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Viacom files for Harmonix refund following poor Rock Band sales

Mon 15 Feb 2010 8:53am GMT / 3:53am EST / 12:53am PST
Business

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.

5 Comments

robert troughton
Managing Director

220 93 0.4
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...

Posted:4 years ago

#1

Russell Watson
Senior Designer

86 34 0.4
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 GI.biz.

It sounds lately like Activision + Viacom = "Thanks for all the fish!"

Posted:4 years ago

#2
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.

Posted:4 years ago

#3

Jim Webb
Executive Editor/Community Director

2,266 2,404 1.1
This is why you pay a performance bonus after the fact.

Posted:4 years ago

#4

Simon Johnson
Studying Computer Science with Games Development

2 0 0.0
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?

Posted:4 years ago

#5

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