The guys behind Viacom’s popular new video game “Rock Band” are in line to collect over $200 million if profits from the chief rival to Activision’s “Guitar Hero” hit certain performance targets by the end of 2008.
Viacom disclosed in a recent filing with the Securities and Exchange Commission that it set aside $208.7 million in 2007 for the potential payment, which is earmarked for the former shareholders of Harmonix, the game’s developer.
The studio – which rose to fame as the creator of “Guitar Hero” – was acquired by Viacom in October 2006 for $175 million in cash.
However, the principals behind Harmonix, including co-founders Alex Rigopulos and Eran Egozy, are now poised to collect a lot more from the sale.
“Rock Band,” which allows players to form their own virtual music groups using remote controls that look like instruments, sold over 1.1 million bundled units, comprising the game and some of the peripheral instruments, between its launch last year on Nov. 20 and Dec. 31.
Michael Pachter, a game industry analyst with Wedbush Morgan Securities, estimated that “Rock Band” would likely have to generate $600 million in sales to meet Viacom’s targets – a prospect he termed as “very likely” given its solid start.
The game has already generated $200 million in sales through limited US distribution. According to Patcher, “Rock Band” is expected to expand its reach around the world this year.
Patcher said the deal will still be good for Viacom if the game can generate $400 million per year over the next five years.