Viacom Owes $383 Million To Harmonix in 'Rock Band' Dispute Arbitrators Say
Viacom Owes $383 Million To Harmonix in 'Rock Band' Dispute Arbitrators Say

About two months ago, MTV and parent company Viacom sold off its Harmonix subsidiary-the videogame development unit responsible for the Rock Band and Dance Central franchises that it acquired in 2006 for $175 million.

It's been a difficult time for music game developers. The market for music games went from $1.7 billion in 2008 to $291 million at the end of last year, and the genre's pioneering franchise-Guitar Hero-was shut down by publisher Activision last month.

Now, in his first interview since the sale, Harmonix founder and CEO Alex Rigopulos discusses the split with MTV, the past and future of the music game genre, and why Harmonix has begun working on non-music titles.

What was your reaction when you learned MTV was selling Harmonix?
It was a result of collaborative conversations with Viacom management. There was nothing surprising about it. It was a strategic decision that was the right one at the time, and I'm certainly supportive of that. We're quite excited about returning to our roots as an indie studio.

What sparked the sale?
From my perspective, one of the challenges that any publisher faces is that the cost structure of videogame publishing requires scale to work economically. For Viacom or any publisher to have a profitable enterprise, it needs not just one or two titles. It needs a portfolio of 10 of 12 titles. Viacom was facing the decision of whether they wanted to double, triple or quadruple down in retail game publishing, versus other options available. Ultimately, they decided that wasn't the right bet, and I don't second guess that decision.

So what's the impact of having new owners?
It feels great to be an independent studio again. We're directly responsible for our own destiny and have the freedom and nimbleness of action that comes with being a small independent company. There's a very high degree of creative excitement at the studio about this new beginning for us. It's a new major chapter of our lives.

To what degree are the new owners involved?
They're actively involved in the decision-making about our future. That said, they've granted the management team here a very long leash and have been extremely supportive of our creative and business ambitions. Thus far it's been a fantastic working relationship.

Can you do things now that you couldn't do while owned by MTV?
We're at a point in our evolution where there's a ton of creative energy around new ideas and new [intellectual property] that we're working on right now. From a creative standpoint, MTV was always very supportive and gave us a lot of free reign. Whenever you're part of any large organization, there's always going to be bureaucratic considerations and political considerations and systemic considerations relating to policy and precedent that can make it hard to operate as a small company. There's just no escaping it. But from a creative standpoint MTV opened up opportunities for us. A great example is the Beatles: Rock Band. Without the relationships and other influence that MTV brought to the table, that project probably would never happen.

Where's the bulk of your development activity spent today?
Our largest team is devoted to running with the Dance Central property right now.

What kind of new products are you looking at?
On one hand, our whole history has been focused on music games and we continue to be passionately committed to music games. So part of our R&D and prototyping efforts are based around continued innovation in the domain of music experiences. We're going to continue to push that frontier forward. On the flip side, we've developed a high degree of creative excitement around motion gaming. Dance Central is at the intersection of music gaming and motion gaming. We're actively branching out into motion gaming, even beyond music gaming, as a new area of creative focus.

Read the rest of the interview in the next issue of Billboard.