income.

     As the transaction should be viewed and accounted for as a capital
transaction between parent and subsidiary, the transaction would not be governed
by FASB Statement No. 84, Induced Conversions of Convertible Debt. However, in
considering the amount of any value given to the parent company, we looked to
FASB Statement No. 84, for a method to quantify the amount of value transferred
to the parent. In addition, we considered the guidance in EITF D-42, The Effect
on the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock, and treated the value given to our parent as a
dividend in our calculation of earnings per share.

     In summary, the overriding principle that certain transactions, including
debt and equity transactions, between entities under common control should be
treated as transactions that are capital in nature, was applied to the
recapitalization transaction.

     The appropriateness of this treatment is supported by the accounting
literature cited below.

Citations of Accounting Literature Addressing Related Party Transactions
------------------------------------------------------------------------

     The Company cites the following authoritative literature in support of the
accounting for this recapitalization transaction as capital in nature.

     1. APB 26: Early Extinguishment of Debt

     APB26, Footnote 1-- If upon extinguishment of debt, the parties also
exchange unstated (or stated) rights or privileges, the portion of the
consideration exchanged allocable to such unstated (or stated) rights or
privileges should be given appropriate accounting recognition. Moreover,
extinguishment transactions between related entities may be in essence capital
transactions.

     2. SEC Division of Corporate Finance Training Manual
        (March 31, 2001) - excerpt:

     Chapter 7 Related Party Transactions

     I. General Disclosure Requirements

          B. Disclosures
          5. Forgiveness of debt by a related party typically should be
             considered a capital transaction. [footnote 1, APB 26.20]

     3. ASPEN Accounting Research Manager, Interpretations and Examples,
        Objectives of Financial Statements Chapter 17, Related Party
        Transactions

     Recording Related Party Transactions

     When a transfer occurs between a parent and its subsidiaries or between two
parties under common control and the transfer price is clearly either below or
above the current value of the transferred asset, the difference should be
treated as a capital transaction. Accordingly:

. . .

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     o If a subsidiary sells an asset to its parent for an amount that is less
       than the asset's current value or purchases an asset from its parent
       company for an amount that is greater than the asset's current value:

          o The parent should record the difference as dividend income.
          o The subsidiary should record the difference directly in
            shareholders' investment as a dividend distribution.

     If you have any questions or if you need any further information, please do
not hesitate to contact me at 212-726-4242.

                                                   Very truly yours,

                                                   /s/ Kristina K. Pappa

                                                   KRISTINA K. PAPPA
                                                   Corporate Legal Counsel

cc:  Melissa Walsh, Christopher White
       Securities and Exchange Commission
     Bruno Bonnell, Diane Price Baker, Jeffrey B. Kempler,
     Jodi Scheurenbrand
       Atari, Inc.

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                                                                       EXHIBIT A

                        PROVISIONS OF Agreement Regarding
                   Satisfaction of Debt and License Amendment

                                    Article 1

                          SATISFACTION OF INDEBTEDNESS

     1.1 Simultaneously with the execution of the underwriting agreement
relating to the Public Offering described in Section 1.2 (the "Underwriting
Agreement"), Atari will do the following in full satisfaction of Atari's entire
indebtedness to IESA and CUSH:

          1.1.1 Atari will transfer to IESA the entire indebtedness
    owned on that day from Interactive to Atari (which indebtedness,
    at June 30, 2003, totaled $39.0 million) in satisfaction of Atari's
    obligations with regard to 0% Subordinated Convertible Notes due
    December 16, 2004 (the "0% Notes") with an accreted value . . . equal
    to the amount of such indebtedness of Interactive that is transferred
    to IESA.

          1.1.2 Atari will transfer to IESA the entire indebtedness owed
     on that day from Atari Australia to Atari (which indebtedness, at
     June 30, 2003, totaled $1.9 million) in satisfaction of 0% Notes
     with an accreted value equal to the amount of such indebtedness of
     Australia Ltd. that is transferred to IESA.

               a. If the indebtedness owed from Interactive and
        Atari Australia to Atari on the day the Underwriting
        Agreement is signed exceeds the total principal and accreted
        interest with regard to the 0% Notes, Atari will transfer the
        excess to CUSH in satisfaction of the same amount of Atari's
        obligations with regard to the 5% Convertible Subordinated
        notes due December 16, 2004 ("5% Notes") that are held by CUSH
        (which obligations at June 30, 2003 total $72.2 million).

          1.1.3 Atari will satisfy the remainder of its indebtedness to
     IESA and CUSH (which remainder, at June 30, 2003, totaled $170.1
     million, as further described in section 11.3 b hereunder) by
     issuing and delivering to IESA and CUSH shares of Common Stock valued
     at the public offering price shown on the cover page of the prospectus
     relating to the Public Offering, with a total value equal to the amount
     of Atari's inde