Guitar Hero strategy ‘was wrong’

Activision’s decision to sell Guitar Hero as a product as opposed to a content platform was the ultimate cause of the IPs downfall, GamesBrief analyst Nicholas Lovell has told MCV.

"I wasn’t surprised by the news," he stated. "Sales peaked at $1.7bn for music games in 2008, fell by 50% on 2009 and by last year were down to nearer $300 million. Against that fall, it’s hard to sustain a business.

"The first problem was the expense. The secret of Guitar Hero (and its competitors) was peripherals. These acted as DRM (you can’t pirate them), USP (play a guitar in a game) and a social aspect (play instruments with your friend). The problem is that once a whole bunch of owned 2 or 3 pieces of plastic tat, they didn’t want any more.

"This put a damper on the market for premium content. The primary response was to launch new software with branded bands – which involved negotiations with labels, heavy investment in inventory and marketing spend. As the market declined, the profitability declined faster, until the business unit was less attractive to Activision."

Lovell also points to the departure of a key executive as a significant nail in Guitar Hero’s coffin.

"I note that when the Guitar Hero business unit was founded, Activision hired Dan Rozenzweig, formerly of Yahoo, to run it," he explained.

"I was excited by this because it suggested that Activision was actively looking for someone who understood services, not products, to run a division which should have seen the plastic tat products seen as customer acquisition” with the profits coming from digital distribution of music by every band under the sun, allowing players to pick and choose which bands to pay for, and allowing Activision to make profits from bands that didn’t have massive followings, but did have loyal following.

"Dan left after a year. I think this is when the writing was on the wall."

Nonetheless, Lovell doesn’t believe we’ve seen the last of the Guitar Hero brand.

"I think Guitar Hero might be resurrected one day. It would be digital only, with the only item sold in shops the instruments needed to play it. The problem is that this strategy is about long-term customer relationships, not launch marketing. And that is not Activision’s strength."

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