Activision Milks the Guitar Hero Franchise

Much like in the movie industry, the brand awareness associated with a popular franchise title can decrease marketing expenses, reduce customer acquisition costs and lower market adoption risk (e.g. hedge against high production and development costs). So long as a game sequel offers enough new challenges or enhancements over the prior version, it stands a high probability of commercial success.

A game like Guitar Hero can be phenomenally expensive to develop across multiple platforms. According to a report on an edition of radio station KCRW’s “The Business” program, rival title Rock Band cost Electronic Arts (ERTS) and Viacom’s (VIA.B) Harmonix/MTV Games approximately $200million to develop. By the same token, however, successful titles can be famously lucrative. The various sequels in the Guitar Hero franchise are regular visitors to NPD’s monthly top ten sales lists. Combined, in total, they’ve generated more than $1b in retail sales.

Activision (ATVI), which has been riding the wave of receipts generated by Guitar Hero and Call of Duty franchises, is as aware of these economic advantages as any game publisher.

Looking to the future, the company seems set to try and ride the games’ momentum as much, and as far, as possible. To that end, several spin offs or new versions are on the horizon (or rumored to be).

• DJ Hero
On February 8th, Activision trademarked the name with the US Patent and Trademark office. It was reserved for “game software” and “interactive video game programs; computer game discs; downloadable software for use in connection with computer games; video game controllers; interactive video game comprised of a CD or DVD sold as a unit with a video game controller.”

There is little further evidence suggesting the game is in the works, but development, if not its time line, is extremely likely. A hip hop or dance music variation driven by a DJ Turntable-like controller would make for a logical extension. Moreover, it would be a fitting tribute to the same early Konami (KNM) arcade games that helped build the music gaming genre Guitar Hero has called its home. (Guitar Hero and Rock Band are largely considered to be evolutionary extensions of Konami’s 1998 arcade game Guitar Freaks. Guitar Freaks was part of Konami’s Bemani series of rhythm games. Beat Mania, a DJ (and not guitar) centric title was also part of the series. The game was popular in Japan and even saw a variation released for the PS2).

• Band Special Editions: Aerosmith and more
Already confirmed with a first installment, one future variation for the Guitar Hero franchise is set to be customized versions specific to individual bands.

On February 15th, Activision confirmed the first such title will feature Aerosmith. This version of Guitar Hero will chronicle the band from their first performances to the pinnacle of their success. Game players will be able to play song titles culled from the band’s catalog as well as much played by opening acts, or that the band members cited as influential in their musical development. The company said the Aerosmith title should hit stores in June.

Other titles built singularly around one band haven’t been announced but more are expected.

• Guitar Hero IV
Even with version three relatively recent to market, a fourth installment of the title is in the works.

Subject to success licensing the songs, this variation is speculated to be ready for market late this year but just in time for the holiday rush.

Activision’s merger with Vivendi Games is due to close in the coming months.

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[David V.]

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