Harmonix rocks out a $209 million bonus?

Source: See below. What we heard: In 2006, MTV's purchase of Harmonix raised some eyebrows, thanks to its $175 million price tag. However, the studio's first MTV-branded effort, Rock Band, had appeared to have come close to breaking even. According to Sunday's financial report from MTV...

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Source: See below.

What we heard: In 2006, MTV's purchase of Harmonix raised some eyebrows, thanks to its $175 million price tag. However, the studio's first MTV-branded effort, Rock Band, had appeared to have come close to breaking even. According to Sunday's financial report from MTV parent Viacom, some "1.1 million bundles" of the game were sold in North America in 2007, generating over $185 million in revenue. According to NPD, both the bundled and unbundled versions of the game have sold over 1.475 million copies in the US alone, generating just above $238 million in revenue as of January 31.

While successful, Rock Band still hasn't yet met the billion-dollar payday of the Harmonix-created Guitar Hero franchise, which Activision picked up for under $100 million in 2006. And now comes news that Rock Band may be breaking even after all. Today in the wake of a report on the journalism insider site Paidcontent.org, numerous game-news outlets reported that in 2007, Viacom paid Harmonix a $208.7 million bonus for its work on the Xbox 360, PlayStation 3, and PlayStation 2 title--which, according to EA, is also Wii-bound.

The official story: Unfortunately, as is often the case in the always-on-deadline, fruitfly-lifetime-long news cycle, many outlets jumped the gun. According to the actual 10-K form filed with the Securities and Exchange Commission, Viacom has set aside $208.7 million in expectation of incentive payments for both 2007 and 2008--which will be doled out incrementally through 2009 if Rock Band revenues are above certain profit projections.

Uncondensed, Viacom's financial reports says the following: "To the extent financial results exceed specific contractual targets against a defined gross profit metric through 2008, former Harmonix shareholders will be eligible for incremental earn-out payments with respect to the years ended December 31, 2007 and December 31, 2008. At December 31, 2007, a liability of $208.7 million has been recorded in Other liabilities on the Consolidated Balance Sheet for the expected earn-out payment. We expect to have a final payment with respect to the year ended December 31, 2008 done in 2009."

Bogus or not bogus?: Bogus that Harmonix and its shareholders have already received nearly $209 million in bonus payments. Not bogus that, over the course of two-plus years, the studio and its backers could receive such payments if Rock Band, which is currently available only in North America, proves profitable. And that prospect seems likely, give the fact the game will generate much more revenue in harder forms of currency when it goes on sale in Europe and Australasia later this year. Another major factor is the game's downloadable content--which was at 2.5 million songs and counting.

However, one big question question remains. How much must Rock Band make to meet Viacom's "defined gross profit metric" and earn its makers a fee akin to a Rolling Stones world tour?

Discussion

52 comments
djeckenrode
djeckenrode

"Um, NO. If they have the DLC on the Wii, it will be the for same price they already charged PS3 and Dreamcast360 owners. To practically give something away to Wii customers that owners of other consoles had to pay for would not only hurt their bottom line, it would infuriate the owners that paid full price. As of last week, there were already 59 downloadable tracks - the game itself only came with 58! PAY FOR YOUR DLC LIKE EVERYONE ELSE!" wow, dude plz calm down a bit, u dont have to go off on a rampage, although i do agree, us wii users should have to pay for DLC if it even comes to the wii which it probably wont

Mr_KMG
Mr_KMG

"You have to hand it to Harmonix, they were able to stand against a juggernaut with a powerful brand name and still make a name for themselfs." "What juggernaut? Themself? They made Guitar Hero, you realize..." But activision is destroying the brand

statboyinva
statboyinva

ThickFreak "Ok, now they have a good excuse to put out on the Wii SOON. I just hope they can fit DLC on it, and maybe it should come with all the extra stuff already released. I would pay an extra $15-$20 for it." Um, NO. If they have the DLC on the Wii, it will be the for same price they already charged PS3 and Dreamcast360 owners. To practically give something away to Wii customers that owners of other consoles had to pay for would not only hurt their bottom line, it would infuriate the owners that paid full price. As of last week, there were already 59 downloadable tracks - the game itself only came with 58! PAY FOR YOUR DLC LIKE EVERYONE ELSE!

Ozzie234
Ozzie234

And yet, if Harmonix would have targeted Rock Band for a more skilled audience already experienced from the previous Guitar Hero games (read: put in some real challenging guitar charts), they would have WIPED THE FLOOR with Activision and Guitar Hero III. They blew it.

