The once-robust gaming industry is now battling a downturn, thanks partly to recessionary effects.  That means smaller budgets and more selective development efforts, and according to Viacom, smaller licensing outlays for music.  “As we go forward, we are… looking to reduce the cost structure associated with Rock Band, being selective in the music titles that we choose for Rock Band based on their cost,” Viacom CEO Phillip Daum stated ahead of the weekend.

Warner Music Group chairman Edgar Bronfman, a hawk for higher licensing amounts, is undoubtedly less-than-thrilled about this sentiment.  But other gaming publishers are feeling similar top-line pressures, and layoffs at Electronic Arts, Activision, and other studios are reminders of that shift.

Just recently, NPD Group reported a 9 percent drop in US-based gaming sales in 2009 to $20.2 billion.  December offered hope of a rebound, though January numbers quickly doused the optimism – also according to NPD, the sector experienced a 13 percent year-over-year decline last month.

But all of that is rosy compared to the drop in music-related games.  Just last month, Wedbush Securities analyst Michael Pachter counted a 50 percent decline in US-based music-related games in 2009, down from a year-2008 peak of roughly $1.4 billion.  That suggests a separate effect, more attributable to category fatigue than broader recessionary pressures.