Too Many Titles, Lack Of Innovation Helped Kill 'Guitar Hero'
Activision's shuttering of its once lucrative "Guitar Hero" franchise (Billboard.biz, Feb. 9) is the latest blow to a music game genre that was once hailed as the savior of the music industry.
The genre isn't dead-not when new motion-based dance games like Harmonix's "Dance Central" for Microsoft's Kinect and Ubisoft's "Just Dance 2" for the Nintendo Wii have been enjoying brisk sales. But amid the decline in overall demand for music games, few observers were surprised by Activision's decision, which follows Viacom's sale of MTV Networks' Harmonix unit, the developer of "Rock Band," to private investors (Billboard.biz, Dec. 23, 2010).
Still, for a business that record labels and music publishers had embraced as a rare growth center, the struggles of music game titles-and the demise of the segment's pioneering title-come as a setback.
The first "Guitar Hero" videogame hit shelves on Nov. 8, 2005. Created by Harmonix and publisher Red Octane, it became an instant hit, generating $45 million in worldwide sales by year's end, according to NPD Group. Sequel "Guitar Hero II" arrived the following year and became the fifth-best-selling game of 2006 with more than 3 million units sold to date and generating $200 million in revenue.
And then big money broke up the band. In 2006, Activision bought publisher Red Octane for $100 million, acquiring the franchise name and assets, but left out Harmonix. MTV quickly swooped in and bought Harmonix for $175 million later the same year, forming the basis of what became the "Rock Band" franchise.
Activision quickly released "Guitar Hero III: Legends of Rock" in 2007, featuring a soundtrack of licensed master recordings, wireless guitar controllers and in-game likenesses of real-life rock stars like Slash and Tom Morello. It became a massive hit and, according to Activision, was the first videogame to break $1 billion in worldwide sales.
MTV/Harmonix responded with "Rock Band," adding drums and vocals to the standard guitar in a significant evolution of the genre. By the end of 2008, the two franchises spearheaded an explosion of music-based games that generated more than $1.4 billion for the year, according to NPD.
At first, the music industry loved it. In addition to earning synch licensing fees, artists found that sales of tracks included in the games would skyrocket in the weeks following a title's release. Some called "Guitar Hero" the savior of the music biz, and Activision CEO Bobby Kotick even suggested in 2008 that labels should pay to have their music included in the game.
Then came the fall. Activision flooded the market with "Guitar Hero" titles, including "Guitar Hero: World Tour," "Guitar Hero 5," "Band Hero," "Guitar Hero: Smash Hits"; multiple portable versions for the Nintendo DS and mobile phones; and band-specific titles for such acts as Aerosmith, Metallica and Van Halen.
Too many games and not enough innovation created a backlash. "Guitar Hero 5" sold only 1 million units from its September 2009 release through the holiday sales cycle, down sharply from the 3.4 million units that "Guitar Hero: World Tour" sold during the same period a year earlier.
Activision scaled back from eight "Guitar Hero" releases in 2009 to just one in 2010-"Guitar Hero: Warriors of Rock." It proved to be the last title in the franchise, selling only 86,000 units its first week, compared with first-week sales of more than 500,000 for "Guitar Hero 5" in 2009.
The writing was on the wall, and during its quarterly earnings report on Feb. 9, Activision shuttered "Guitar Hero" for good. "Given the considerable licensing and manufacturing costs associated with this genre," Activision Publishing CEO Eric Hirshberg said, "we simply cannot make these games profitably based on current economics and demand."