http://www.thekartel.com/johnmasterlee/blog/2009/10/23/rock_band_series_remains_unprofitable_to_date
Yeah. Really. The franchise did 1 billion dollars in revenue in the first 15 months. But Viacom paid about 150 million to purchase Harmonix, another 150 million to Harmonix for meeting sales goals, the actual development of the original Rock Band cost 100 million, margins were pretty low since the peripherals are expensive to produce (when you consider the game's price was slashed to around $100, this makes sense) and liscensing music has both a big up-front cost and an ongoing cost to the music labels, and lastly they overproduced the game and eventually had to eat the cost. In the end, the whole thing has cost Viacom $90 million more than it made.
I thought that with shrinking sales, the increasing costs to make better instruments, and liscense more music and more playable musicians, while the average sale price dropped due to saturation of guitar controllers, was going to erode the profitability of music games very quickly. But it turns out that the #2 music game has never been profitable. You have to wonder what it would take to bring Guitar Hero's annual profits to zero.
"[Our former customers] are unable to find software which they WANT to play."
"The way to solve this problem lies in how to communicate what kind of games [they CAN play]."
Satoru Iwata, Nintendo President. Only slightly paraphrased.
