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A few months back from Japan in 1999, they laid off 10 of their 25 employees.

The floor above the Walgreens in Cambridge's Central Square used to be a Harvard University Japanese studies library. Now it's filled with rockers, the employees of Harmonix. Fake and real instruments lie everywhere. Many of the former library rooms are soundproofed. Meeting rooms are named after defunct Boston rock clubs like The Rat and The Channel.

Dozens of the 250 or so employees are musicians, many active in Boston-area bands. Daniel Sussman, who produced Guitar Hero and oversees the four factories in China that are making the components for Rock Band 2, plays guitar and sings for the Acro-brats. Dan Teasdale, lead designer for Rock Band 2, plays bass for Speck. Harmonix was a music company from its start and always hired musicians.

In 2000, it became a game company.

A game has a goal. The players keep score; they can compete. If they are teenagers and young adults, as are most people who buy video games, they can become obsessive. What Rigopulos and Egozy had been trying to sell for five years was a kind of interactive art. Now they were ready to get behind something else: fun.

There wasn't a U.S. market for music video games in 2000, but games at least had a revenue model. The video game business is like the book business. Publishers pay an advance for creation of a game and cover the costs of packaging, marketing, and distributing it. A game developer like Harmonix gets the advance -- often $2 million or more per game -- and pockets as profit whatever isn't spent to create the game, then hopes it sells well enough to produce royalties.

In Japan, Rigopulos and Egozy had noticed video games in which players tapped out musical beats. They thought these new rhythm-action games were dumb, actually. Harmonix had crafted algorithms to crack music's code, and here, in games such as Beatmania, kids were mindlessly smacking buttons with their palms. But the kids were having fun. After four years of failure, Rigopulos and Egozy swallowed hard.

But they still hadn't learned. The first game they prototyped, called Frequency, was a complex, thinking person's button-masher. You would race down a tunnel whose walls represented instruments -- guitar, drums, bass, synthesizer -- and press buttons to activate layers of sound. Frequency intimidated people. Of eight publishers Harmonix contacted, all said no except Sony (NYSE:SNE), which agreed to publish Frequency for its PlayStation 2 in 2001. "We were finally able to sell something other than stock," Egozy says.

The game sold poorly, and a 2003 sequel, Amplitude, did about the same. In a focus group, when Sony gave testers advance information about Amplitude, only 2 percent said they were interested -- the lowest score Sony had ever recorded, Rigopulos was told. After playing the game, 69 percent said they were interested -- the highest score ever. Rigopulos called Sony excitedly when he heard the results. No, he was told. You don't get it. The expensive part is getting people to try it. Egozy recalls dryly, "Sony said to us, 'We love you, but we're not going to give you another couple million bucks to make a music game that no one wants to buy.' "

No one was returning calls. There was no next plan. So when Japan's Konami did call, asking them to make a karaoke game for the U.S. market, Rigopulos and Egozy sucked it up and said, "It's a gig." Karaoke Revolution was Harmonix's simplest product yet -- and its most popular. It allowed players to score points by singing pop songs into a headset or microphone. Harmonix was getting better at not spending every cent of its advances. In 2004, the company's 10th year, Harmonix made its first dollar. "We were eking out like a 2 percent profit," Egozy says.

So here's where the vision had led. The founders had sold the bulk of their company to outsiders and after 10 years were making a minuscule profit with games that had essentially nothing to do with their original vision. How much did they need to wander from the mission to succeed? They rationalized: At least karaoke was music. What to do, though, when Sony called again in 2003, looking for a game for its new interactive camera -- and explicitly said, No music at all. They took the gig. EyeToy: AntiGrav involved riding on a virtual hoverboard. It got lousy reviews. And, as 2005 began, it became Harmonix's best-selling product ever.

The success was a punch in the gut. "We were like, God, are we just idiots?" Rigopulos says. "Are we a game company? Are we a music company?" "We were thinking, Is our entire company mission statement basically a complete flaw?" says Egozy.

They struggled. Perhaps Harmonix was not a music company after all, just a company filled with musicians who created games that were...quirky. Mission statement? Things change. Maybe Harmonix Music Systems should become Harmonix Game Studios.

"It was really at our sort of darkest moment in terms of self-doubt that the third chapter in our history began," Egozy says, "when we were contacted by RedOctane about making a guitar game."

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