Viacom, parent company to MTV Games and Rock Band developer Harmonix, said sales of its music game suffered during the quarter "due to the soft retail environment", helping to drive a decline in revenues for the company.
For the fiscal quarter ended June 30, revenues in Viacom's Media Networks division, which houses MTV Games, dropped 8 percent to $1.97 billion. Viacom attributed the decline to "a 41 percent decline in ancillary revenues driven by lower sales of the music video game Rock Band."
Rock Band also helped drive a 12 percent decline in profit to $671 million in the Media Networks division. Viacom attributed the decline to "losses associated with Rock Band due to the soft retail environment," as well as lower advertising revenues and $16 million in severance charges.
Indeed, a recent Gamasutra analysis noted that U.S. retail revenue for the Rock Band series is down a striking 67% year on year in February-June 2009, likely in part due to declines in sales and sale prices of the more expensive band kits, plus lack of new products.
But Viacom chief exec Phillipe Dauman is still confident in the Rock Band franchise. "We continue to feel very good about the long-term value that this franchise holds, particularly as we see the downloadable content portion of the business continue to grow," he said in an earnings call listened in on by Gamasutra. Dauman said that Viacom has sold over 50 million songs via disc or online for Rock Band.
Viacom's overall quarterly revenues dropped 14 percent to $3.3 billion, while profit dropped 26 percent to $586 million. The firm is also home to Paramount Pictures, the studio behind the 2009 blockbuster films Star Trek and Transformers: Revenge of the Fallen.
Sumner Redstone, executive chairman of Viacom and former Midway Games majority stakeholder said in a statement, "As the leading pure-play content company, Viacom has the right portfolio of assets and the right vision to manage through this challenging climate while we continue to position ourselves for future growth." Dauman said that the negative impact is "short-term", and that Viacom's "aggressive" cost management will ensure a brighter future.
Going forward, MTV Games and Harmonix is counting on its upcoming and much anticipated The Beatles: Rock Band to be a big hit -- the game launches on 9/9/09 with a multitude of famous songs from the Fab Four. "It's a work of art," Dauman said. "This will change the way people look at music video games."
Viacom CFO Thomas Dooley added, "The Beatles Rock Band will be a "mid- to high-teen margin business when it's up and running".
[UPDATE: Comments from Viacom analyst call added.]