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Guitar Hero "Reaching its Peak" - Analyst

Kris Graft's picture

By Kris Graft

December 8, 2008

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"We expect Guitar Hero and Rock Band releases for the next 10 years as they will always have a large and loyal market base, just as [Dance Dance Revolution] is still today a very profitable franchise for Konami, even though that series reached its peak a long time ago."

Lagging Guitar Hero: World Tour sales are an indication that Activision's explosively popular series is finally "reaching its peak," claimed Electronic Entertainment Design and Research analyst Jesse Divnich in a Monday research note.

Ahead of U.S. NPD Group November sales data, Divich said, "Currently, we expect unit sales to decline by more than 50 percent series-over-series for November. This is coming off the October month where series-over-series units declined by more than 60 percent."

Guitar Hero: World Tour sales had been initially hampered by tight supply, but now Ebay reseller prices are beginning to register below the bundle's $189 retail tag, "a strong indication that demand and supply are currently in equilibrium," said Divnich.

Reduced-price Guitar Hero III sales during Black Friday cannibalized sales of World Tour, he added.

Although sales appear to be down for the series, Divnich assured that games like Guitar Hero and Rock Band will not be disappearing "anytime soon."

He explained, "In fact, we expect Guitar Hero and Rock Band releases for the next 10 years as they will always have a large and loyal market base, just as [Dance Dance Revolution] is still today a very profitable franchise for Konami, even though that series reached its peak a long time ago."

Other "Misses"

Guitar Hero: World Tour wasn't the only game that Divnich categorized as a November sales "miss." He also said EA titles Need for Speed: Undercover and Mirror's Edge, along with THQ's WWE Smackdown vs. Raw, will post "disappointing sales."

"We believe that low quality scores and low replay value are to blame for Mirror’s Edge’s poor sales," he said. "However, If EA can improve quality and release a sequel during a less congested time-period (off-holiday), we believe that Mirror’s Edge 2 could achieve some market success."

EA has yet to formally announce a sequel to the game, although it's expected.

Divnich fingered "brand fatigue" and lower review scores for Need for Speed: Undercover and WWE. He expects the titles to decline in November unit sales year-over-year by 10 percent and 20 percent, respectively.

Likely "Hits" and Overall Sales Predictions

Divnich expects November U.S. software sales to be $1.34 billion, a 3 percent year-on-year increase. He noted that last year, November had nine post-Thanksgiving shopping days versus only two this year, so a small climb would actually be an accomplishment.

Driving these software sales during the month were Call of Duty: World at War, Gears of War 2, Left 4 Dead, Resistance 2 and Animal Crossing: City Folk.

Divnich estimates Call of Duty: World at War sales were up series-over-series by 2.1 million units during November, taking into account the PS2 and Wii versions, which Call of Duty 4 did not have. However, he expects holiday sales of World at War to be flat for the entire holiday when compared to last year's entry. "This title is performing well above our expectations and that of the markets," he stated.

Divnich also said that Gears of War 2 is expected to sell over 2 million for the month, while Left 4 Dead and Animal Crossing: City Folk were projected to have sold around 300K and 200K, respectively.

Charts below courtesy of EEDAR

*Last Year Hardware Data According to The NPD Group

NickgamertagO1's picture
On December 8th NickgamertagO1 said:

I agree for the most part. I actually think they should have just kept with the Guitar Hero name and not released a band game. I find myself going back to GH3 when I try to play GH:WT. It just doesn't feel right I can't quite figure it out. Rock Band just has a more solid feel to it as a band game than GH: WT. I hope the talked about GH5 will go back to being just guitars and focus on what (for me) made the game so good (fun). BIg name bands are great and all, but when the songs aren't memorable or fun it doesn't matter.

I do think they need to just stop making new games and focus more on DLC. They may lose sales on new software sales (not counting DLC sales) and peripheral sales, but as the online market only continues to grow so will their DLC sales.

One thing Activision has been able to do so well for so long (with exception to the last Tony Hawk and apparently the last GH game, is release annual updates to franchises and have them sell well every time. Maybe that's coming to an end? I wouldn't think so for Call of Duty though.

OmegaVader's picture
On December 8th OmegaVader said:

This shouldn't be suprising -- I knew a month after GH3 that the franchise reached its sales peak. Original fans are realizing that the franchise is now a wolf in sheep's clothing, so to speak. It's just not the real guitar hero we came to love. I imagine there are thousands if not a million other people like myself who, having bought both Rock Band and GH3 last year, decided to forgo GH:WT altogether this fall and just stick with RB2...and more still who simply want the original GH back and forgo both franchises altogether.

That said, I think it's unfair for this fellow to say the genre itself has reached it's peak. Just because GH is having its market share eaten by Rock Band (and rightfully so!) doesn't mean the genre is at its peak, especially when DLC purchases are through the roof....and 'less sales' for GH compared to last year still leave a lot of room for ridiculous profits. It's also worth noting that since both major music titles on the market require more expensive peripherals than just the original guitar will also impact sales. Though, this also means that consumers have made an investment, and intend to reap the maximum benefit of said investment.

I will definitely buy whatever else Harmonix has to provide in the future, as they have proven themselves quite handily...and I'll buy anything Activision has if they ever decide to return to the quality rhythm titles they used to publish. I doubt they can ever truly replicate Harmonix's original brilliance in the first two Guitar Hero titles, however. They simply know how to do music right.