Rock Band franchise unprofitable in Q3

Despite "strong" start of Beatles, Viacom CEO says MTV Games and Harmonix's rhythm game series negatively impacted margins during July-Sept. period.

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Reporting on its third-quarter earnings yesterday, Viacom called out MTV Games and Harmonix's Rock Band franchise as a key revenue driver during the July-September period. As noted yesterday, The Beatles: Rock Band enjoyed a "strong" start and helped offset shrinking revenue from other segments of Viacom's Media Networks division, to which the BET, Comedy Central, and Nickelodeon channels, as well as other properties, belong.

"Now give me money (that's what I want)"

However, despite bolstering sales, the Rock Band franchise continued to weigh on the media conglomerate's bottom line. Speaking to investors and analysts following the earnings report, Viacom president and CEO Philippe Dauman said that the Rock Band franchise did not turn a profit during the period.

"In terms of Rock Band, Rock Band was a negative contributor to margins in the third quarter," he said. "We expect it to break even or be slightly profitable in the fourth quarter from a margin point of view.''

Dauman went on to say that Viacom will heavily push The Beatles: Rock Band during the holiday season, a period that he said will determine whether the product was a success.

"It really depends on how many units we sell in the holiday season," he continued. "That is what we are building the business for. The economy has made it tough, but we are out there, and we think we are being very competitive in the space, and it really depends literally on the next three to six weeks."

Interestingly, the Viacom executive also noted that the Media Networks division stands to gain in the event of a strong showing from Activision's Guitar Hero franchise, the first several installments of which were developed by Harmonix. "We also generate royalty fees through the Harmonix relationship with Activision," he said. "So to some extent, the performance of that business will depend on the performance of our competitor."

MTV Games did not return a request for comment as of press time.

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