alfredofroylan on 12 February 2010
Music games are getting beatting quite hard lately
Viacom paid Harmonix some $150 million for its performance on Rock Band in 2007 when music games were booming. Now that they're not, it looks like Viacom wants its money back.
Target-based compensation was part of the deal when Viacom's MTV acquired Harmonix late in 2006. The music game studio's stakeholders were promised incremental earn-outs for exceeding certain financial targets, and apparently received them.
For example, in 2008, SEC filings revealed that Viacom had set aside more than $200 million in target-based compensation for Harmonix based on Rock Band's performance -- in the original game's first month on sale it sold more than 1 million units.
Ultimately, "in 2008, we paid $150 million, subject to adjustment, under this earn-out agreement related to 2007 performance," says Viacom in a new SEC filing.
"At December 31, 2009, we believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of the earn-out has not yet been determined," the filing continues.
The Rock Band franchise -- comprised of two console editions, the special The Beatles game, and the broad digital store of downloadable content -- has generated over $1 billion dollars in sales to date. But the music game category in general saw sales contract by as much as half throughout 2009, as high-priced, peripheral-equipped bundles failed to sell as well as in earlier years.
Proponents of the genre say that the music game business is transitioning, not declining -- with peripherals at market saturation and controller interoperability at a high, the genre's revenue now comes from software sales and downloadable content, like track packs.
But fewer hardware bundles sold means big year-over-year sales declines for companies like Viacom, which yesterday blamed lower Rock Band sales for a decline in revenues, claiming the franchise had a "challenging" year
Target-based compensation was part of the deal when Viacom's MTV acquired Harmonix late in 2006. The music game studio's stakeholders were promised incremental earn-outs for exceeding certain financial targets, and apparently received them.
For example, in 2008, SEC filings revealed that Viacom had set aside more than $200 million in target-based compensation for Harmonix based on Rock Band's performance -- in the original game's first month on sale it sold more than 1 million units.
Ultimately, "in 2008, we paid $150 million, subject to adjustment, under this earn-out agreement related to 2007 performance," says Viacom in a new SEC filing.
"At December 31, 2009, we believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of the earn-out has not yet been determined," the filing continues.
The Rock Band franchise -- comprised of two console editions, the special The Beatles game, and the broad digital store of downloadable content -- has generated over $1 billion dollars in sales to date. But the music game category in general saw sales contract by as much as half throughout 2009, as high-priced, peripheral-equipped bundles failed to sell as well as in earlier years.
Proponents of the genre say that the music game business is transitioning, not declining -- with peripherals at market saturation and controller interoperability at a high, the genre's revenue now comes from software sales and downloadable content, like track packs.
But fewer hardware bundles sold means big year-over-year sales declines for companies like Viacom, which yesterday blamed lower Rock Band sales for a decline in revenues, claiming the franchise had a "challenging" year
http://gameinformer.com/b/news/archive/2010/02/12/take-the-money-and-run-media-giant-demands-refunds-of-rock-band-bonuses.aspx
Activision get rid of RedOctane and now this.
