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Analyst: Deflating Music Genre To Play Flat Notes For Activision
Analyst: Deflating Music Genre To Play Flat Notes For Activision
October 26, 2009 | By Leigh Alexander

October 26, 2009 | By Leigh Alexander
More: Console/PC

Sales of Beatles: Rock Band and Guitar Hero 5 fell short of expectations, and now one analyst says weakening numbers may mean the music genre might be faltering -- and less able to play hero for Activision's revenues.

Pre-orders for Activision's DJ Hero aren't trending favorably compared with expectations either, says Cowen Group analyst Doug Creutz. "Our previous estimate had been for combined Guitar Hero 5, DJ Hero, and Band Hero U.S. retail sales of $408 million through December. We now estimate total sales of $199 million, slightly more than a 50% decrease," he says.

Earlier this year, Creutz, along with many other analysts, predicted the music genre could resist the "fad" label and sustain, thanks to newer and more diverse SKUs -- like DJ Hero. The result should have been at least flat growth for Activision in the music sector.

But according to Creutz, casual and mass market game sales have borne the brunt of the recession's impact. "While the core gamer side of the business has held up relatively well, sales of other titles with mass-market appeal have been impacted, particularly on the Wii (which was a key platform for Guitar Hero)," he says.

"We saw this with Madden NFL 10 (unit sales down 13 percent year over year-to-date) and we believe the impact has beeneven more pronounced with the music genre."

As concerns Activision's market-dominant presence in the genre, The Beatles: Rock Band took more market share from Guitar Hero 5 than Creutz anticipated. "We had thought that a title focusing on a single band would necessarily sell fewer units than a title featuring multiple bands and appealing to a broader variety of tastes," he says -- apparently, when that one band is arguably the most popular of all time, the rules don't apply.

And it seems trend-ism has indeed dented the Guitar Hero franchise, Creutz adds: "We probably underestimated the extent to which the 2007-08 peak in Guitar Hero unit sales was driven by the extreme amount of buzz around the product," he says.

"In retrospect, Guitar Hero III likely attracted a lot of one-time buyers (that have not returned for subsequent franchise installments) due to its ‘it-game’ status at the time."

All this combines to weaken the prospects for upcoming turntable game DJ Hero, says the analyst. "As a result, we are reducing our estimate for DJ Hero Q4 U.S. unit sales from 1.6MM to 600K, and we are reducing our first year estimate from 2.5MM to 950K," Creutz says.

"We still believe that DJ Hero will be an important part of Activision Blizzard’s music franchise strategy, but we think it may take a few versions of the game for it to reachits full market potential -- similar to the original Guitar Hero," he concludes.

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Amir Sharar
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It is quite possible that people are burnt out of these sorts of games, but on the other hand I think it has more to do with the high cost of entry and some mismanagement of these titles.

Perhaps it speaks less regards to the popularity of the "music genre" and more on the popularity of "music based games that use highly priced peripherals".

I recently spent $400 on a new racing wheel, but I was able to justify it because it is compatible with all platforms and with FM3 and GT5 (alongside Supercar Challenge, NFS: Shift, and DiRT 2) coming out I will be using it quite a bit.

On the other hand repeatedly buying these music games that come out with new hardware that feature incremental upgrades adds up. My friend bought GH3, then Rock Band, then GH:WT and RB2 (disc only) and the costs of the peripherals added up. Luckily I went the route of GH:WT and RB2 disc only, and I was able to use one set of peripherals across many "band" based music games. I saved hundreds while she spent hundreds more for the exact same experience (thankfully due to the fact that GH:WT's peripherals work on RB games, which I suppose is thanks to Harmonix and MTV Games/EA).

My point being that the lack of a standard peripheral has bit many people in the ass and they probably don't feel like being sucked into another product. DJ Hero interests me, but will the peripheral see support in a sequel? Or will that sequel feature a "new and improved" peripheral with more features?

