Video game industry set for fall surge
Beatles, Super Mario on deck in hopes of reversing slumpNEW YORK -- With a little help from the Beatles, Super Mario and price cuts from Sony and Microsoft, the slumping video game industry is hoping for a sales resurrection in the fall.
The season gets a late-summer start Tuesday, with the release of "Guitar Hero 5," a game featuring music from the Rolling Stones, Nirvana and other popular bands. Then on Sept. 9 comes the launch of "The Beatles: Rock Band," which marks the rock icons' debut in a video game.
Plagued by the recession and a lackluster game release schedule for much of this year, the video game industry -- which is bigger than the music business by some estimates -- has fallen into a slump. It has been the first once since the latest game consoles -- the Xbox 360, the Wii and the PlayStation 3 -- were launched in 2005 and 2006.
The music genre -- the second-most popular category behind action games -- has suffered in particular, though that's partly because it's been so popular in the past couple of years that it needs exceptional sales just to stay even. According to the NPD Group, U.S. retail sales in the music and dance game genre were nearly $390 million less at the end of July than at the same time last year.
Music games invite you to play and sing along to real tunes, offering onscreen cues about when to finger guitarlike plastic controllers or hit touch-sensitive drums. When the game is played well, the songs sound pretty good.
"You just get into it -- it feels like you're in a real band. It's like you're really onstage," said Marquez Alexander, 14, who bought two sports games Monday at a GameStop store near San Francisco's Union Square. He said he plans to pester his mother to buy him the new Beatles game -- even though he barely knows the band.
"I never heard of them until I was like 7. It's just another game, another challenge," he said.
While John Lennon may have once boasted the Beatles were more popular than Jesus, time will tell whether today's video game fans feel that way. The "Rock Band" game will cost $60, which is typical for a big release, but there also will be a $250 version that comes with "limited edition" instruments resembling the ones the Fab Four used.
Video game industry analysts are cautiously optimistic that 2009 will end on a higher note than it began, not just because of the music games but blockbusters like Nintendo's upcoming remake of the classic "Super Mario Bros." for the Wii and Activision Blizzard Inc.'s "Call of Duty: Modern Warfare 2."
It doesn't hurt that two of the three console makers announced hefty price cuts in recent days. Last Thursday, Microsoft Corp. said it is slashing the price of the high-end Xbox 360, the Elite, by $100 to $299. A few days earlier, Sony Corp. rolled back the price of the PlayStation 3 by $100. That just leaves Nintendo Co., whose Wii has cost $250 since its launch. Analysts expect the company to bring down the price of the Wii, though it might do that by keeping the base price level and including more free games with it.
One hurdle for the industry: Several game publishers have delayed big launches meant for the holidays. "BioShock 2" from Take-Two Interactive Software, "Splinter Cell: Conviction" from Ubisoft and "StarCraft II" from Activision have been pushed out to 2010.
It could also turn out that the biggest profits from the latest "Rock Band" game flow to the Beatles -- and not Electronic Arts Inc., which is distributing the game, or Viacom Inc. the parent company of the game's creator, Harmonix Music Systems Inc. Though it's not clear just how much money it cost Viacom to license 45 Beatles hits used in the game -- along with the band members' likenesses -- that "doesn't happen for a little bit of money," noted BroadPoint Amtech analyst Benjamin Schachter.
As popular as the Beatles are, in many ways Activision is taking fewer chances and appealing to a much broader audience with its upcoming music games than EA and Viacom are with "Rock Band."
In addition to "Guitar Hero 5," Activision is also launching "DJ Hero" and "Band Hero," each targeted at distinct gaming audiences.
Following the success of "Guitar Hero," Activision CEO Bobby Kotick said the company realized there were still unsatisfied audiences -- fans of hip hop, dance music and more family friendly tunes. He expects good demand for the Beatles game, but, he added, "It's a single category, it's a certain type of music."
With the latest "Guitar Hero," Activision is appealing to fans of Bob Dylan, Tom Petty and John Mellencamp. With "Band Hero," it aims to lure younger gamers who are fans of acts like Taylor Swift and Maroon 5 singer Adam Levine. With "DJ Hero," Activision seeks listeners of 50 Cent, LL Cool J and the Gorillaz.
"They are doing a smart job of really addressing every user base out there," said Signal Hill analyst Todd Greenwald. As for the Beatles game, "it's a big risk," he said. "It could be huge, it could be very disappointing."
Henrique Santos, a 22-year-old student from Brazil, tried a demo of the Beatles game at GameStop on Monday and said it was challenging but probably will be a hit.
"They're definitely not my favorite band," he said after banging away for a few minutes on an electronic drum set that's part of the game. "But for a game, the Beatles are the best party band, because everybody likes them."