Now the history of Atari is a complicated one, and there's bound to be tons of misinformation about its IP (since back in the day copyright was more lax/less enforced and Atari owned a company, Tengen, that produced bootleg games) and the current state of the brand.
Now, what was Atari? Back in the day, they were... big, to say the least. After creating Pong, commonly acknowledged to be the first successful commercial videogame, and spurring the first generation of game consoles (the Pong consoles, heralded by the Magnavox Odyssey and copied by Nintendo with their Color TV Game line - the Pong AT in Smash), they dominated the second generation with their 2600. Trouncing Mattel's Intellivision and Coleco's Colecovision, Atari were the kings of the industry (until it collapsed from a mix of saturation and bad products). At the same time, Atari was killing it in the arcades, creating hits that then fed its console business by being able to sell those games, for home (though it should be mentioned that console exclusivity wasn't a thing back then). After the industry crashed, Atari never really recovered, putting out follow-ups like the 5200 and 7800 to dwindling success.
Now here comes the complicated part. In '76, Atari was sold off to Warner Communications. Shortly after came the release of the 2600 and the glory days, but the console, arcade and home computer divisions worked independently from each other and functioned as separate entities. The arcade division was chugging along, but the computer division was losing a war against Commodore and the console division was crippled by the crash of '83. Therefore, the computer and console divisions were sold off to Jack Tramiel as Atari Corporation, while Warner renamed the arcade division Atari Games.
Atari Games stayed at Warner until '85, when it was sold to Namco - who later lost interest and sold its shares, partly back to Warner and partly to private interests. Since they were forbidden from using the Atari brand for console games, they created subsidiary Tengen to publish games on the NES. In '93 Time Warner bought Atari Games and made it a subsidiary of Time Warner Interactive Group - later TWIG, Atari Games and Tengen were all consolidated into a single entity named simply Time Warner Interactive. Still with me? Then Time Warner Interactive was sold off to WMS Industries, who made it a subsidiary of its subsidiary Midway Games. Midway Games later spun-off into its own company and renamed Atari Games to Midway Games West. Midway later went bankrupt, and so Atari ceased to exist. But Midway's assets were bought by Warner (funny how it all comes full circle) and reborn as Netherrealm Studios. So, the arcade division of Atari currently exists as Netherrealm Studios.
Now Jack Tramiel's Atari Corp? Well, it struggled. In the computer space it was left behind by its rival Commodore and titans like Microsoft and Apple. Console-wise, it pushed out the infamous Atari Lynx and Jaguar. The less said about those the better. After the failed creation of a PC gaming division I won't name to avoid confusing you more, Atari Corp merged with JTS Inc to become JTS Corp. JTS Corp sold Atari to Hasbro, who made it a subsidiary of Hasbro Interactive. Then things went south for them, too, and Hasbro Interactive was sold off to Infogrames (makers of Alone in the Dark). Hasbro Interactive became Infogrames Interactive, then Atari Interactive. Infogrames as a whole realized the Atari brand still held a lot of recognition, and basically renamed their whole operation Atari (Infogrames was renamed Atari SA, while their US branch was renamed Atari Inc). Then they went bankrupt, sold off lots of stuff, then apparently reassembled and now exist again as Atari SA.
So, yeah. Who the **** owns what? Is it as simple as, games that debuted on arcade are owned by Netherrealm while console and computer originals are owned by Atari SA? What about Tengen? What about Kee Games (a fake rival Atari created in the arcade days to avoid exclusivity contracts)? What IP does Atari SA still own, and which did it lose in the bankruptcy?
Honestly, I don't know. Deeper probing will probably yield more answers - after all, we're getting Atari plug-and-play consoles to this day, so a look at what games are on would be a big clue. But this is just some research I did a few years back - that's why the Atari SA part is so inconclusive, it was still dead when I gathered all of this and therefore I had to look up the new parts to write this.
Now, with that out of the way, I also have a pretty comprehensive list of Atari's IP, so I'll just look at possible contenders.
Adventure: one of the most seminal games of all time (you don't get namecalled in a Steven Spielberg movie for nothing), the namesake of the adventure genre. While the character in-game is depicted as a pixel, and doesn't have a name, something could be done (the character has a design on the cover art, albeit partly obscured) and it does have some items that could signal moveset potential like a magnet and a magic bridge. Also
Flyboy
had a dream about this and we all know they're secretly a prophet.
Area 51: definitely not one of the best known Atari games, it was an arcade light gun shooter that spawned a sequel, and two console FPSes (one starring David Duchovny!) I figured I'd mention it just because it has defined characters, but it's a long shot.
Awesome Possum: That's right! Atari owns Awesome Possum. This discount Bubsy has no chance to make it in over the unreal deal, but it is a platformer mascot so it probably has moveset potential (I'd think? I never played it) and, well, you probably know about it.
Breakout: I mean, I had to mention Breakout, it's one of the most famous and iconic games of all time. It spawned a genre of itself, which includes Taito's Arkanoid - that's right, Square Enix just owns the clone, not the real deal. Maybe an AT or a stage works best for this, though I should mention that the original arcade has artwork that interprets the game as a prisoner knocking a ball-and-chain into a wall to escape, so that's unique.
