Rock Band developer Harmonix to be sold by Viacom

by Alexander Sliwinski on Nov 11th 2010 9:00AM

Viacom has announced that it plans to sell Harmonix, developer of the Rock Band series and Dance Central. The mega-corp has reclassified the Boston-based company as a "discontinued operation" in its third-quarter financial and has already changed all future earnings to reflect the sale. The company recorded a $299 million loss in discontinued operations to reflect the change.

We followed up with Wedbush Morgan analyst Michael Pachter to help explain the "discontinued operations" situation. The analyst told Joystiq, "I am sure that the purchase price of $175 million is in there -- it would have been carried on Viacom's balance sheet as goodwill. The rest could be other operations (non-gaming), some portion of the earn out that they paid a couple of years ago, which should have been expensed, but you never know, or some portion of the development costs for games not yet released."

Update: Added quote from EEDAR analyst Jesse Divnich after the break.

[Thanks, Andrew B.]

Regarding discontinued operations, Divnich explains, "It is just a way for them to classify future losses so the impact of losses do not psychologically impact the sentiment towards the company. If Viacom said, we lost 'X million,' investors would be concerned about their long-term health. However, by saying we lost 'X million' from discontinued operations, it would convey to investors that the losses are attributed to an area of their business they no longer plan to be a part of."

Via: WSJ
Source: Viacom

Tags: ds, harmonix, microsoft, nintendo, playstation, ps3, psp, Rock-Band-3, sony, viacom, wii, xbox

Reader Comments (95)

So... what does this mean for future DLC and the like?

@Iamdude I agree, and what about future Rock Band titles?
Any answers Joystiq?

@Iamdude

DLC should be safe, that is the profitable part of the operation. They just author some tracks, stick them on a digital storefront, and collect cash money as people buy them for years and years.

The problem here is the retail releases. Beatles seriously underperformed relative to projections in sales last year. That Beatles license was not cheap, and your big-box stores were giving away full band kits 2 for a dollar a few months ago. That's a lot of unsold hardware.

Green Day was, predictably, a sales disaster. And it's very telling that this announcement was made right after disappointing first-week sales results were announced for Rock Band 3.

Viacom is clearly tired of pouring money into the development of awesome games that don't sell well. They'd rather get their return on investment by hoping someone else wants to buy an awesome development team and a business with a nice recurring DLC revenue stream.

@Iamdude this looks like a serious vote of no confidence in Harmonix. My guess is poor sales of RB3 is to blame. Bye to music games in the next few years. It was fun while it was hot.

:(

@copa That is crazy...it came out what last week??? No patience. I know I'm planning on getting the keyboard bundle for Xmas.

@copa Where are you getting this information about RB3 sales being bad?

I'm not necessarily doubting you, I just haven't seen any information about RB3 sales, either positive or negative.

@Mcmax3000 On the UK charts RB3 was around #27 on the list. That isnt the entire world but its a popular game in the UK and debuting at 27 is worse than awful.

@Mcmax3000 It's already dropped to $49.99 on Amazon. I don't know, in a way I kind of hope 3 is the last one...unless they can make RB4 as good as RB2 was. I just don't understand how they shipped 3 out with so many bugs, and features missing. I miss the World Tour, cash, staff, leaderboards, scoring, customization, seeing peoples art, making online bands, competitive modes, and online interaction so much better in RB2.

@Petebot330

For sure! Rock Band, is and always will be a slow-burn money maker. It's not a first week big earner, like Call of Duty. Sheesh.

@Dizazter It was for RB 1 and 2. You cant re-write history people. RB and GH is closer to a slow painful death. It is simply a fact.

@Mcmax3000 MTV never recouped the money it paid for Harmonix. RB3 sales were bad. UK is like a mirror image of US sales, only smaller. It debuted at 27. It only sold like 5300 copies. To put that in perspective, GHWOR in that same week was at 26. if some company is willing to leak NPD numbers to the public (at the risk of being found and sue), we'd see how RB3 did in the US.
music band games are a niche now. Harmonix's next hope is Dance Central.

@onlysublime You say "were bad". The game has only been out for a couple of weeks. While I agree that the numbers you quoted are not good first week sales, I don't think it's quite fair to write it off as failure in the past tense already., especially since I read posts from people in the UK that were having issues finding the game at launch, just like here in Canada.

To everyone else, like I said, I wasn't necessarily doubting the claims, I was just curious as to where the information was coming from since I hadn't seen any sales figures yet.

That said, I doubt this has anything to do with RB3 sales. Selling off a division of your company isn't something you decide over night, especially in a large corporation the size of Viacom. This was probably decided weeks, if not months ago.

And here comes Activision....)':

@Coldplay619
DON'T EVER JOKE ABOUT THAT

@Coldplay619
I read that in the "Here Comes the Men in Black" theme song.

@Coldplay619 please, god no!!!!!!!!!!!!!!!!

