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.