Not long ago, the video-game industry stumbled on a gold mine: rock ’n’ roll. Played with instrument-shaped controllers, music games such as Guitar Hero and Rock Band challenged gamers to tap and strum in sync with colored dots on the screen. The more accurate the performance, the higher the score, and the louder the roar of the virtual crowd.
The games became a cultural phenomenon. Fans hosted Guitar-B-Cue parties in their backyards and swapped performance clips on YouTube. Both games traced their roots to the Cambridge, Mass.–based Harmonix Music Systems, a company founded by two graduates of the prestigious MIT Media Lab. By creating the illusion of musicianship, the games achieved Harmonix’s goal of letting ordinary people feel the joy of performing tunes.
The games shattered records, becoming the first franchises to surpass US $1 billion in sales each. The titles also became new platforms for music delivery: Classic rock songs found whole new audiences, and new bands found a new type of exposure. Artists such as Smashing Pumpkins and Metallica even debuted new songs within the games. As Harmonix cofounder Alex Rigopulos told me during the genre’s ascent, "This is the new MTV."
But much like the golden days of MTV, the plastic guitar bubble didn’t last. Sales of music games dropped from a peak of $1.7 billion in 2008 to just $300 million in 2010 (less than last year’s hit game Call of Duty: Black Ops sold in one month). Viacom, the parent company of MTV, had bought Harmonix for $175 million in 2006; in December 2010, it sold the company for a mere $50 (and a reported tax break of $50 million) to Harmonix-SBE Holdings, an affiliate of investment firm Columbus Nova. And just two months ago, Activision, which owned the Guitar Hero franchise, announced that it was discontinuing the game. "Due to continued declines in the music genre, the company will disband Activision Publishing’s Guitar Hero business unit and discontinue development on its Guitar Hero game for 2011," read the statement.
So what happened? In hindsight, plastic instruments were always destined for extinction, being simultaneously too good and too limited. But music gaming has continued to evolve and thrive with new gaming technology.
Music games didn’t start with Guitar Hero. The category traces its roots to the 1978 handheld device Simon, which challenged players to hit a combination of red, yellow, green, and blue buttons—each of which emitted a corresponding musical note. Quirky Japanese music games such as Beatmania and PaRappa the Rapper found cult audiences on consoles in the late ’90s. But it was the karaoke games of the early 2000s that rejuvenated the genre. Before Harmonix became famous for Guitar Hero and Rock Band, the company made its name with a series of hit sing-along games called Karaoke Revolution.
When Guitar Hero debuted in 2005, however, it added more plastic to the mix. To rock out, consumers eventually had to buy one or a number of dedicated peripheral devices. Guitar Hero required a plastic axe, and Rock Band added a bass, drums, microphone, and keyboard. The instruments added a visceral sense of realism while keeping the game play accessible.
The game industry thrives on sequels, and soon a slew of new Guitar Hero and Rock Band titles followed, along with downloadable songs. Because the games were built around the peripherals, the publishers tried to sell new and improved instruments with each new title (say, a heavy-metal-themed axe, or drums with cymbals). The problem was, the original instruments were so well made that there was simply no reason for consumers to keep shelling out money for new ones. As Michael Pachter, an analyst with the Los Angeles–based Wedbush Morgan financial services group, says, "It was engineered to last, not [to] be functionally obsolete."
The game companies also attempted to introduce new peripherals into the genre. DJ Hero, a club-music-themed game, included a turntable-shaped controller that proved overly complex for the average player (plus, balancing it on your lap wasn’t nearly as fun as strapping on a guitar). Rock Band 3 featured a more lifelike Wireless Fender Mustang PRO-Guitar Controller (with 102 game buttons on the neck), but it didn’t necessarily make the experience more fun.
With hundreds of new songs and unnecessary new instruments, the market became oversaturated. Many gamers bought downloadable songs à la carte instead of shelling out for a whole new setup. Music games, it became clear, "don’t require annual sequels, which is what lots of game developers expect," says Colin Sebastian, a director and senior analyst with Lazard Capital Markets, a financial advisory firm based in New York City.