@The Aquacharger
that so works!

@Protege420 no it doesn't.

@Coldplay619
It WILL be activision or EA. Activision disbanded neversoft, so that would make sense and, well, basically ever decision about the launch of RB3 already makes them seem like EA or activision, so it wouldn't surprise me, AT ALL, if the operation of the company has already been transferred, most likely to EA.

@Coldplay619

Here comes activision, franchise upenders?

Viacom doesn't like free money?

@2Slick: They're selling high.

@tofoomeister
Sales of both WoR and RB3 have been slow compared to previous entries (RB3 especially if you look at UK's Chart Track), there's not really anything likely to change that for future titles (If anything was going to revitalize the genre in to new highs, it was going to be pro instruments). May as well get out of the market whilst your company is still worth a decent amount.

@wormania

Agreed the rhythm game fad is over. These games will never sell like they did at their peak.

@2Slick in your magic world, companies dont incur costs?

@Jack Kevorkian

In my magic world, I don't incur costs.

@FriedConsole Activisions Fault, of course!

@RodrigoCard

Not sure if you are joking or not but the music game fad would have come and gone without milking of the both RB and Guitar Hero. It was smart for both companies to produce as many as possible to cash in on the fad.

Why am I imagining a nightmare scenario where Activision buys out Harmonix and forces them to give Rock Band the Guitar Hero treatment?

Ninja'd. Damn.

C'mon EA, you know what you have to do here...

@Rollins

Buy Harmonix, put out RB4 with a "VIP Pass" for people who buy it new that gives them free "DLC" which is really just the same 5 songs over and over again, but each time a new pack comes out, a higher difficulty is added to the song until you've finally gotten the complete songs after 6 packs. And then when something actually new and worth buying comes out, they can charge $10-15 for it rather than it being part of the VIP Pass?

Yeah, please, EA...buy Harmonix so you can make me hate their games as much as I hate BF now for the stupid stunts pulled with that bullshit VIP Pass.

I'm glad I didn't buy RB3 then yet. It was going to be a major purchase for me, as I wanted to move from the Wii to the Xbox 360, but now, i don't see that happening for the immediate future.

@Rocketboy Saw Band Hero full set (drums/mic/guitar) at BestBuy for $59. That'll lower your cost of entry, then get RB3.

@Rocketboy
RB3 is awesome you cant miss there best and last game!

The cost of two guitars, drum set, mics, keyboard, software, and new copies of the songs I bought for the Wii is a lot more than the just the software, even if I pick up a discounted kit. It'll still be cheaper for me just to stick on the Wii, which is where I started. I was willing to shell out the cash at one time, but now that there's uncertainty in the franchise, I'll just stick with my crappy graphics and the less songs, and just buy RB3 for the Wii.

I'm not sure why my comment "Because of this news, instead of spending a lot of money to go from Rockband 2 on the Wii to Rockband 3 on the 360, I will stay with my initial investment on the Wii" would be a big [-] getter.

Geesh, I didn't have a 360 when I first found a good deal on Guitar Hero 3. And when I did finally have a 360, I didn't feel like reinvesting in equipment. Sorry for being frugal.

So, until we hear anything more about what this means I'm not passing judgment.

I do know that I won't buy RB3 until I know for sure what this means.

@Credge

It means RB3 is an awesome game with over 2000 songs available as DLC.

@Troy Powers You don't need RB3 to play them, what's your point?

ah Sh!t that's the end of dlc

So Viacom owned Harmonix, who developed Rock Band. EA published Rock Band. And MTV is somewhere in the mix. Who owns the "Rock Band" name/franchise? EA? Viacom? Harmonix? A Rock Band game without Harmonix is not a game I want to play.

Either way, I'll follow Harmonix wherever they go, assuming the quality stays high. I made the jumps from Frequency/Amplitude to Guitar Hero to Rock Band with them and I figure I'll continue with whatever they do next.

@km3k Viacom owns MTV, thus the "MTV Games" label attached to Rock Band. EA is the distributor through the EA Partners program, all they really do is deal with the boxes that get shipped out to stores, etc.

Viacom owns Rock Band. If they sell Harmonix, they're probably keeping the Rock Band IP for themselves.

@tapoxi Thanks for the info. I expect Viacom would keep the Rock Band IP too.

@km3k I doubt that Viacom will keep the Rock Band IP. If they wanted to continue making Rock Band games, they wouldn't be selling Harmonix. Besides, Harmonix isn't worth more to potential buyers if the Rock Band IP goes with it.

@tapoxi They have to sell the IP with Harmonix. Without the IP, Harmonix is just a bunch of programmers with goofy side bands. I could just hire them without buying the company.

@Mcmax3000

"I doubt that Viacom will keep the Rock Band IP. If they wanted to continue making Rock Band games, they wouldn't be selling Harmonix."

