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Analyst:  DJ Hero  Sales 'Modest,' Consumers Resisting Games Over $100
Analyst: DJ Hero Sales 'Modest,' Consumers Resisting Games Over $100
November 3, 2009 | By Leigh Alexander

November 3, 2009 | By Leigh Alexander

With retail sales for video games "sluggish" in general, it's a less-than-ideal time to launch an expensive game, and Activision's DJ Hero may be feeling the impact of consumer resistance, says Lazard Capital Markets analyst Colin Sebastian.

Although game sales are "stable," the analyst says, sell-through of DJ Hero looks to be "modest" so far in the U.S., out of step with its high ratings. The music title, equipped with a turntable peripheral, retails for $119.99 for its basic edition, with its special "Renegade" edition at $199.99.

"In general, our checks suggest ongoing concern at retail for software price points [over] $100 when many consumers are still showing price sensitivity," says Sebastian, predicting the title will sell about 1 million units in its fourth quarter.

Peripheral-bundled music games, with their higher price points, have been a pillar in Activision's revenue strategy in the past, as they necessarily bring in higher sales.

But launch sales of two major recent games -- Activision's own Guitar Hero 5 and MTV/Harmonix's The Beatles: Rock Band fell short of predictions, prompting analysts like Wedbush Morgan's Michael Pachter to halve their predictions for the games' holiday sales.

Cowen Group's Doug Creutz suggests languishing rhythm game sales demonstrate not only that the genre may be past the prime of its popularity, but that it is suffering from the recession's impact on the casual consumer who's most likely to cut discretionary spending on games -- the core consumer generally continues to spend even in lean times.

New DFC Intelligence data recently showed, however, that genre fans are loyal to music games without preferring a specific franchise, demonstrating that those who enjoy music games may still continue to buy broadly across the category.

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Jamie Mann
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In the UK, DJ Hero is retailing at 100 GBP - aka $165 (or $140 if taxes are deducted to make for a fairer comparison). One supermarket is punting it out at 85 GBP, but still: with Christmas very much on it's way and limited multiplayer capabilities, it's not the easiest purchase to rationalise!

Tyler Peters
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For that price point you've got to have one heck of a commercial campaign, and DJ Hero doesn't seem to have it. If the marketing fails, then guaranteed you've got a flop, regardless of how good the game is.

Especially in this economy.

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steve roger
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The peripheral is simply just way over priced. The game and controller is $100. That is a lot to ask for a unknown. But mark my words, you will see a serious price drop and it will sell.

Peter Dwyer
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Disagree with most comments here. If it was just about people thinking that DJ hero was not worth 100 dollars/pounds, then Beetles would have sold a shed load more than it did. The reality is that neither hardcore gamers nor casual gamers are willing to spend the now insane amounts of money required to own these games. They were always justa trend and that trend was fueled by what the casual gamers were into at the time. Like all such trends, people simply move on. Even if the hardcore still love these games. The average Joe is now looking at a set of overpriced plastc instruments that neither her or her friends wish to play with anymore.

Perhaps this downturn in Activisions core revenue streamers will finally wake the company up to it's somewhat suicidal attitude to the people it's relying on to buy it's games and keep it afloat.

Tom Newman
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It's not at all about the price. It's a good scapegoat to not blame anyone working at Activision, but it's not the price.

Caleb Garner
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all i can say is that if i'd drop that much money into a peice of hardware like that it better be a midi instrument as well! :) I could see it being fun with ableton live. I'm sure there will be or already is a hack. but yea i think it was foolish to assume that people would continue to buy hardware forever. However like any business, no one will stop making as long as people buy so you go go go till the bubble pops and lick your wounds and find the next thing that sells. No business says.. "we're making tons of money, let's slow down" because no one knows how long that wave will last.