When Harmonix was sold to investment group Columbus Nova, which essentially let Harmonix buy itself out from under Viacom, it was figured that the sale price couldn’t be that high, and that it was likely that Viacom was willing to take a loss.
It turns out they did just that: Harmonix was sold for a mere $49.99 according to the Wall Street Journal, which is what you can literally buy the basic game for – new – at Gamestop. However, as part of the deal, Columbus Nova takes on Harmonix’s liabilities as well. This includes unsold stock that would have to eventually be liquidated, as well as music rights fees, such as the expensive deal for Harmonix to be allowed to use The Beatles’ music.
Viacom declined to comment when approached by Wired earlier today, though according to the WSJ report, the deal was structured so that Viacom could recoup $150m in tax breaks from the deal. This still equates to a loss from the $175m they initially bought Harmonix for.
This is the rote definition of cutting your losses. Due to the plastic instrument arms war between Viacom and Activision, the market was flooded, with each game selling their own DLC, which just led to confused and ultimately disillusioned consumers. It became a vicious cycle; to keep from getting buried by Activision, who was pumping out game after game, instrument after instrument, Harmonix and Viacom had to return fire themselves by releasing a spate of games catered around bands like The Beatles and Green Day. In the end, Viacom took a loss, Harmonix was considered damaged goods, Red Octane is dead, and the WSJ report states that Harmonix’s remaining employees are likely looking at “serious” reorganization. Don’t be surprised if I’m reporting on layoffs in a couple of weeks.
Tags: harmonix, mtv games, rock band, viacom