Harmonix Reloaded: Music Videogame Maker Raises $15M

Xconomy Boston — 

[Updated, 9/8/15. See below] For a 20-year-old company, Harmonix Music Systems sure looks like a startup. Now the Boston-based videogame maker, best known for the Guitar Hero and Rock Band franchises, has raised $15 million in new equity funding, according to a regulatory filing.

The company isn’t talking yet, but the presence of venture capitalists Brad Feld and Nabeel Hyatt on the SEC filing suggests that Foundry Group and Spark Capital, respectively, invested in the new round. Both Feld and Hyatt are listed on the form as board directors.

(Disclosure: I play in two bands with executives and/or longtime employees of the company. In recent years I have stayed away from reporting on their firm as much as possible.)

Harmonix named Steve Janiak as CEO in May 2014 during a restructuring that also included layoffs. Janiak succeeded co-founder and longtime chief Alex Rigopulos, who became chief creative officer and remains chairman of the board.

Last year, the company ran a Kickstarter crowdfunding campaign to support a remake of its 2003 game, Amplitude. The effort reached its goal, raising about $844,000. The game is expected to roll out in December and January. And Harmonix just announced a partnership with Fig, a crowdfunding site for game developers, to launch a forthcoming game (as yet unspecified).

Meanwhile, Harmonix is slated to release Rock Band 4 in October. With the next installment of Guitar Hero (led by competitor Activision) also coming out this fall, we’ll soon see whether music-performance games make a comeback after saturating the market in the late 2000s.

Harmonix got started in 1995 and had its first major hit with the original Guitar Hero in 2005. The company was acquired by Viacom’s MTV Networks for an initial $175 million in 2006. The acquisition didn’t work out. As sales of music videogames slowed, Viacom sold Harmonix to a private equity firm in 2010. The two parties were involved in a lawsuit over bonus payments that was resolved in Harmonix’s favor in 2013, to the tune of about $300 million. The final acquisition price after earn-outs was $735 million. [This paragraph was updated with new info on the Viacom-Harmonix deal price—Eds.]

The company recently moved from its longtime space in Cambridge, MA, to a new office in downtown Boston—reflecting another trend among local tech startups.