Future of the Music Gaming Genre
Just my PS3 instruments... before I bought the Beatles bundle!
I recently saw an article in the Chicago Tribune titled “‘Beatles: Rock Band’ sales slow over holidays as music video game genre bombs.” Ouch. Personally, I’m still as excited about the genre as I was when I first played Guitar Hero, and as long as Harmonix keeps making games, I’ll be happy. Plus, that’s not even including the forthcoming RBN Music Store launch! With that being said, I still wanted to check out the piece to see what was being reported on with the genre.
The article explains that global sales of the Beatles: Rock Band were 1.7 million units sold, compared to only 996,000 units moved of Guitar Hero 5. So first of all, kudos to the Beatles: Rock Band for beating it’s rival! (I haven’t seen any good quotes regarding Guitar Hero vs. Rock Band from the Cocky Kotick lately!) According to the article, that’s where the good news ends for Rock Band. To put the Beatles: Rock Band sales in perspective, Rock Band 2 sold the same amount in a smaller time frame in the US alone. Also, 2009 music gaming revenue was $1.06 billion, down 46% from prior year, versus a total industry decrease of only 8%.
That doesn’t look good. But after thinking about it for a few minutes, I realized that there are a number of things that are not touched upon in the article that I wish were explained in much greater detail, so I guess that’s my job…
The piece does not even mention digital downloads, which based on an interview with Alex Rigopulos, CEO of Harmonix, and Brian Brights, Project Director of the Guitar Hero franchise, the next step in the evolution of the genre will be in user-generated content, which is virtually impossible to do incorporate in traditional industry reporting methods, and skewing reported results against music gaming. Just prior to the end of 2009, the Rock Band DLC library reached 1,000 songs; a very impressive feat. There are no official statistics on how much revenue the DLC has generated for Rock Band, but I used a quick and dirty method to make a rough guess. Using Keldon’s Rock Band Scores site, I was able to figure out roughly how many tracks have been sold. (His site only pulls back tracks that have scores with them, so this total is actually slightly understating the total sales, as there are surely tracks out there for one reason or another have not been played and had a score recorded.) If you back out the free tracks, and multiply by $2 each (I understand some were priced at $.99, but this is just a ballpark estimate), you can reasonably estimate that DLC has generated between $90-$100 million in revenue. If you compare this figure to sales thus far of Guitar Hero 5 (which has sold just south of 1 million copies), even at $60 each, the Rock Band DLC has outsold one of it’s major disc-based competitors (granted the DLC has been selling since late 2007 and Guitar Hero 5 has only been available since September). It appears that disc-based content is still the dominant way to generate revenue, digital distribution should not be ignored.
The other thing that I didn’t think was emphasized enough is the fact that revenue sales for the genre were always budgeted to drop at some point once the market became saturated with the related hardware. I’ve bought each bundle for all three major Rock Band games, but I’m the exception. I think it’s safe to assume that the average customer who purchased the Rock Band 1 bundle did not purchase the Rock Band 2 or Beatles bundle, but would have rather purchased the game only. All things being equal (Rock Band 2 vs. Rock Band 1 instrument quality, Beatles limited edition bundle pricing, Track Packs/LEGO Rock Band/Guitar Hero games), if you purchased the Rock Band 2 bundle near full retail (~$170), and then purchased the Beatles: Rock Band game only (~$60) the following year, even though you have purchased both of the major franchise games in consecutive years, this represents a 65% drop in revenue for the franchise. (And just FYI, do not confuse revenue with profit. Profit is the money you have AFTER expenses; revenue is strictly how much money you bring in.) It’s safe to assume that Harmonix was well aware of this, and attempted to offset this disparity by releasing additional games (Classic Rock, Country, and Metal Track Packs, LEGO Rock Band, even Rock Band: Unplugged). That is why sales dollars metrics used when discussing the music gaming genre paints the wrong picture. The units sold metric represents a much better barometer of the music gaming genre.
Finally, I was shocked at the 46% revenue drop in the genre referenced in the article, and wanted to take a look at the NPD report, but I was having trouble finding the original source as it relates to full year 2009. What I did find, was the EXACT SAME statistic being referenced back in September about the genre. I don’t want to sound all “conspiracy theory” here, but I’m wondering if the statistic referenced in the latest article is a good number, or just sloppy reporting. I mean, both major franchises released TWO games this fall, instead of only one per franchise in 2008. I find it hard to believe that the year-to-date decline in August 2009 perfectly matched the revenue decline at the end of the year. And even for the sake of the argument, if the 46% at the end of the year is a good number, that means the drop in revenue for the genre leveled out around the time that the Beatles: Rock Band came out. Q1 and Q2 were clearly bad for the genre, but the bleeding stopped in Q3, so anyone saying that the genre is dying doesn’t know what they are talking about.