In terms of managing these titles, Activision doesn't have the same track record as MTV Games in terms of making their titles compatible with each other (ie. RB1 tracks can be played on RB2), and more importantly in terms of DLC support. There's a lack of foresight that ends up forcing the customer to spend more money.

So while it could very well be that gamers are burnt out of music games, I have to say from my perspective it has some to do with a lack of trust and an unwillingness to spend a lot on each and every music game.

Steve Kaetzel
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I think a large part of the reason why we're seeing this deflation is from the lack of diversity in the genre. They all seem to revolve around how correctly the user can play a succession of notes. Music is more than just a bunch of notes played in time. It's a medium for imagination and self-expression that these games are failing to capitalize on. I would like to see the new music games focus more on user creativity and bring the user closer to the joys one experiences from being an actual musician.

Steve Kaetzel

Composer/Sound Designer

Red Monkey Productions

ken sato
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Your both right. The way to think about it is the number of positives towards purchasing a title versus the negative, and I see no conflict with either your positions as they don't conflict. The high purchase point and lack of innovation are problems every production / design team has to wrestle with at the outset.

In effect GH and RB are victims of their own success, their are probably two different forces at work: conservatives on keeping what keeps the franchise readily identifiable and easier to assimilate, and the creative personnel that might want to prototype new features to attract new audiences or revitalize the old.

Amir Sharar
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Steve: I agree. Something that I found interesting is that a couple of music based Indie titles found on the Xbox Indie Games section on the 360 have been incredibly well received. One being "Groov" a twin stick shooter that has average gameplay but is addicting due to how every action you take generates music, and EzMUSE+: Hamster Edition, a loop-based music making app. EzMUSE has seen incredible sales despite being one of the most expensive offerings on the service. Many serious Indie efforts that resemble traditional games did not get the attention or sales of these games...which tells me that there is a market in music based games that put more power in user's hands and allows them to become creative.

And ken I suppose you are right about the 2 forces at play. I was surprised with the quick turnaround of GH5 and RB: The Beatles...released just a year after GH:WT/RB2. With such a quick turnaround time you would be hard pressed to add a lot of innovation and changes to the series.

Jamie Mann
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The revenue may be lower than expected, but what about the actual sales? The main reason GH/RB generated so much money was because of the need to buy the plastic instruments, boosting the revenue from $60 to $200. Now that most people have the instruments and there's a healthy secondhand market (at least for the guitars), I'd expect the volumes for the "band in a box" editions to have slumped dramatically.

That said, I've personally not bothered with GH5 or BRB. I have RB2 and GH:WT: between these two and the DLC, I don't see any need to go out and buy yet more disks. The same may well be true for a wider audience...

Jamie Mann
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Oh, and @Ken:

I don't think there's a struggle between conservatives and radicals, but rather a balancing act between casual/social and hardcore. The former want all songs unlocked and reduced failure penalties, the latter wants unlockable content and complex song structures and scoring mechanisms. There's also a third factor: the need to remain at least partially backwards compatible with existing plastic instruments.

From what I can see, both RB and GH have clearly opted to target the casual/social markets: GH games now have all songs unlocked by default and both franchises are bringing out titles like Lego Rock Band and Band Hero.

Scott Thomack
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I agree with many points to these posts but the thought that I agree with the most is the fact that the games are just not innovating enough. The companies are treating them like a Madden franchise. Minor tweaks here and better menus there. Madden gets away with it because of roster changes and football fever. Music games need to start making more substantial changes to stay relevant.

Basically the music games need to keep the note playing the same and the menus are great now too (easy to change difficulty, jump in jump out multi-player, etc...) but anything else can evolve. Give me a Brutal Legend caliber story to go with my tour or really let me modify my characters, in game instruments, and even my stage show. Also if you allow for the customizations then make it worth my time. Allow me to upload my stage to Play Station Home. Have contests that allow bands to play in the Playstation Home lobby for all to see and hear. Use the camera from a console and put the feed on a screen that is part of the stage. Basically make the games more fun and engrossing. Create better community features.