14 DAY TRIAL // The initial narrative that accompanied the launch of The Beatles: Rock Band, the newest collaboration between Harmonix and MTV Games, has been of a revolutionary videogame that will attract non-gamers to the music genre titles and which will set the trend for future releases that are focused more on specific bands than on offering a wide range of music. But now it seems that the financial picture for the game is not too rosy.
Tom Dooley, who is the chief financial officer for Viacom, has stated “Rock Band was a negative contributor to margins in the third quarter. 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.”
The big release which The Beatles has had in September and the fact that it sold better than Guitar Hero 5 from Activision do not mean that profitability is just around the corner. In fact, the operating margins for the division handling Rock Band have fallen from 40 to 36%.
It seems that the biggest cost is that of the controllers which are bundled with one version of The Beatles: Rock Band. The company has encouraged gamers to just pick up the software and use older instruments to play in order to limit demand of the most cost intensive version of the game. The instrument bundle costs 100 dollars and this price point was only reached by subsidizing the cost of the hardware which gamers get.
If a higher price point had been introduced, The Beatles Rock Band could have suffered from the low sales of a game like DJ Hero, the Activision made spinoff, which is retailing for 119 dollars with a turntable peripheral included.