Rock Band hits 7M, rings up $574M in US

Viacom awarding $300 million-plus bonus to Harmonix founders after rhythm franchise hits massive sales milestone; 26 million downloads worldwide to date.

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When MIT college chums Alex Rigopulos and Eran Egozy founded Harmonix in 1995, their goal was to fuse the joys of playing music and playing games. Some 13 years later, they have done so several times over. After developing Frequency, the original Karaoke Revolution, and Guitar Hero, the company shipped Rock Band, which combines both vocals and instruments.

Ten months after the first Rock Band launched on November 20, 2007, Rock Band 2 hit stores on September 14, 2008. Now, multimedia multinational Viacom, owner of Harmonix parent company MTV Games, is reporting that the Rock Band franchise has hit a massive sales milestone. In a conference call with investors last week, Viacom president Philippe Dauman said that all games in the series have sold over 7 million combined units in 13 countries.

"We have a tiger by the tail in Rock Band and our growing games business," he declared.

According to the NPD Group, over 3.51 million units of the original Rock Band were sold in the US as of September 30, along with over 362,000 units of the Xbox 360 Rock Band 2--the only edition available as of that month. (A PlayStation 3 version was released in October, with Wii and PlayStation 2 versions due out by year's end.) There's also the stand-alone Rock Band Track Pack Volume 1 for the Nintendo Wii and PlayStation 2, which sold a combined 119,500 units domestically since their July release. (Volume 2 will ship next Tuesday.)

In cash terms, Rock Band and its sequel generated a respective $548.7 million and $21.6 million as of September 30, according to NPD, the game industry's preeminent market-research firm. Throw in the $3.5 million from the Track Packs, and that's just shy of $574 million in revenue from physical US retailers alone.

The aforementioned figure doesn't include revenue from Rock Band games' online music store, which offers single songs and track packs for digital download each week. Dauman also announced that, to date, some 26 million Rock Band and Rock Band 2 songs have been downloaded worldwide. Though he didn't break out exactly how much money the Harmonix franchise has pumped into Viacom's coffers, he did say that "worldwide [quarterly] ancillary revenues in Viacom's Media Networks grew 36 percent on the continuing strength of Rock Band." For the July-September quarter, Viacom ancillary revenues totaled $313 million, meaning Rock Band was the main factor behind a $112.7 million earnings increase.

As a result, Viacom is handsomely rewarding Rigopulos and Egozy for their efforts. In a SEC filing, the company revealed that during the July-September quarter, it had paid "$150 million...under an earn-out agreement related to the 2006 acquisition of Harmonix Music Systems Inc." Viacom is also planning a final earn-out payment next year which "is expected to exceed this year's payment." (Emphasis added.) Add in Harmonix's original $175 million purchase price, and the Boston-based developer stands to earn a minimum of $475 million in just three years--and just three years after showing its wares in Kentia Hall at E3 2005.

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