SteveTwo
SteveTwo

The reason why Harmonix having created Guitar Hero is relevant is because Rock Band is basically what Harmonix envisioned Guitar Hero evolving into. They were offered a ton of money for GH, and in thier mind, they were ready to change it to the next level anyways, and that money made it happen. It would have been shocking had they not done so well 'against' Guitar Hero. They had all the experience of creating that franchise, plus alot of money from GH, then all the money they were given for GH... that's a hard to lose formula.

assasinsgreed
assasinsgreed

proves that Americans are committed gamers even in a time of economic recession

PiNwOrM
PiNwOrM

""You have to hand it to Harmonix, they were able to stand against a juggernaut with a powerful brand name and still make a name for themselfs." You dont know what you are talking about. But to put it into context, its easy to beat a brand that you created yourself." What does them creating it have to do with anything? They don't OWN guitar hero. The AVERAGE casual gamer doesn't KNOW that they made it. Guiter Hero is simply a juggernaught, and Harmonix has to compete with it. Who created it is irrelevant.

NightRain
NightRain

They are freakin' rich, dudes!!

okassar
okassar

I am not surprised,Rock Band is a great game.I bought it and it was worth it for the most part,definitely a lot of fun and a really good party game.I just wish it was at least like 20 bucks cheaper.I wonder if GH will go on only with guitar or with the same name after people are getting used to the Rock Band peripherals of hearing about them.The more the better.I wouldn't be surprised if more Karaoke games and even Drum games will start popping up,likely with the major ones affiliated with Harmonix.Now they see this is a big money maker,they'll pursue new ways to use Rock Band and its peripherals to make new cash and grow.

americahellyeah
americahellyeah

i had to pay 240 for mine up here in canada and i thought it was well worth it.

Tricky
Tricky

Here we go again. Blah, blah, blah, whatever. If they released Rock Band in the UK (along with the rest of Europe and Australia) maybe then they'll make more bloody money. America isn't the only place to release games. Single minded idiots...

Tom1243
Tom1243

I dont Care....Just release the damn game in the UK!!!

ShockaSlim
ShockaSlim

"You have to hand it to Harmonix, they were able to stand against a juggernaut with a powerful brand name and still make a name for themselfs." You dont know what you are talking about. But to put it into context, its easy to beat a brand that you created yourself.

Samurai_Budgie
Samurai_Budgie

Oh goodie, maybe they'll cough up and start making this in Europe....

teirdome
teirdome

Makes me sad that the POS that is GH3 has outsold Rock Band. I've had people over 3-4 times per week for the last month and I'm still not sick of the game. Simply the best party game out there. Period.

JohnnyNeat
JohnnyNeat

@Generic_Dude The Dollar has and is falling, will continue to fall and is worth 4 cents in actuality. So when it comes to the economy everything is everything... even if mentioned in a meaningless gaming article.

JohnnyNeat
JohnnyNeat

All the money and still No Wii Rock band yet? What gives? I want to add my Wii GH3 Guitar to the mix baby! Don't make me buy a 360 version.

reddevild
reddevild

Nintendo_Man: have you not seen Ultimate Band from Disney?!?!? its such a straight knock off of RB, the clones are already coming, you just have to look harder

klugenbeel
klugenbeel

The people demand more numbers! We want more numbers!

AdMordem
AdMordem

Thanks for the Australasia.. If anyone important reads this, maybe they might release it sometime soon over here in OZ.

MilkyJoe1
MilkyJoe1

they'll make even more if they realise there are people outside of the USA with things called Consoles too

ALLoY1717
ALLoY1717

Addressing the issue of clones. I don't think it will be possible to the extent of something like the over flowing pot of GTA clones nor to the point of clones even coming close to the same experiance peripheral wise. Think about it the original Guitar Hero was a huge risk that has paid off big, however Rock Band was an even bigger one. Selling a rhythm game for $170 that pretty much has to have all the bits to go with it is one thing but to do that whilst competing against another similar, although not as complete experience, is something else. So for a third company to step in and match or even try to exceed what is already offered by two different expensive games is more or less suicide. And not only for that project but it could put the whole GH and RB game style in danger. Too many specialist, expensive games like this is bad, to divide up the market any more would mean that none of these games would make a profit which in turn would be the death of the genre. Look at DDR, you never hear of the wads of cash that it makes becuase it doesn't. DDR is pretty much supported by a sole hardcore fan base and the only reason it can keep going is because it is the only game of it's kind, "want a dancing game here's DDR you got no other choice". I will close this stupid little comment by saying, look at what happened to the WWII FPS genre.

