Viacom Sued Over Rock Band Payouts by Former Harmonix Shareholders, Founders

By Alice O'Connor, Dec 21, 2010 6:20am PST A group of ex-shareholders in Rock Band developer Harmonix, including several studio founders, are suing its parent company Viacom, Gamasutra reports, over allegedly attempting to avoid paying out performance-based bonuses for the rhythm game series.

When Viacom bought Harmonix back in 2006 for $175 million, it was agreed that Harmonix shareholders would be paid bonuses if the developer exceeded performance targets in 2007 and 2008. The ex-shareholders claim that they were never paid the 2008 bonus, which would have been based on any profit over $42 million. As the Rock Band franchise's retail sales were over $1 billion in 2008 and the first quarter of 2009, the profits and payouts were probably substantial. The plaintiffs are still calculating a figure.

The group, which includes Harmonix co-founders Alex Rigopulos and Eran Egozy, further claims that Viacom worked against Harmonix to reduce the amount it would potentially owe. The suit alleges that during distribution agreement negotiations with EA in 2008, Viacom sought benefits directly for itself, rather than a reduction in fees that would increase Harmonix's profits--and therefore those of the shareholders too.

Furthermore, there's the issue of $13 million supposedly held in an account, which was due to be released to the shareholders but held by Viacom following a variety of rhythm game patent lawsuits. The shareholders claim they are still owed this.

Viacom will surely fire back soon enough and it'll all get awfully messy. The company revealed last month, before this news broke, that it was seeking to sell off Harmonix.

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11 Threads | 25 Comments
  • This sounds a lot like the, "They'll NEVER sue us because they KNOW if they do, we'll sell their company and leave them in the poor house."

    Then when the lawsuit was obviously well under way, Viacom shrugged and said, "Fine, we're going to sell you and leave you in the poor house. Hope your royalties are enough to pay your way until you find some other conglomerate to fund your silly musix."

    People ask, "How do these companies think they can get away with all this?" The answer is: "They think they can get away with it because the economy is bad and royalties are nice, but having a steady job is nicer."

    When it was announced Harmonix was up for sale, did you see EA jump at the chance to own them? No. They explicitly denied any interest. No one else said they were interested. I suspect the best THEY can hope for is to be bought out by Activision-Blizzard and assimilated into the Guitar Hero-building unit of the B-A Tri-fecta (Call of Duty, Guitar/DJ Hero, and Blizzard). The worst is being bought by Kotick, shut down, having their patents and licenses transitioned over into Guitar Hero, and watching GH go up in sales (and in price with a drop in quality and value) because they now have no credible competitor.