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Report: Harmonix Sold For Just Under $50
Report: Harmonix Sold For Just Under $50
January 4, 2011 | By Leigh Alexander

January 4, 2011 | By Leigh Alexander
More: Console/PC

Harmonix's sale price ended up being just about the same as that of a new copy of Rock Band 3 -- media reports say investment firm Columbus Nova, which bought the developer from Viacom, paid $49.99.

This may seem like a surprising arrangement, but technology news site All Things Digital cites unnamed sources to suggest that Columbus Nova has also assumed responsibility for costly outstanding matters like music rights fees and remaining warehouse inventory of games and plastic instruments.

Significantly for Harmonix, the company reportedly gets to keep the IP it developed while under Viacom's purview, Rock Band and new Dance Central.

The latter of these is widely regarded as among the best of what's available for Microsoft's Kinect, and was the top-selling game for the device in November, according to NPD Group.

When MTV parent Viacom acquired the studio in September 2006, it paid $175 million in cash plus earn-out bonuses to former shareholders in the studio. That transaction, of course, took place during a different climate for video game retail, when peripheral-equipped band games flew briskly off of store shelves.

Those earn-outs are currently a topic of legal contention between Harmonix's shareholders and Viacom, although that suit concerns only former shareholders and will not come to bear on the developer's sale or ongoing operations. Harmonix says it'll continue to develop DLC and pursue its planned music release schedule for Rock Band music.

[UPDATE: The Los Angeles Times notes that the inexpensive deal had major tax ramifications, as Viacom "received a 2010 tax benefit of about $50 million based on losses in its investment", and "it offloaded about $100 million in liabilities owed by Harmonix that have been assumed by its new owner."]

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Chris Remo
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Steven Andrews
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Is it too late for me to put in a bid?

Tiago Rodrigues
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I guess when it comes to royalties in the music industry, no success is big enough to cover the expenses. Here's to hoping this won't affect the quality of future titles or of the niche.

Lamont Gilkey
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I missed out on another sale...

Evan Bell
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But did they buy Harmonix on steam? That will be next big craze. Developer price experiments. 5 devs for 5 dollars!

Marcus Miller
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My wife loves Dance Central. It would be ashame if there was no Dance Central II.

Robert Marney
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This is very intriguing. Here are some possible reasons why this happened:

1. Because inventory space is more expensive for peripheral-based games than regular games by an order of magnitude (physically larger and harder to get into stores in quantity), only in an extraordinary boom period like 2007 is the plastic instrument game commercially viable at all. Expect a big round of layoffs and a public statement that Dance Central 2 is the new hotness.

2. Somewhere in the deals with music rights holders there is a time bomb stipulating (for example) recurring rights payments regardless of sales, or based on total downloads to date. As the Rock Band Store grows and the music game fad retrenches, the entire operation flips from profitable to "enormous tax writeoff" very quickly, like an MMO after the latest World of Warcraft release.

3. The music game business was never profitable in the first place without peripheral sales. As those fell off a cliff, Viacom saw the writing on the wall.

4. Harmonix has been losing money for years now, and is betting heavily on Dance Central and the Rock Band 3 "real guitar" mode to attract an entirely different audience. Viacom wants to move to a less risky investment, like horse racing.

Tadhg Kelly
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I thought the bottom fell out of music games a while back?

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Some additional info from the WSJ/LATimes... makes a lot more sense now...

"[UPDATE: The Los Angeles Times reports that Viacom will actually receive a $50 million tax benefit, and offload $100 million in liabilities. That makes more sense, and I've since confirmed it myself. My apology for the error.]"

Daniel Martinez
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In other news, Infinity Ward was sold to EA for a Mach 3 Turbo Cartridge, a moist towlette and a handfull aftershave.

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these guys are hemorraghing cash. i'm surprised someone even paid $1 for it. this is merely a goodwill gesture by viacom to preserve jobs. they could have just shut it down and laid off everyone, but they at least found a home for the employees. viacom also had already taken a writeoff on harmonix late last year so they would have gotten the tax shield from that.