Sections

Viacom files for Harmonix refund following poor Rock Band sales

Company requests return of performance-related bonus

Viacom is requesting that the founders of Harmonix pay back a performance-related bonus handed to them in 2008 following a drop off in sales of key franchise Rock Band.

The company paid $175m for Harmonix back in 2006, with an additional Rock Band performance-related bonus built into the deal. It subsequently dealt out a reported $208.7m based on the game's sales in 2007 and 2008.

It is this payment that Viacom is now asking to be paid back, according to a PaidContent report. A company 10-K filed by Viacom stated: "We believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of earn-out has not yet been determined."

Last week, Viacom blamed the declining sales of Rock Band for an overall revenue decline of 3 per cent year-on-year.

"It certainly was a challenging year in 2009 for the videogame industry in general and certainly for our Rock Band franchise," said Philippe Dauman, speaking during an investors conference call.

Going forward, the company said that it would focus more on software than on hardware in order to reduce the cost structure associated with the franchise, and also be more selective in the music titles chosen for the series.

It has previously been reported that Viacom paid $50m for the rights to The Beatles back catalogue in The Beatles: Rock Band.

The game subsequently failed to reach the number one slot in the UK software chart upon its release and, at the end of last year, Dauman admitted that while Rock Band's economics were improving, it wasn't happening as quickly as the company would have liked.

Related stories

Harmonix raises $15 million in equity funding

Music developer secures money from 14 investors ahead of Rock Band 4 launch

By Matthew Handrahan

Harmonix: People felt insulted when we turned to Kickstarter

Uncoupled Kinects and Kickstarter struggles, CEO Alex Rigopulos on a strange year for Harmonix

By Matthew Handrahan

Latest comments (5)

robert troughton Managing Director, Coconut Lizard6 years ago
How can a performance-related bonus be retracted? Harmonix would, understandably, have used that bonus to reward staff, directors and so on. Perhaps it was a mistake for Viacom to have paid it - but they did.

If I leave a tip at a restaurant, I wouldn't expect to be able to go back days/months/years later and retract that bid because, actually, the food wasn't as good as I'd first thought...
0Sign inorRegisterto rate and reply
Russell Watson Senior Designer, Born Ready Games6 years ago
So, bonus was paid in 2008 for performance, sales drop of in 2009 onwards and they want that bonus back because of that? Surely they dont have a leg to stand.

This would be the threat that companies such as Viacom pose to the games industry as was discussed in a previous article on GamesIndustry.biz.

It sounds lately like Activision + Viacom = "Thanks for all the fish!"
0Sign inorRegisterto rate and reply
Fran Mulhern , Recruit3D6 years ago
All depends what the bonus provisions say. Agree it would be weird to have them clawed back, but then if that's what the bonus rules state then....

I doubt it's that clear cut, suspect there will be some argument on it.
0Sign inorRegisterto rate and reply
Show all comments (5)
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.6 years ago
This is why you pay a performance bonus after the fact.
0Sign inorRegisterto rate and reply
Simon Johnson Studying Computer Science with Games Development, University of Hull6 years ago
This is worrying, because it could be identify a bigger problem at Viacom. They have very suddenly looked to recoup losses, could this be a sign the cracks are starting to show? Could Viacom crash and burn?

0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.