Centipede: an all-time classic and just a plain fun game. Depending on the source, the player character in the game is either a garden gnome wielding a magic wand, an elf called the Archer, or the Bug Blaster, shooting at bugs. You could definitely come up with something here. Besides the shots, he could spawn bugs (including the titular Centipedes), use bombs, and drop mushrooms and flowers like Pac-Man's hydrants.
Tank/Combat: not much you can do here beyond having a tank that shoots shells and drops mines, but again, I felt like I had to mention them because of their huge success (you look at a screenshot of Combat, you'll probably know what I'm talking about).
Crystal Castles: not one of the classics, but it does have an actual defined character called Bentley Bear, but there's no moveset beyond jumping.
Gauntlet: a two/four-player game where you control four characters (Thor the warrior, Merlin the wizard, Thyra the valkyrie and Questor the elf) in a fantasy environment, using magic and stuff. This could work as an Ice Climbers-style character, though four could be too much.
Haunted House: I just wanted to mention this game because you play as a pair of eyes in the darkness.
I, Robot: not actually based on the novel, in this game you play as Unhappy Interface Robot #1984 in its rebellion against Big Brother (subtle). Again, moveset-wise it's lacking, but where else am I gonna get to mention that? (I promise no more of these)
Kangaroo: a Donkey Kong clone where you play as Mama, a mother kangaroo who wields boxing gloves and must jump over apples to rescue her joey from the evil Ape (with a capital A). Not the most famous game, or the best, but a character with moveset potential is there.
Marble Madness: I believe it's impossible to come up with a moveset for a marble but this game is a masterpiece, not just for the arcade but the NES as well, so a stage is very much deserved.
Missile Command: again, there isn't a character here, but this is another seminal title. Hell, it might be the earliest example of videogames as art, with its statement on nuclear annihilation.
Paperboy: another one of those iconic classics, and one that most NES fans know about. Good ol' Paperboy, could he work in Smash? Maybe not, as he can only throw papers (dunno if he can do something else in Paperboy 64, but I'd assume he can't), but this is the kind of character you include for the legacy, not the moveset potential, so maybe he can use the many weird and delightful hazards in his favor.
Pit-Fighter: this game is pretty trash but it's a fighting game with tons of characters, with unique moves and weapons that can be picked up. If it were a better-known game, maybe it would be a frontrunner.
Pong: I don't think I have to say anything about Pong.
Primal Rage: also known as that arcade fighter where you play as dinosaurs. It would definitely work, but it's not the title you'd choose to represent Atari.
SwordQuest: this series of games has a deep and pretty interesting plot starting twins Torr and Tarra, but I'll skip it because it's all just part of a contest. The games themselves could have moveset potential in the form of the items you have to move (not use, move) between rooms, and I'm sure the twins do cool stuff in the comics that accompany the games, but the games themselves are pretty unremarkable so you might as well go with Adventure.
Yar's Revenge: you play as who else but Yar, a bug-like creature on a mission to defeat the Qotile. A 2600 classic, it has a plot, it's fairly complex for its age, but ultimately there's not much Yar can do except fire its Zorlon Cannon.
There's other games, of course, but I think that's a pretty good crash course. So, do I think any of these could be getting into Smash?
Chance: 0%
Hell naw. First off, the Atari 2600 was a catastrophic failure in Japan. So I don't think it's an easy sell to that audience, and I wouldn't be surprised if its the one hole in Sakurai's encyclopedic knowledge of videogames, as it's before he started caring and not nearly as influential in his homeland (beyond Pong obviously). Maybe the arcade games that were huge here were huge there, but that still means Atari was just an arcade dev for them, no more influential than Taito, Bally or Midway.
Also, many of Atari's biggest icons weren't owned by them. I'm mostly referring to Activision's Pitfall Harry, but also Pac-Man, and Space Invaders.
Plus, rights issues. Who has to be contacted? Does Nintendo even know? Would both companies have to be licensed with? It's a flustercuck and a potential headache for Nintendo.
Then there's competition. If you want a rep from this era, honestly aside from Paperboy or the Bug Blaster, maybe you'd just be better off with Pitfall Harry. If you're going to deal with Warner, why not just go for a Mortal Kombat character? And barring that, Scribblenauts?
Finally, moveset. I'm all for something like the guy from Adventure pulling a Mr. Game & Watch/Pac-Man and repping many of Atari's classic games, but other than that, they don't have a lot of defined characters with moveset potential, and even Paperboy and Centipede take some creativity to envision.
Want: 80%
I have tons more characters I'd like to see, but Atari's a huge part of gaming history and that's what Smash is all about, right? It's not the splashiest of choices or one that would sell like hotcakes but man, it's almost like, Sakurai's duty to inform the uninformed of these parts of gaming history. Without Atari we might not even have an industry today - that's how much they've done. And with the sorry state they're in today, at least something in Smash would be a good eulogy.
Noms: Noctis x5
Prediction: 46%
Edit: man, somehow I wrote all that but forgot about Asteroids. I suck. Anyway give Asteroids AT Samurai