Last week, Gamasutra published an article titled  Analysis: Guitar Hero Vs. Rock Band - Behind The Numbers. The scope of the discussion was limited to actual sales trends. To try and make sense of these numbers, I decided to post an article that focused on the strategic and marketing concepts that might help explain these trends, titled Too Much of a Good Thing: Explaining the decline of Guitar Hero and Rock Band.

The article presents statistics on the growth of instrument simulation games (see graph below) and discusses the basic theory behind product life cycles. Developers are often faced with decisions about which platform to develop products for. Given that most developers have limited resources, it is important to focus efforts on platforms that will provide lasting revenue streams. One way to do that is through product life cycle analysis.

One important thing to remember is that the statistics posted by Gamasutra are YTD numbers. Therefore, they do no include sales of Beatles Rock Band, the popularity of which could help narrow the year-over-year sales decline. That does not negate the concepts discussed in the article. At best, a temporary 11th hour reprieve will be followed by a continued decline in sales in anticipation of an eventual plateauing. 

Number of Instrument Simulation Games Launched since 2005

When I posted a link to the article on the Linkedin "Video Game Marketing Group" discussion board, it generated some comments about how companies can best respond to declining sales that are the result of product life cycle trends. Some of the points raised in that discussion are:

• There is no one life cycle pattern. There are several patterns that have been identified in  product life cycle literature.
• Guitar Hero and Rock Band will likely follow a flatter pattern with moderate growth following the decline phase, known as the growth decline plateau, a pattern first identified in 1976 by  Nariman K. Dhalla and Sonia Yuspeh in their article "Forget the Product Life Cycle Concept." 
• Neither Rock Band nor Guitar Hero are "failing." They are simply adjusting to the reality of product life cycles. Both games are here to stay and hopefully they will continue to get better.
• There are at least two ways to prepare for and respond to maturation/ decline stages. Sometimes the answer is to accept lower sales levels and sometimes it is to discontinue a product. 3M has made an art out of cycling new products into its portfolio while retiring products that are near the end of the life cycle. The key is to have new (different) products to replace the old ones (not simply variations of existing products, such as a Beatles version of Rock Band).

The numbers presented in the case of Guitar Hero and Rock Band raise an important question:

Can companies continue to release instrument simulation games at the current rate?

I believe the answer is clearly "no." The best options are to release fewer instrument simulation games, to extend the time between product launches, and to focus on supporting existing products by expanding downloadable content with more songs and options. The question is whether the revenue stream from add-ons is sufficient to support existing staff levels. If not, these companies will be faced with the choice of laying off people or moving them to other unrelated projects.

What do you think? What other product categories do you see facing these kinds of market pressures? How do you feel about the strategies of Harmonix and RedOctane?