For sale!

NOV. 12, 2010 • After reporting that its profit dropped 59% in the most recent quarter, Viacom Inc. said it would sell its Harmonix game division.  Harmonix is best known for creating the Rock Band franchise.  The music segment became over-saturated with sequels and related hardware by 2010, leading to declining consumer interest in such titles. Viacom’s game unit lost about $65 million the company disclosed in a conference call. “The console-games business requires an expertise and scale that we don’t have,” Viacom chief executive Philippe Dauman said on the call.

Impact: One of the challenges entertainment and media firms outside the gaming industry continually face in this business is how to be nimble in a market at the mercy of relentless changes in technology and the consumer fads they spawn.  The high growth the overall retail games industry experienced in 2007 and 2008 was largely due to the Wii and guitar based music games.  One of the signs of music category contraction DFC saw in late 2008 was the high portion of guitar game disc-only sales, indicating growth of new music game consumers were likely going to drop, particularly in the face of the financial crisis, the effects of which persisted through 2009 and into this year.  Viacom is not the only major outsider firm that found significant challenge in the gaming industry.  Turner’s ill-fated Gametap is a prime example, as was Fox’s 1990’s effort and Universal’s early slates.