NOALINK2500
NOALINK2500

"Another major factor is the game's downloadable content--which was at 2.5 million songs and counting." Hahaha! Awesome!

soccerdude256
soccerdude256

Impressive figures. Especially considering a PAL version of the game is in great anticipation by many folk and still has the possibility to be released on the Wii. This isn't the last time Rock Band will make news. Watch out 'Guitar Zero' (Loved GH2, Hated GH3)

4esth
4esth

I wonder how much they spent in replacing hardware. I've sent my guitar back three times (two strums and one busted whammy spring), and the drums once for a bad blue pad. I have to admit I've purchased most of downloadable songs and I'm glad they have kept their word about constant downloads unlike GH3. I just wish the full albums would come already. Also can't wait for the new metallica song. For those that don't know, Harmonix owns the rights to the first Metallica single and can make it available for download before the single is even released to radio.

zio999
zio999

the revenue figure doesn't reflect the expenses of manufacturing the game, or the absurd warranty expense I'm sure they're incurring.

ThickFreak
ThickFreak

Ok, now they have a good excuse to put out on the Wii SOON. I just hope they can fit DLC on it, and maybe it should come with all the extra stuff already released. I would pay an extra $15-$20 for it.

thorsen-ink
thorsen-ink

Generic_Dude What's the deal with Gamespot going on and on about the devaluing of the American dollar? I've seen it brought up in several articles... they seem to want to really drive that point home. Even sounds a little like taunting in this article. _________ Well, for one, because currency fluctuations can affect game companies, since the US is the biggest game market in the world. In Nintendo's case, the falling dollar has actually affected its stock price: http://www.gamespot.com/news/6187047.html

PacoL250
PacoL250

Let's see how much Europe and Australia/Asia eats this game up. I'm thinking they sure will. :)

playa42018
playa42018

Rock Band is the future. Guitar Hero is running out of steam.

Fable_fan88
Fable_fan88

hells yeah we are, cause if we weren't. . . the terrorist win...

RaiKageRyu
RaiKageRyu

...cause you know, Americans are self-centered like that.

dn3datomiced
dn3datomiced

Why, Generic_Dude? Because most GS users, I'd assume, and this included me a few years ago, don't read other news, and are generally unaware of other important things happening, like the value of the dollar dropping. Thus, GS is trying to encourage that, in contrast to all of this revenue showing up in the gaming industry lately, that it's not as valuable as the general American populace assumes it is. Granted, they don't do it ALL the time, but I applaud them for providing outside reading of important topics from time to time to help foster general news reading habits.

Necross131
Necross131

Gonna be lots more Rock Band's if they keep this up.

Generic_Dude
Generic_Dude

What's the deal with Gamespot going on and on about the devaluing of the American dollar? I've seen it brought up in several articles... they seem to want to really drive that point home. Even sounds a little like taunting in this article.

dn3datomiced
dn3datomiced

Killer2401 You have to hand it to Harmonix, they were able to stand against a juggernaut with a powerful brand name and still make a name for themselfs. What juggernaut? Themself? They made Guitar Hero, you realize...

faceman420
faceman420

I got one. Best 170 bux I ever spent at once lol..

TurtlePerson2
TurtlePerson2

Rock Band is a blast and they'll be made rich by the revenue from the song sales. It's too bad because I was hoping for a day when I'd be able to import my own MP3s and download rhythms from the community online for free. But hey, it's a fun game to play and it's not a PC game, so those kind of features shouldn't be expected...

xgalacticax
xgalacticax

If games like this continue to sell, very soon every game will be coming out with its own controller that takes up like half the room, hahaha

wiifan001
wiifan001

All right! Send Rock Band over to the Wii. Don't worry I'll actually keep busy with Smash Bros Brawl and Mario Kart Wii during the making of Rock Band Wii.

Killer2401
Killer2401

You have to hand it to Harmonix, they were able to stand against a juggernaut with a powerful brand name and still make a name for themselfs.

Vash67
Vash67

$208.7 million... what a strange number to pick. But I guess Harmonix would prefer that to a round number like $200 mil.

Nintendo_Man
Nintendo_Man moderator

Expect alot of clones now, it is bound to happen.

aygol
aygol

Impressive. It still sells a lot even with the $169 price tag.