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Viacom Profits Up, But Sales Down As Rock Band Weakens

As softening Rock Band sales are blamed for revenue declines at MTV Games parent Viacom, the company may aim to cut costs at its games business to address the changing music genre.
Although mega media conglomerate Viacom saw its profits rise over its fourth fiscal quarter, sales declined -- and the softening music genre may carry a large share of the blame. Viacom, parent of Rock Band house MTV Games, saw sales for the quarter ended December 31 fall 3 percent to $4.1 billion despite higher profits of $694 million, up from $173 million during the same period the year prior. The company owes its stronger performance largely to sales of DVD and home video alongside aggressive cost cutting. Specifically, however, a decline in ancillary revenues was blamed squarely on lower Rock Band bundle sales. Viacom CEO Philippe Dauman said in a Thursday conference call that the company will look at ways to reduce costs at its games unit, as it aims to refocus away from peripheral hardware and more onto software. "It certainly was a challenging year in 2009 for the video game industry in general, and certainly the Rock Band franchise," Dauman said. He added that Viacom will have to be more "selective" in the music selection for Rock Band, based on royalties. "The music industry will have to assist this category to make sure it can continue on a profitable basis in the future," Dauman said. Band games have seen major market softening throughout 2009 as compared with 2008 -- retail sales tumbled 46 percent as consumers bought up fewer of the costly hardware-equipped game bundles. But MTV Games' Paul DeGooyer, who heads up the Rock Band franchise, has stressed in the past that the music genre isn't fading, merely transitioning -- the instrument controllers, increasingly interoperable, may have reached market saturation, but there's a continuing demand for software. Ongoing sales of downloadable content and song packs for music games continue to sustain the genre, too, DeGooyer has argued. Dauman says digital revenue streams will continue to be an important part of the company's business models. "We think we have the best games in category, and we'll continue to roll out exciting products," says the CEO. MTV Games' most recent release, The Beatles: Rock Band, passed 1 million units late in 2009. Around the same time as that announcement, MTV-owned developer Harmonix revealed it had to lay off 13 percent of its staff.

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