Sales of music video games plummet in 2009

Fri Dec 18, 2009 6:36pm EST

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DENVER (Billboard) - What a difference a year makes.

The music-game category raked in $1.4 billion in revenue last year, according to Wedbush Morgan Securities analyst Michael Pachter, driven largely by sales of "Rock Band 2" and "Guitar Hero World Tour." By the time 2009 comes to a close, Pachter expects the category to make half that -- $700 million -- despite such high-profile releases this fall as "The Beatles: Rock Band," "Guitar Hero 5," "DJ Hero" and "Band Hero," not to mention "Guitar Hero: Van Halen," which is due Tuesday (December 22).

According to data from market analyst NPD Group, sales of these games haven't met expectations. The Beatles game, while selling a respectable 800,000 units of its various versions so far, missed the 1 million mark analysts expected in just the first month after its September 9 debut. "Guitar Hero 5" sold 500,000 units in its first month, compared with the 1.4 million "Guitar Hero III" moved two years ago in its first month.

"DJ Hero," the game that was meant to expand the category into the hip-hop genre, moved 123,000 units in the first few days after its late-October release, and analysts at Cowen & Co. slashed their sales forecast for the game from 1.6 million this year to 600,000.

So what happened to this once-promising category, which so many in the music industry looked to for much-needed revenue? According to Pachter, the answer is: Too many games with too much music in too short a time.

'TOO MUCH VALUE'

"(Game) publishers have probably done themselves a disservice by giving us way too much value for our money with each of these games," Pachter says. "You just get way too much content. The installed base has a lot of music, and they don't really need a lot more. It's sort of like buying more books when you have a stack of books left to read. You just don't."

Pachter points to the disappointing sales of "The Beatles: Rock Band" as proof of this theory.

"There isn't a game that we would expect to have more widespread appeal than that," he says. "And yet with the installed base of music-game owners at around 20 million, it boggles the mind that only 800,000 bought 'Beatles: Rock Band.'"

But this doesn't mean the music-game category is a quickly fading fad with no future. No one expected the same level of record-breaking sales achieved in 2008, and Pachter expects the category will level off at about $500 million-$600 million per year, which he calls a "nice, healthy" genre on par with the "Call of Duty" action-game franchise. That doesn't take into account the revenue earned from in-game music sales, which "Rock Band" and "Guitar Hero" have yet to report.

Hand in hand with the decline of music-based game sales is a softening of the impact those games have on digital downloads.

A sampling of the songs included on soundtracks to "Guitar Hero 5," "Band Hero" and "DJ Hero" shows no significant increases in track sales as a result of their inclusion in each respective game, according to Nielsen SoundScan data.

The game with the most impact on sales was "Brutal Legend" -- which isn't a music simulation game but an action/adventure title with a strong heavy metal theme and soundtrack. But while songs from acts like Motorhead and Judas Priest saw sales spikes as high as 700 percent, the volumes were too low to make much of a real impact -- in many cases from single-digit or double-digit weekly sales to low triple-digit sales.

To re-create the blockbuster sales of last year, the category needs a new innovation. One idea: Dahni Harrison -- the son of the Beatles' George Harrison, who worked closely on the development of "Beatles: Rock Band" -- told the Chicago Tribune he is working with Harmonix to create a version of "Rock Band" with new controllers that could actually help teach gamers to play guitar rather than just simulating the experience. Such new motion-capture devices as Microsoft's Project Natal may also play a role in evolving the gameplay.

Until these innovations come to fruition, though, the music and video-game industries will have to live with a music-game market that has fallen back to Earth.

(please visit our entertainment blog via www.reuters.com or on blogs.reuters.com/fanfare/)

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