The Beatles: Rock Band is expected to reverse a negative trend for Viacom's game unit this holiday, but it won't come without heavy licensing fees. The LA Times is today reporting that Viacom will pay the various rights holders to The Beatles music a minimum of $10 million, with an addition of $40 million or more if the game sells well.
"The royalty rates on this are not even comparable to anything that has been done before," said Martin Bandier, chairman of Sony/ATV Music Publishing, a major rights holder for the Beatles catalog.
One of the more significant reasons that Rock Band has not nearly been as profitable for MTV as it would have hoped is the margins on the instrument controllers. "In the early stages of the property, plastic was a difficult business with very thin margins," said Scott Guthrie, general manager of MTV Games.
To compensate for this, MTV is launching a premium bundle with custom Beatles instruments along with a cheaper bundle with regular Rock Band instruments. Ironically, the company is also encouraging users to play the game using Guitar Hero controllers, something that Activision is more than happy to see happen. "Our core competency is media," said Paul DeGooyer, senior vice president of electronic games and music for MTV Games. "Let [Activision] take on the burden of getting those super-tight margin instruments out there."
While Viacom hopes to recoup licensing and development costs for The Beatles: Rock Band on day one, the company is hoping for the biggest margins on DLC albums from the band, like "Abbey Road" and "Sgt. Pepper's Lonely Hearts Club Band." "The really big opportunity is the downloadable content," said Bandier.
Perhaps the largest opportunity for The Beatles: Rock Band is to bring in audiences to the franchise that might otherwise not be interested in music games. "We believe the opportunity here is to widen our audience base," Guthrie said. "We absolutely want to get people engaged in our franchise and then widen the genres of music available."
