Activision poised to score with "Guitar Hero 3"

By Scott Hillis

SAN FRANCISCO (Reuters) - Activision Inc is set to launch "Guitar Hero 3" amid expectations that the latest installment of its music-themed franchise will be a platinum hit for the second-biggest U.S. video game publisher.

The game is the highly anticipated encore to one of the year's breakout successes, "Guitar Hero 2", which sold 3.9 million copies through September, according to market research firm NPD.

The game has become a cultural phenomenon. Bars have held "Guitar Hero" competitions and fans have uploaded videos of their best performances to the Internet. A search for "Guitar Hero" on YouTube returns 76,100 results.

The sales figure for the current title is even more impressive considering that the game sells for at least $80, since it includes a guitar-shaped controller. (Most video games sell for about $60.) As colored notes cascade down the video screen, players must hit correspondingly-colored buttons on the guitar neck.

Anticipation of "Guitar Hero 3" has helped drive Activision shares higher, despite the anticipated debut of a rival game next month.

Activision shares have risen nearly 33 percent so far this year, compared to a rise of nearly 14 percent for those of its larger rival Electronic Arts Inc.

On Thursday, a day after Wedbush Morgan analyst Michael Pachter raised his profit estimates on Activision due in part to "Guitar Hero", the stock was up 2.1 percent at $22.83 in late afternoon trading.

Fans have also followed details of the third game with the kind of passion they might show for a new album from their favorite band.

The wait ends on Sunday as the game goes on sale featuring a set list with dozens of songs from bands such as Metallica, The Rolling Stones and Guns N' Roses.

New features include a new controller modeled after a Gibson guitar, a competitive mode in which gamers can challenge each other in guitar battles, and more original versions of songs instead of covers.

"The game play is pretty much identical to the previous games," said Sal Accardo, an editor at gaming news and reviews Web site GameSpy.com. "I think they were very concerned with trying to stay faithful to what worked."

The franchise has not only been a huge hit for Activision but signals the mainstream acceptance of a new way for enjoying popular music that could be as significant as the arrival of MTV in the early 1980s, some say.

"I truly think that's exactly it. We've only scratched the surface of what music games can do," said Alan Flores, lead designer of "Guitar Hero 3" at Activision's Neversoft studio.

Activision promises a steady stream of new songs than can be downloaded to gaming machines like Microsoft's Xbox 360 and Sony's PlayStation 3.

The simExchange, an online prediction market for video games, expects "Guitar Hero 3" will sell 285,000 copies in its first four days, and nearly 2.3 million copies in total.