Viacom ditches Rock Band, Dance Central after selling off music game developer Harmonix

When Viacom decided to sell music game developer Harmonix, it was a pretty good indication that it didn’t think Harmonix was doing a good job spurring innovation in the genre. But now it’s clear Viacom has no confidence in the music game genre as a whole, as Harmonix will retain the rights to its Rock Band and Dance Central intellectual property after being sold off.

Viacom decided to dump the music game developer after it failed to generate the same kind of revenue the music game genre has been able to bring in for the past several years. Harmonix led to about a $316 million loss in the first nine months of 2010, according to a recent filing with the Securities and Exchange Commission. Viacom stands to make up to $200 million by offloading the liabilities and rights of both series to Harmonix, making up at least part of that loss.

A lot of Harmonix’s problems have to do with the failure of the music game industry as a whole, which has stagnated since ballooning in the mid 2000s. Music games generated $152 million so far this year in the U.S., down 50 percent from a year ago, according to Wedbush Morgan Securities analyst Michael Pachter. In 2009, music games generated $875 million in sales. Sluggish music game sales have been the largest drag on video game sales this year so far, which are down about 8 percent from 2009.

Harmonix’s first batch of intellectual property, Guitar Hero, was left with Activision-Blizzard when the company changed hands to Viacom. Activision-Blizzard took off with the franchise, releasing multiple versions of the game and becoming the main competitor for Harmonix’s Rock Band series. But that franchise has largely stood in the shadows of Harmonix’s Rock Band series, seeing less success with critics.

Rock Band 3 was actually hit with critics, but that wasn’t enough to save the company from being sold off. The game garnered a score of 93 out of 100 across 46 reviews on Metacritic, a website that aggregates review scores for games, music and movies. The Rock Band series as a whole has been a bright point in the music game industry, but even then the games have been criticized for failing to innovate and take the genre in a new direction.

Viacom’s sale of Harmonix was enough of a shot at the music game industry, but giving away the intellectual property to the game, which can still generate additional revenue from the sale of downloaded tracks, is basically a vote of zero confidence for the genre. Harmonix has said that the release of new licensed music for the game won’t be affected. But without the support of Viacom and MTV to help the company pick up new artists, Rock Band 3 may very well be Harmonix’s last stand.