It's hard to argue that Rock Band isn't a really, really big success. Just recently it was revealed that the latest edition of the game, Beatles: Rock Band, sold pretty darn well in its first month. One would then assume that some of the money that Viacom fills their swimming pool with constantly is made up of the mad profits from the series. It seems, however, that at the moment Rock Band is more of a leak in that pool than a hose adding more to it. According to some inside sources at The Kartel, a recent report from Credit Suisse highlights the fact that the franchise will lose Viacom $90 million by the end of 2009. While credit Suisse simply showed that the problem was there The Kartel guys highlight six reasons that such a successful franchise could still be in the red.
- Viacom purchased Harmonix for $175 million.
- They subsequently gave Harmonix a bonus of $150 million for hitting sales expectation in 2008 and will deliver another $150 million to them at the end of this year most likely. (Guess the guys at Harmonix are in the black, huh?).
- MTV Games Senior Vice President Robert Picunko claims it took nearly $100 million to develop Rock Band.
- Peripherals cost money and the margin for profit is extremely low. Rock Band has four of them in every set.
- In the second quarter of 2009 it appears that Viacom made between $50 - $82 million worth of extra Rock Band 2 product because they overcompensated thanks to Rock Band selling out too quickly. Keeping overstock also costs money.
- Song licenses cost money. Lots of money. The Beatles license is reported to have cost upwards of $50 million.
It can also be noted that Rock Band's sales haven't always been that fantastic, as a soft retail year brought them down. With all this it becomes a bit clearer to see how Viacom could still be $90 million in the hole when it comes to Rock Band. However, Credit Suisse also says that the company shouldn't fear as they should be able to move into profitability with the franchise some time next year. Investing in a quality product for long term benefit instead of quick initial gain? Sounds like Wall Street needs to learn a thing or two from Viacom.
Matthew Razak is Destructoid's Associate editor and co-founder of film site
Flixist. He began as community member "cowzilla" and was since sequestered to write brainy features material. He lives in Los Angeles with his beautiful wife.
Likes
Games! Movies! Hats!
Meet the rest of the team
| BBcode help |
| [b]Bold text[/b] |
Bold text |
| [i]Italic text[/i] |
Italic text |
| [url]http://www.dtoid.com/[/url] |
http://www.dtoid.com |
| [url=http://www.dtoid.com/]Web link[/url] |
Web link |
|
| [img]http://www.example.com/robot.jpg[/img] |
 |
Post a comment! You can also post a photo below:
Comment with Facebook
Click connect and comment instantly!
|
Comment with Dtoid
New? SIGN UP - it takes 5 seconds
|
23 comments | showing # 1 to 23
|
Comment with Facebook
Click connect and comment instantly!
|
Comment with Dtoid
New? SIGN UP - it takes 5 seconds
|
Comments policy
Destructoid is an open discussion community. You don't need to "audition" to post a comment - just speak your mind. We respect differing opinions on the site, so have at it. Be smart, funny, insightful, clueless, or cute -- but back it up with substance. Keep your cool, keep it fun. We only ask that you act respectfully and above all: don't be a troll and ruin it for everyone else. Don't bring down gamers or we'll, you know, gently shoot you in the face and stuff you into a flaming mailbox. Each comment is your opportuntity to make this community awesomer. Is that even a word?
Avoiding the banhammer only requires common sense: spamming, trolling, racism, NSFW stuff, and other forms of sucking will not be tolerated. If anyone is griefing please report abuse. Be good. Don't suck!
Contest:
11:00 AM on 10.24.2009
| 
Songs are still hella expensive to download. I think they'd make more money by selling each song for about .25USD and just packaging in around 40 songs per expansion. More people would buy more.
Or something similiar. I just know, as someone who buys a lot of crap as DLC, $2/song is not the equilibrium price.
That's what makes Rock Band so delicious.
Do they forget about Lego Rock band and how many more sales all versions of RB will get during the holidays?
That's 625 million dollars.
3 million copies of full Rock Band sets at 200 bucks wouldn't even match that amount of money in terms of profits. Remember, slim margins due to plastic instruments.
Sounds like Viacom went the console platform route of losing money now to gain it later, like MS and Sony keep doing every generation with their consoles.
Hope it all works out for them.
This. This is why entertainment industries of this type are dying. We're talking about 45 songs written by four guys of whom two are dead. I know there are other factors, but 50 million of them?
Such a sad state of aff...
FUCK VIACOM.
That said, the only reason why I bought a Rickenbacker for Rock Band Beatles was because I wanted a wireless guitar and wanted something nice and different. If they wanted to curtail the profit loss on this, they would do well to just stop developing new instrument based features (which is something Activision ought to do with Guitar Hero), and focus on continuing to pump out disc only editions. The instruments themselves can definitely be bought separately, but again, not everyone's looking to get a new guitar every year so you don't have to bust out those bundles all the time...
just sayin. We really don't need a rock band every year...especially when they're constantly releasing song packs for DLC.
This is where they really need to emphasize that whole "Rock Band as a platform" idea. Pumping out disc and plastic instruments could hurt them later on.
Drums, mic, guitar. That's three.
But they're also saying.
"the franchise will lose Viacom $90 million by the end of 2009."
Which is what I am referring to. The year isn't over.
Just look at the comment above. They don't even know what they're talking about.
I dont understand what has taken them so long
GH is arguably the more popular of the brands too.
What's difficult to understand? They're forecasting a $90 million dollar loss by the end of the year. That forecast would *include* forecasted holiday sales. Which means that without the traditionally strong holiday sales boost for videogames, Viacom will lose a lot more than $90 million by the end of the year.
Seriously, Rock Band 2 isn't even out in Australia yet.
Engraving Machines
Natural Supplements Depression
Soft Dog Harnesses