UPDATE: Since the original publication of this story, Gamasutra and Newsweek have appended corrections to their reporting. As it turns out, the $209 million referenced in Viacom's SEC filing is being set aside for a potential future payment to Harmonix, pending Rock Band's performance this calendar year. Wired.com regrets the error.
ORIGINAL STORY:
The wild success of* Rock Band* has earned could net former shareholders of developer Harmonix a fat $209 million bonus from MTV.
It's a shockingly large amount, considering that MTV only paid $175 million when it acquired the Boston-based game developer in 2006.
Rock Band's performance must have really exceeded expectations. And Harmonix must have had some amazing lawyers, as they apparently worked out a sweet deal for themselves.
According to MTV parent Viacom's most recent filing with the SEC, as part of the acquisition, Viacom agreed that "former Harmonix shareholders will be eligible for incremental earn-out payments with respect to the years ended December 31, 2007 and December 31, 2008," should Harmonix's financial results exceed expectations and "contractual targets." So another big payday is likely coming in a year. [Update: The payment at the end of this year would be the only payment.]
This morning, Newsweek did some "back of the envelope calculations" to put the payout in perspective, which was first reported by Gamasutra. According to the same SEC filing, more than 1.1 million
Rock Band bundles for the Xbox 360, PS2 and PS3 had been sold as of
December 31, 2007 for $170 each, bringing in about $187 million in revenue, they noted.
In mid-January, MTV said that it had sold about 2.5 million units of downloadable content for Rock Band. At about $2 per purchase, that's another $5 million, bringing the total for gross revenue to about $192 million so far.
The initial acquisition of Harmonix was $175 million; the performance bonus of $209 million brings the outlay to $383 million, and that's before one considers the licensing fees paid to artists and labels, EA's distribution fees and promotions costs for the game.
At this rate, it's going to be a while before Viacom or MTV actually recoups any kind of profit from the hit game, especially since Harmonix is up for another performance-based bonus next year. It's an unusual situation, but *Rock Band *is certainly an unusual game.
Although all of the extra hardware required for maximum enjoyment -- two guitar controllers, drums and a microphone, bringing the price upwards of $200 for the whole set -- is pricey, Rock Band is uniquely poised to keep generating revenue based on its weekly catalog of downloadable content.
The 2.5 million extra songs sold have barely scratched the surface of the content that will be purchased as more and more Rock Band players grow tired of their current set lists and crave something new to play with their pals.
Whereas Guitar Hero players need to wait for new disc-based updates, Rock Band already has enough songs online to make a whole new game.
So long as bands keep making music, new material for Rock Band exists. So long as people enjoy music, Rock Band will have an audience. Viacom may be spending a small fortune to sew up the talent, but in the long run, it will have been worth every penny.
Harmonix Earns $208.7 Million Bonus From Viacom [Gamasutra, via Newsweek]
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