There was a time when Harmonix was money in the bank. It pioneered the music game genre in 2005 with the groundbreaking Guitar Hero and then, after being acquired in 2006 by Viacom, expanded the concept with the 2007 release of Rock Band. It had enough pull to establish an exclusive deal to bring The Beatles to the genre, working with Paul McCartney, Ringo Starr and the son of Beatles producer Sir George Martin. But the music game genre was already cooling off; The Beatles: Rock Band sales were decent but below analysts' expectations and in February 2010, MTV, a subsidiary of Viacom, tried to get back some of the $150 million in bonuses it had paid Harmonix in 2008 "related to 2007 performance."
Now, with Rock Band 3 sales tanking rather badly, Viacom has decided to wash its hands of the whole thing. The company announced in its third quarter fiscal results for 2010 that it plans to sell Harmonix and has reclassified the business as a "discontinued operation."
Viacom President and CEO Philippe Dauman said nothing about the apparent decline of the genre in the Q3 earnings call, claiming that the decision to offload Harmonix was strictly a matter of strategic focus. "Our decision to exit this business strategy is to focus on what we do best, and that's creating world class entertainment," he said. "The console games business requires expertise we don't have. For us, this is all about focus."
Harmonix is addressing questions about the situation in a thread on the Rock Band forums and assured gamers that the news is not apocalyptic. "This morning's announcement does not affect the ongoing work at the studio as we continue to support our existing franchises, Rock Band and Dance Central," Harmonix Manager of Communications John Drake wrote. "As stated earlier, Viacom is in discussions with several potential buyers and will continue to fully support the business until a sale is completed."
So who's going to buy Harmonix? The usual suspects have all been mentioned: EA because it wants something to counter Activision's Guitar Hero franchise, Apple because it already has access to a huge library of music in the iTunes store (and a huge pile of cash sitting around), Bethesda because it seems to be having fun these days buying every wayward studio it sees and of course the most obvious choice, which also happens to be the one most fans really don't want to consider: Activision itself.
Activision CEO Bobby Kotick admitted in February that purchasing Guitar Hero publisher RedOctane, which it shut down that same month, while ignoring Harmonix was a mistake. "We really didn't even think, 'Hey, we should go to Boston and meet these Harmonix guys and see what they're up to,'" he said, explaining the assumption that replacement studio Neversoft would be able to handle the Guitar Hero franchise as well as anyone. "It would probably be a profitable opportunity for both of us."
Now it appears that Activision may have a second crack at the studio, and it certainly has the resources to make it happen. And while Kotick and company may be the videogame industry's Great Satan of the moment, I don't think it's a bad idea at all. It has the muscle to give the franchise a serious push and, just as important, to maintain and grow the Rock Band DLC library. If nothing else, returning the Guitar Hero franchise to Harmonix would generate no small amount of interest and good will, and Activision has proven with the Blizzard acquisition that it is sometimes willing to just shut up and stay out of the way.
We will, of course, be keeping tabs on the situation and post updates as they happen!