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Beatles not putting Viacom's Rock Band in the black

November 3, 2009 |  5:09 pm

BeatlesRockBand It may be a long and winding road to profitability for The Beatles: Rock Band.

On a conference call with analysts today following its quarterly earnings report, Viacom executives said that their Rock Band video game franchise, whose only new product last quarter was the Beatles version, is losing money, as it has for the past two years.

"Rock Band was a negative contributor to margins in the third quarter," said Chief Financial Officer Tom Dooley. "We expect it to break even or be slightly profitable in the fourth quarter from a margin point of view. It really depends on how many units we sell in the holiday season."

Losses on Rock Band brought down the operating margin of Viacom's media networks group, which encompasses its cable channels and related products, from 40% to 36%.

Chief executive Philippe Daumann said that Beatles: Rock Band had a "great launch" but also noted that "the economics of our Rock Band franchise are improving, though not as quickly as we'd like."

The game sold 595,000 units during September in the U.S. International sales data hasn't been released, and Viacom didn't provide any specific updates today.

In the past, Rock Band games have lost money for Viacom primarily because of the high cost of manufacturing instrument controllers. For the Beatles game, the company significantly raised the price of a version with instruments and encouraged consumers to buy the software, which is more profitable, and play it with older Rock Band controllers or those from Activision's competing Guitar Hero titles.

-- Ben Fritz

Photo: The Beatles: Rock Band on sale at a Best Buy in New York City. Credit: Daniel Acker/Bloomberg.

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