Uhh... You obviously aren't aware of Guitar Hero, are you?

@Punkrawk Bbob
I actaully wouldn't be too sure that Viacom will keep the IP considering they want to leave the Video Game business.

@Punkrawk Bbob

Sure I am. Activision didn't own Harmonix. They purchased Red Octane who partnered with Harmonix to make the first two Guitar Hero games.

MTV then purchased Harmonix, who was an independent studio at the time (they were also making the Karaoke Revolution games for Konami and they made EyeToy: Anti Grav for Sony around the same time).

@Punkrawk Bbob

I wanted the Harmonix team do an hour and a half presentation on the history of the company a couple of years ago at PAX so I'm pretty familiar with them & what they've done in the past.

@Mcmax3000 Harmonix is a hired-for-money developer. way back when, Red Octane was known for peripherals, most famously, for the hardcore DDR dance pads. they wanted to make a guitar peripheral so they went to Harmonix and said we need a game to sell these guitars, will you make the game? and thus guitar hero was born. guitar hero belonged to Red Octane. Harmonix was just the developer. just like Karaoke Revolution belonged to Konami even though Harmonix was the developer.
I think for Viacom to make back the money they invested in Harmonix, they'd have to give up the IP to Rock Band. otherwise, no one is going to spend big for Harmonix with no clear future in sight with the dying music band genre. any way, someone is going to pick up Harmonix for cheap.

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Rock Band developer Harmonix to be sold by Viacom

Reader Comments (95)

Posted: Nov 11th 2010 9:03AM Iamdude said

Posted: Nov 11th 2010 9:05AM HBlakeH117 said

Posted: Nov 11th 2010 10:03AM copa said

Posted: Nov 11th 2010 10:10AM Jack Kevorkian said

Posted: Nov 11th 2010 10:16AM Petebot330 said

Posted: Nov 11th 2010 10:51AM Mcmax3000 said

Posted: Nov 11th 2010 11:00AM Jack Kevorkian said

Posted: Nov 11th 2010 11:29AM mywhitenoise said

Posted: Nov 11th 2010 11:39AM Dizazter said

Posted: Nov 11th 2010 11:55AM Jack Kevorkian said

Posted: Nov 11th 2010 12:49PM onlysublime said

Posted: Nov 11th 2010 2:31PM Mcmax3000 said

Posted: Nov 11th 2010 9:04AM Coldplay619 said

Posted: Nov 11th 2010 9:05AM HBlakeH117 said

Posted: Nov 11th 2010 9:16AM The Aquacharger said

Posted: Nov 11th 2010 9:23AM Soc said

Posted: Nov 11th 2010 11:17AM Protege420 said

Posted: Nov 11th 2010 12:56PM mywhitenoise said

Posted: Nov 11th 2010 2:33PM mietha said

Posted: Nov 20th 2010 10:23AM Haggard said

Posted: Nov 11th 2010 9:07AM 2Slick said

Posted: Nov 11th 2010 9:11AM tofoomeister said

Posted: Nov 11th 2010 9:34AM wormania said

Posted: Nov 11th 2010 9:49AM FriedConsole said

Posted: Nov 11th 2010 10:12AM Jack Kevorkian said

Posted: Nov 11th 2010 10:56AM 2Slick said

Posted: Nov 11th 2010 12:33PM RodrigoCard said

Posted: Nov 11th 2010 1:21PM FriedConsole said

Posted: Nov 11th 2010 9:11AM MowDownJoe said

Posted: Nov 11th 2010 9:11AM MowDownJoe said

Posted: Nov 11th 2010 9:14AM Rollins said

Posted: Nov 11th 2010 1:10PM superklye said

Posted: Nov 11th 2010 9:15AM Rocketboy said

Posted: Nov 11th 2010 10:01AM Tukachinchilla said

Posted: Nov 11th 2010 10:41AM leemahi said

Posted: Nov 11th 2010 2:00PM Rocketboy said

Posted: Nov 11th 2010 9:16AM Credge said

Posted: Nov 11th 2010 11:21AM Troy Powers said

Posted: Nov 11th 2010 11:41AM Credge said

Posted: Nov 11th 2010 9:18AM FdUmCh said

Posted: Nov 11th 2010 9:20AM km3k said

Posted: Nov 11th 2010 9:27AM tapoxi said

Posted: Nov 11th 2010 9:37AM km3k said

Posted: Nov 11th 2010 11:00AM Mcmax3000 said

Posted: Nov 11th 2010 11:03AM SeishiZero said

Posted: Nov 11th 2010 1:16PM Punkrawk Bbob said

Posted: Nov 11th 2010 1:41PM libregkd said

Posted: Nov 11th 2010 2:03PM Mcmax3000 said

Posted: Nov 11th 2010 2:07PM Mcmax3000 said

Posted: Nov 11th 2010 2:44PM onlysublime said

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