Great Scott

Two months ago MTV appointed THQ and Disney vet Scott Guthrie as head of its Games division, which includes the Rock Band brand. Here, in his first interview since taking the post, he talks to Michael French about MTV Games’ wider strategy, the power of DLC, and a little game called The Beatles Rock Band…

What is your vision for MTV Games now that you are in charge?
We have a long-term plan, but as we are only in the formation stage right now I can’t really disclose it. But we do have a short term plan which is to execute as well as we can against The Beatles Rock Band. It represents a huge opportunity for not just MTV Games, but the whole Viacom enterprise.

There is talk of the music game category being down in a revenue sense this year. What’s your take?
There’s a few things going on there. The first and foremost is that we are transitioning as a category out of the ‘plastic’ area. Both MTV and our competitor [Activision] spent a lot of time getting instruments into households, and we’ve done a very good job. But the margins on hardware are small – so we are now transitioning into a software model.

You see a revenue drop because we aren’t selling $149 bundles. But the business is really turning into two pieces – a focus on packaged software and also online. There might not be any official tracking through NPD or ChartTrack of the latter, but it is significant. DLC is a double-digit portion of our total revenue stream and grows month on month.

While plastic isn’t as big a part of the revenue stream now, we have a much healthier market, expanding into new music genres. A great example is the introduction of our Country Music Track Pack – it was the biggest seller in the last year and a half. Our audience is interested in new genres, which in turn presents a lot of opportunities.

So if you dig deeper beyond those top line numbers and you see it’s as healthy as it has ever been.

The competition, Guitar Hero, is a goliath franchise and Activision often boasts about its revenues. What’s your plan to compete?
We have opportunities that we perhaps haven’t yet leveraged to the same degree as our competitor has. But we are taking a decidedly focused approach to our games which could be considered different to them. What we are doing is focusing on big artists and expanding genres – and we’re very focused on the DLC business on which we have completely outflanked our competitor on.

Why the strong emphasis on DLC over packaged media?
The DLC allows us to have flexibility that packaged media doesn’t, it has some reduced costs in terms of manufacture – although there are still some alternate costs associated with digital distribution instead. It allows us to do different things with artists. If there are upcoming tours or new songs that a band wants to try out, DLC is perfect. We can do things online in a manner that you can’t with pressed plastic.

The Beatles Rock Band is a retail release – but it’s only the third iteration in the series as opposed to Guitar Hero’s 10 discs. Do you want to beef your slate of physical products up at all?
No – we believe we have the right cadence on our release schedule where we, between big launches every year, significantly drive our online business to keep the fan base happy and excited.

But might retailers not prefer more more discs as that can help drive the higher-value hardware sales?
I think you’d be surprised if you spoke to some retailers – the senior guys we speak to really like the way we go to market. We aren’t cluttering their shelves with insignificant packaged product and we’re keeping consumers interested in our products every week with our Tuesday DLC releases.

That will also apply with The Beatles, which will have a significant DLC component. That model keeps consumers happy and entrenched and keeps retail happy as they have a real relationship with the entry point.

So for those tent pole releases, what happens after The Beatles game – what’s coming in 2010? Another major artist game? Or Rock Band 3?
We’re exploring both – and possibly will do both. The Harmonix development team are working on what is effectively the next game, or ‘Rock Band 3′. We aren’t standing still – we will keep moving into new areas and look at new technologies that our platform holder partners are also developing, such as Project Natal from Microsoft. We’re working with them to pull some things together. So it’s pretty exciting time for the future of our music game business.

The Rock Band Network, which allows artists to upload and sell their tracks was unveiled in July. What’s the thinking behind it?
This is a really major thing for us – you will not believe the quality of feedback we are getting from all sides of the music business. Part of it is that we want to be able to allow artists to monetise their content directly, but in a broader sense we want to cover all spectrums of the business, be that big artists and major labels – like we are with The Beatles – down to garage bands and everything in between.

What other genres does MTV want to move in to?
There are several – but I’m not allowed to say at this point. Right now we are looking at several opportunities, ones that leverage how MTV as a media company can support and market those new products and appeal to the userbase and audience that MTV has worked so well with in over 25 years.

Is that strategy purely around physical products, or are you interested in smaller download titles?
Given our success in DLC, we are formulating a digital strategy for everything we are looking at. Because it is real and meaningful – you hear other publishers say it’s about three or five per cent of the market, but that is just underestimating the real success of it. We believe that we have some key learnings and technical expertise, and that we understand the consumer out there, to make the most of that.

In what ways will MTV Games grow? Are you interested in growing your physical distribution capabilities as a publisher?
We are first and foremost a content company, that’s our priority. How we reach the market is something we address with great partners like Electronic Arts. They have some great strengths in terms of reach to retail which we don’t, so we will keep leveraging that.

Will you buy more studios?
We’re going to continue to look at the arena and where there might be opportunities to drive content creation we will consider it. But I think that is a model which is a bit broken for the industry now – the idea of publishers having to buy studios doesn’t always work.

The best talent doesn’t want to be owned – our answer is to work with them and collaborate, and bring the strengths that we have as MTV Networks and a Viacom enterprise to help them get to market. When you talk about such partnerships, you need to think about what each party does well – that’s why we have worked so well with EA and subsequently retail, but also how well we handle all kinds of talent.