And Then There Was This
First, in September of 2006, we had this:MTV, the cable TV channel some critics have accused of straying too far from its musical roots, is to acquire Harmonix Music Systems, a maker of music-oriented video games, for $175 million in cash.
That was a thrilling moment for me, because it meant that all the people at Harmonix were coming into some serious cash, and nothing would have made me happier than for all of them to become filthy rich. Hell, they deserved it.
Now, in December of 2010, we've come to this:
I had a hunch that Viacom sold off Harmonix, which makes the Rock Band games, at a steep discount last month. But I’m still surprised it was this cheap: I’m told that investment group Columbus Nova paid $49.99–the list price for “Rock Band 3″–and got the entire company.
I knew they didn't pay much, but I had no idea. Now, it's not quite that simple:
People familiar with the transaction tell me Harmonix’s buyers also assumed the game company’s liabilities. That includes expensive music rights fees, and responsibility for lots of unsold games and equipment sitting on warehouse shelves.
And I’m told that the deal is structured in a way that will let Viacom net something like $150 million in tax benefits...
There are a few things worth noting here:
1) Activision, EA, Microsoft, and anyone else who was interested was unwilling to do this deal, which seemingly involved just accepting the existing liabilities of the franchise. That's not good.
2) Given that Columbus Nova's only investment is on the liability side, the easiest way for them to make money is to sell existing inventory at fire sale prices. They didn't pay anything for it, so even if they sold it at a reduced price, they're both making some money and eliminating the cost of carry.
3) I don't see how Columbus Nova has any incentive to continue the studio in its existing format. They will want to turn the studio into a profitable enterprise, and quickly. This probably means significant staff cuts and restructuring, unfortunately.
That's all bad news, particularly for one of the best gaming studios in the world. The good news, though, is that they do still exist, and we're still getting new DLC, and maybe the Squier will actually come out and we can learn how to play guitar.
And on the Squier front, that mysterious charge from Best Buy that would seem to mean the Squier was shipping has disappeared from my pending charges. False alarm.
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