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Viacom Quarterly Revenues Down As  Rock Band  Sales Decline
Viacom Quarterly Revenues Down As Rock Band Sales Decline
July 28, 2009 | By Kris Graft

July 28, 2009 | By Kris Graft
More: Console/PC

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.]

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Steven Ulakovich
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The music genre has become rather saturated, though I would like to know what kind of revenue Harmonix sees from their downloadable content, and how much the current Pepsi promotion might build future customers to the service.

Releasing a more quality library of titles in pieces looks to be a much more viable step for a profitable future then a yearly release of the primary title and several top priced software releases.

Sean Parton
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@ David Delisle: "I refer to the possibility of music catalogues [sic] being exhausted"

Hahahaha. That's hilarious.

Music is constantly being created. Constantly. Do you ever think that we'll run out of music? Hell, Rock Band only just started releasing content in genres like Country. There's no way in hell that it's remotely possible to run out of music to put in these games. If anything, it's a shame that the current band simulation titles will never really catch up and be able to transcribe many of the new and old great songs that exist or will be made.

"Also the gameplay hasn't evolved all that much. "

Well, if all you play is Rock Band, then that's obviously true (as they've not released a new iteration of it in a year or so). However, Rock Band Beetles will have a new backup vocals feature, and Guitar Hero has constantly added new things to the game (two peddle drums, bass open notes, solo notes, etc).

The main reason why revenue is down is because they're approaching a new major releases, so sales for current releases is not as high. Your argument has no merit.

Chris Remo
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Harmonix has, for an extremely long time, stated the goal to get as many genres of music as possible into Rock Band. Obviously, they're somewhat limited to popular genres that share instrumentation with typical rock bands, but there's still a huge variety there. Even within rock alone, there's still massive ground left to cover.

Sean Parton
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@David Delisle: "Exhausting the good popular mainstream music."

Wow, a no true Scotsman fallacy. Way to troll, yo.

You win 10 charizards.

"How does one approach a new major releaseS?"

I was actually referring to both GH and RB with that point, but specifically with the Rock Band, there is Rock Band Beetles and Lego Rock Band. I think that company also has one other title I'm too lazy to look up, and Activision has at least two Guitar Hero games coming up off the top of my head (GH5, the new DS one).

steve roger
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Sometimes I hate these boards. You guys sniping at David over his statement that the music catalog may be exhausted are being really narrow minded. I took his first and especially his second clarifying comment in a totally different way.

I doubt he meant that the songs would run out. But rather the available songs that Rock Band was harvesting and willing and able to pay royalties for and still have a profitable line of games.

Sorry but Rock-a-Billy Band sounds good as a niche product but that might not sell well enough to justify the cost.

You can disagree with the point he was making, but you can't call it stupid. Especially when you all missed the point.

So, yes there is a huge variety, but as you already know Rock Band and Guitar Hero can't get old real quick.

It is a very self-limiting genre in a lot of ways. In order to make money off of it you have to spend money. Can you imagine having to come up with the cash to pay for Beatles and the like year and year out in order to keep this line of massive hit video games alive. I shudder thinking of it. I really doubt that Rock Band: Swing Tunes are a priority for this company.

Give Daniel a break and put away your knives.

Jamie Mann
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TBH, I think David is both right and wrong. There is still a wealth of music out there waiting to be converted over to Rock Band, even if the focus is kept on the rock/indie/metal/alternative scenes. However, the "physical disc" market is saturated, the plastic instruments market is flooded and DLC sales aren't particularly profitable.

To back up that last point: 50 million DLC sales sounds great - but how much profit can you get out of 160MSP? I'd be surprised if it was more than 15c per song, which works out at about 7.5 million dollars - chickenfeed compared to the millions extracted from the physical sales.

Still, Rock Band appears to have a better business model than Guitar Hero: the Beatles and Lego variations target relatively untapped demographics, their new "indie song channel" has some interesting potential and the focus on DLC rather than physical sales should cushion the decline of the market.

However, whichever way you cut it, I suspect the days of billion-dollar sales are over.