Viacom to sell Harmonix
Rock Band developer offloaded; speculation begins that Activision could swoop for studio
Harmonix parent Viacom has announced that it will be selling the Rock Band developer, in the same financial statement which revealed that write-downs at the developer had helped to slash 59 per cent from Viacom's third-quarter earnings.
No buyer has come forward for the developer as yet, nor was any reason given, but discontinuation of the company's revenue streams and a re-evaluation of its market worth has cost Viacom $299 million.
Doug Creutz, of market analysis firm Cowen & Company, has speculated that it would make sense for Activision to buy Harmonix, reuniting it with the Guitar Hero brand.
"We speculated several weeks ago that, given the declines in the music genre, it would make sense to (re)combine the Guitar Hero and Rock Band franchises, thus we believe Activision Blizzard is a potential buyer," said Creutz in an email.
Generally, it was a healthy financial report for the MTV owner, with overall revenues up to $3.3 billion for the quarter ending September 30, compared to $3.17 billion for the same period a year earlier.
Nine month earnings and revenue also increased across the board, buoyed by healthy ad revenues from TV channels and strong performances from the company's cinematic releases, such as Jackass 3D.
"We are very pleased with the financial and operational results we delivered in fiscal 2010, which were the direct result of our continuing creative success. With a strong balance sheet and increasing free cash flow, we are delivering on our commitment to return capital to our shareholders with the institution of a quarterly cash dividend in the second quarter followed by the resumption of our stock repurchase program in October," said Viacom president and CEO Philippe Dauman.
Rock Band 3, the latest iteration of the music game franchise, was extremely well received critically, but failed to make any impression on the sales charts - selling only 7386 units in the UK on its week of release.
Harmonix also developed Kinect exclusive Dance Central, which released last week in the US and this week in Europe. No indication has been given as to who will offer continued support for the titles, nor what form it will take.
MTV, which is also owned by Viacom, purchased Harmonix for $175 million in 2006.
Slow sales of the Rock Band games had previously been highlighted as an important factor in financial downturn at Viacom, but more recent reports seemed to indicate that the tide was turning in Rock Band's favour.
Which presents the question: is there another big publisher aside from Activision who would be interested in buying Harmonix? Given how demise of the music genre, would it be worth another publisher trying to get a foot in the door of a genre which is no longer the golden goose it once was...?
You can't blame them for wanting to back down from a medium and a genre which is no longer making them money. At least (in this other news story) Viacom have gone on to explain that they don't have the experience with videogames and will focus on other sectors.
Hopefully someone will buy Harmonix who will give them the finance and freedom to continue to push their chosen genres forward, although Activision buying them to regain control of the Guitar Hero brand definitely makes sense from the publisher's perspective. Any idea if ZeniMax are planning on moving into the music genre?! ;)
Edited 1 times. Last edit by Terence Gage on 11th November 2010 5:51pm
ZeniMax is currently on a shopping spree and most of the developers they have are core developers so rounding it up with a casual developer would be a possibility although not sure if they have the money for all the licensing regarding songs.
There would be also an odd possibility that Sony gets in on it, they do music games with Singstar, good connections to the music industry via Sony Music and Dance Central is by far the best Kinect game out there so taking away a very capable Kinect developer would kind of make sense in that way.
I used to work for Activision in a former life, and there's no doubt that when they bought RedOctane, they would also have bought Harmonix had the price been sane. Activision bough the brand, the game, the guys who invented it for less than $100m. Harmonix, who didn't 'invent' GH or own the brand... who would pay more for just them alone? The price suggested to Activision was absurd, and then MTV went and paid a MULTIPLE of that... And more than was paid for the GH franchise lock, stock and barrel. Read the Viacom financial statements about the earnouts for Harmonix directors too, even if the game underperformed. Lunacy.
As a side note, the $175m sale of Harmonix to MTV kicked off a series of development geniuses wondering 'if Harmonix is worth that, what the fuck are WE worth'... including Infinity Ward. And we all know how that one ended.
T
EA or MS would be my pick...anyone but activison...
A lot of the problems related to Harmonix doing poorly at retail relate to Activision, or more specifically, the fact that Activision loaded the market with so many naff music titles - some of which copy Rock Band so gregariously that they're sitting in the corner with a Dunce cap on their heads while their classmates laugh at them - that it saturated the market. Because of Activision consistently releasing a mediocre product, Rock Band had problems with later penetration. This is doubly ironic since Activision's in the driver's seat for acquiring the developer.
EA=rock band = good music games
When only a rock star can afford to play today's music games, it's time to scale things back a bit, innovation be damned...
It would make sense that EA might be interested in picking up Harmonix, but I'm just not sure they'd want a big cash investment into the music genre, given its decline in the last couple of years. I don't think the genre's failings are entirely due to Activision's 'Hero' brand having saturated the market; I think there are too many products that are too similar, and people are probably getting a bit sick of all the plastic peripherals taking up space in their living room. Not to mention the price, of course.