With all that being said, it does not surprise me that the genre would cool down to some extent. Stocking up on plastic instruments on top of a pricey console in a tough economy is not a welcoming proposition to many gamers and many families. And since the trend in the gaming genre is to have an ever increasing amount of players (from 1 to 2 early on, to 4 with Rock Band, and then even to 6 with the Beatles: Rock Band), there’s less of an incentive for the casual player to invest in a full bundle, when their best friend next door has it. It’s clear that the market for peripherals has been saturated. But has music gaming reached it’s peak? Rigopulos doesn’t seem to think so. While Activision has been primarily concentrating on a disc-based distribution method, Harmonix has invested more in digital distribution while concurrently releasing disc-based games. They are also committing user-generated content to digital distribution via the Rock Band Network, with the RBN Music Store launching in only a few weeks time, and I couldn’t be more excited!
So what about you? Has your interest for music gaming cooled? What impact is the RBN going to have on your interest level? Let’s hear you sound off in the comments!
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SebastianSB (169)
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Im still VERY happy with these games and the RBN is only going to add to it!
Quick thought (without reading your entire article yet). No one put out a compelling music game in 2009. GH:VH was a joke for the masses (though I personally loved it). TB:RB was guaranteed to be limited in sales as a single band game. L:RB was just an extension of RB2 (more songs, little/no interface changes), GH5 was a leap forward but the soundtrack blows goats.
The real numbers is in HMX/MTV sales of downloadable content for the RB franchise. You mention RBN coming out soon. I’m hesitant to say that will be a huge success. I think it may be more of a niche thing for the hard core players.
As for retail games, the gaming industry was fairly flat in 2009 (had a some growth, but retail prices were down ~$4 per game). That’s in games in general, not just the music genre.
2010 will be an important year for HMX/MTV to prove what RB3 can do for retail sales. GD:RB will not be huge, again as a single band game. If RB3 only sells to the die hards (i.e. only 1,000,000 copies sold), then I will say the genre is screwed. And then we can say, http://www.RockBandAide.com is heading into a niche space and http://www.MyGGGo.com needs to find a new obsession. But I will hold out judgment until we get RB3 later this year and see some sales numbers in Q1 2011.
Now, time to go back and read your post.
I think the market for music *games* is saturated and pretty much done, but the market for *music* is not. Like you researched, the cash is flowing for DLC and that has to be easy money.
Lets face it. The *game* of Rock Band/Guitar Hero isn’t anything special. I don’t play these games for the graphics, special guests, or even the special modes – I play it for the songs I love.
This is why I can’t help but shake my head when I see a new separate box release of a RB/GH game. With the exception of Beatles, due to the nature of the beast, I don’t know why they don’t just make everything a DLC. Even if it’s a “full” DLC that costs $20, it would certainly get my attention more so than a $50-$60 retail box that a) costs more and b) requires me to switch disks.
I think Harmonix has been smart with RB2 because they seem to be focusing on music rather than trying to figure out the next gimmick for a box release. With the Green Day title though, they’re getting close to jumping the shark for me. DLC, DLC, DLC. Make a good base game like RB2 and then pump work into it. Don’t make me buy another full release.
As far as the RBN and user-gen goes. I don’t think that will take off like they hope it will. I don’t think the bulk of RBers care enough. But at least getting RBN doesn’t require a new RB3 title. Props for that.
I saw back in October, Harmonix announced that DLC sales were at 60 million downloads. I’ve never seen anything specifically announce whether that accounts for individual song downloads or all downloads including packs. But the fact that Harmonix still releases about 6-10 songs every week for a game released almost a year and a half ago is an amazing accomplishment and shows Harmonix might still be making a good amount from DLC.
Good article.
I’m getting pretty fed up with reporters who look at the current sales trends in decline and shout “Bombed” or “Failed” without taking into account the GLOBAL RECESSION that the planet is in the throes of. Most people don’t have the same level of disposable income as they did when Rock Band 1 came out.
I just have a hard time believing that selling 1.7 million copies of anything is a failure on some level.
Very nice article, sir. One other thing to consider is that those NPD numbers not only don’t take DLC into account, they don’t take into account any other peripheral sales.
So let’s say that in 2008, I bought the Rock Band 2 bundle for $200; and in 2009, I bought the Beatles Rock Band disc, the Sgt. Pepper’s album, a bunch of miscellaneous DLC singles, and an Ion Drum Rocker. As far as NPD is concerned, I spent $200 on music games in ’08 and only $60 in ’09 — even though my total expenditure on music games in ’09 was closer to $400.
If nothing else, NPD really needs to start tracking digital sales; the PC numbers alone are making them look ridiculous.
My interest has only gone down some. I still play 2 days a week but I almost never play online anymore. I purchased and played the heck out of RB:Beatles and Lego RB. Going back to RB2 without some of the nice features of the newer games just shows that we need an RB3 to put it all together.
It is troubling when the ‘Star Patch’ for xbox needed you to beat the score and the patch for the PS3(that we waited months for )broke all reporting of scores to the leader boards. A lack of testing on their part.
I am waiting for the next RB release from Harmonix and I am excited about RBN and what its impact will be.