How have MTV Games and Rock Band performed in Europe so far?
The positive is that we see Europe as the biggest opportunity for growth. The reality is we have underperformed in this market, certainly versus our competitor. We had decent growth with The Beatles: Rock Band, but we absolutely believe there is much more to come from us for the European territories.
How does the company plan to turn things around?
It is a fairly straightforward game plan – we need to have more feet on the ground so that we've got dedicated resources that will be able to collaborate and work with our EA and Mad Catz partners.
One of the new people you've hired is Roy Campbell. What can he bring to the business?
As you know this is a very competitive market place, particularly here in the UK. I'd say the UK is the toughest territory for anyone in the gaming business. There is a lot of price compression. So somebody with Roy's experience is key. He allows us to be nimble, he will hopefully team up quickly with our partners, and then be able to go out to the marketplace and achieve the required growth.
Is the long-term plan to stick with EA or will MTV look to go it alone?
We have a partnership that is not long-term, but we have been together a long time. These things are contractually bound, but in terms of how we approach the partnership, it is long-term. Electronic Arts is fully supportive of what we are trying to do and they're really the key drivers in helping us achieve our objectives.
How much market share are you looking for in Europe and the UK?
It varies from territory to territory. The UK and Nordic countries are good territories for a music-based business, and we expect to participate in the 16 to 17 per cent sizing that the music/rhythm space has in these markets. Our goal is to be the number one player in music games. We have a long way to go, and we are playing catch-up – we were not the first people in the market and we're up against not just a formidable opponent in Activision, but also Sony with the SingStar franchise. There are several things in play here – but we absolutely believe we can be the market leader.
In the UK Guitar Hero is No.1. How can you unseat this franchise?
Guitar Hero absolutely is the market leader in Europe, but that's not the case back in the US, so we have been able to do this before. We think we have better gameplay, better song selection and a better online presence. When you access Rock Band's DLC we have over 1,000 songs, whereas they have a third of that.
We really believe that with the launch of Rock Band 3 – which is a significant upgrade to what we had before – we believe we can take market share aware from them.
At the end of the day, what we are trying to do is isolate what our consumer is looking for, and hopefully grow his or her participation in our games. Gaining market share is our secondary objective. We want to please our consumers and expand our consumer base.
Music is one of those things where there may be some songs on Guitar Hero that isn't in our title that a consumer wants to play, so hopefully they will enjoy both products. So both businesses can be compatible with each other.
How important is Rock Band's digital element to your overall business?
I think it is critical no matter what entertainment category you're in. For us the disc has always been the entry point for our game, but then that disc opens up a whole other world of opportunities through DLC.
For example, we can feature a new artist every month for download. DLC allows the franchise to stay alive and it keeps it interesting. But one is not separate from the other.
We don't see it is a digital business and a boxed business, both are connected to one another. We know that space at retail is tight and expensive, and it has to be a huge opportunity for retail to give up that space. So digital allows us to compliment what we are doing on a day-to-day basis.
Do you think it will ever reach a stage where you won't need to release a disc and can just update the game through DLC?
I don't know. The consumer will tell us how they want to get their entertainment. But I don't see that happening in the short term. I see that there is still a need for us to distribute product through bricks and mortar.
One of your digital initiatives has been the Rock Band Network. What's been the response to that?
It has been really fun and is exceeding our expectations in the number of artists that are using it. We expected artists that have yet to make a living out of music to be putting their songs on the network. But what we are finding is that very well-known artists are also using it – we're more than doubling the number of artists we anticipated.
Activision is looking to grow the market by targeting other music fans through DJ Hero and Band Hero. What are your thoughts on this strategy?
I will speak for my franchise, because I can't talk for theirs. But we believe that Rock Band can suit different genres. You may have an inclination to metal or to country, but we believe that once you have played our game with your chosen genre you can then go on and enjoy a different style. Rock Band can bring families together. That is what was so cool about The Beatles. It allowed parents to introduce that music to their children, but it also allowed the children to go on the Rock Band store and introduce Green Day to the parents.
The Beatles and Green Day certainly have very different fans. But if you don't want to get stuck focussing on a specific genre, then why release band-specific titles?
First and foremost it has to be a band that wants to work with us and has a story to tell. And that story has to be able to translate into the game itself. We know that consumers like a wide range of music, so we are trying to walk that fine balance of giving consumers what they want but also, when we have the opportunity to work with a great band like Green Day, to be able to embrace it and tell their story.
Would you say that perhaps a band like Green Day is more suited to Rock Band's audience than perhaps The Beatles were?
Yeah, I think that is a fair statement. I think that our core audience of 16 to 34-year-old males are much more familiar with Green Day music than The Beatles. What is interesting about Green Day is that this isn't a band that has been around for short period – they've been going 21 years. They have a great history. For the core gamer market, Green Day probably has a much higher awareness than perhaps The Beatles did.
Were you happy with how The Beatles: Rock Band performed?
The honest answer is no. We were expecting higher sales. We got caught in a few things that happened last year. It was a tough economy; there was a lot of competitive products out there, and I think Beatles probably had softer sales than it would have if some of those things weren't in play. Overall we were pleased with the sales. I think that we underestimated the competition and they took mind share away from us. The music genre still performed well.
So you don't agree that the music genre is in terminal decline?
Yes, when you look at share year-over-year, it is in decline. But what has happened is that people now have the plastic peripherals in their homes. You could argue the instruments should never have been part of the share in the first place, because in terms of software our business was up 73 per cent year-on-year. I believe that was also the case with Guitar Hero. I think that is where we are in the evolution of music games. Most people have their instruments and they are only looking to buy the software. Music games are still significant in the marketplace – they're the number two genre behind shooters.
Like any big genre, it will have its ups and downs, but it will be built on new content and creativity, and those will be the things that decide whether consumers want to keep investing in music games.
Why should we be excited for Rock Band 3?
At E3, you'll see that Harmonix has spent two years on an engine upgrade and creating the next evolution of Rock Band.
Unlike the other guy, we haven't been bringing a new game out every year. Sure, last year we had The Beatles but that was more about the content. This time we have lots of great, new music and some new consumer features you will find interesting.
What about MTV Games' ambitions outside of the music genre?
We're very focused on leveraging the assets of MTV, which is a music, pop-culture business, and the ability of the Harmonix studio, which is music-based as well. You will see some things announced at E3 that will focus around both the music and pop-culture elements.