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Viacom To Seek 'Substantial' Refund On Harmonix Rock Band Bonus Dollars

MTV Games parent Viacom says it will seek a refund on "a substantial portion" of the $150 million in target-based bonuses it paid to Harmonix for the performance of Rock Band in 2007.

Leigh Alexander, Contributor

February 12, 2010

2 Min Read
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Viacom paid Harmonix some $150 million for its performance on Rock Band in 2007 when music games were booming. Now that they're not, it looks like Viacom wants its money back. Target-based compensation was part of the deal when Viacom's MTV acquired Harmonix late in 2006. The music game studio's stakeholders were promised incremental earn-outs for exceeding certain financial targets, and apparently received them. For example, in 2008, SEC filings revealed that Viacom had set aside more than $200 million in target-based compensation for Harmonix based on Rock Band's performance -- in the original game's first month on sale it sold more than 1 million units. Ultimately, "in 2008, we paid $150 million, subject to adjustment, under this earn-out agreement related to 2007 performance," says Viacom in a new SEC filing. "At December 31, 2009, we believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of the earn-out has not yet been determined," the filing continues. The Rock Band franchise -- comprised of two console editions, the special The Beatles game, and the broad digital store of downloadable content -- has generated over $1 billion dollars in sales to date. But the music game category in general saw sales contract by as much as half throughout 2009, as high-priced, peripheral-equipped bundles failed to sell as well as in earlier years. Proponents of the genre say that the music game business is transitioning, not declining -- with peripherals at market saturation and controller interoperability at a high, the genre's revenue now comes from software sales and downloadable content, like track packs. But fewer hardware bundles sold means big year-over-year sales declines for companies like Viacom, which yesterday blamed lower Rock Band sales for a decline in revenues, claiming the franchise had a "challenging" year.

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2010

About the Author

Leigh Alexander

Contributor

Leigh Alexander is Editor At Large for Gamasutra and the site's former News Director. Her work has appeared in the Los Angeles Times, Variety, Slate, Paste, Kill Screen, GamePro and numerous other publications. She also blogs regularly about gaming and internet culture at her Sexy Videogameland site. [NOTE: Edited 10/02/2014, this feature-linked bio was outdated.]

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