HITS Daily Double
Guitar Hero takes an artist to a whole different place."
——Bobby Kotick, Activision Blizzard


Guitar Hero and Rock Band Provide Latest Revenue Stream for Record Labels
Can Guitar Hero and Rock Band revitalize the music business? The two videogames are leading the battle for consumers between dueling media congloms Vivendi and Viacom.

Guitar Hero is manufactured by Activision Blizzard, formed by last year’s $19 billion merger with Vivendi, which owns 52% of the $4 billion-a-year company. It’s headed by 45-year-old Bobby Kotick, who bought 25% of the then-sputtering Activision in 1990 with a loan from casino mogul Steve Wynn. Since 2005, the Guitar Hero franchise has sold in excess of 15 million units in North America, with retail sales topping $1 billion.

Viacom owns Rock Band through MTV’s 2007 acquisition of Harmonix, the company which originally developed Guitar Hero in 2005 and released its first two incarnations before the title was acquired by Activision’s Kotick. Rock Band is distributed by game giant Electronic Arts.

Harmonix co-founders and MIT alumni Eran Egozy and Alex Rigopulos, who were instrumental in the development of Guitar Hero, created and launched Rock Band in 2007 by simply adding drums, bass and vocals to the game.

Guitar Hero and Rock Band have created some valuable revenue for the music industry in downloadable song packs, even if some label moguls, most notably Warner Music Group boss Edgar Bronfman Jr., have been griping about their share.

Rock Band has more than 545 tracks by over 243 artists (including 10 complete albums) available via disc and download purchase, generating more than 30 million paid downloads since its launch Nov. 2007. Rock Band 2 has sold 2 million units across Xbox 360, Playstation 3, Playstation 2 and Nintendo Wii since hitting retail Sept. 14, 2008. A special edition featuring the music of The Beatles will be available later this year.

Guitar Hero has already spawned an individual edition featuring Aerosmith, and another coming this year from Metallica, whose Death Magnetic album was recently made available as downloadable game content simultaneously with the release of the CD.

Approximately 22% of music consumers of CDs, digital music and mobile applications, and 35% of buyers under 35, have played a music videogame, an interaction that leads gamers to purchase music either on CD or digitally, according to research firm NPD. Sales of the two games brought in more revenue in 2007 than digital music downloads, with a combined $935 million compared to $835 million.

“Music-related games are evolving into an important source for music discovery that can have positive revenue implications for the recording industry,” said NPD entertainment analyst Russ Crupnick.

Guitar Hero takes an artist to a whole different place,” Kotick told Conde Nast’s Portfolio. “Downloads on iTunes take off. The artist’s relevance and importance to 17-year-olds change in a way that you could never get in any other medium… Seven-year-olds with no idea who Aerosmith is are playing the band’s music alongside 45-year-old fans.”