Market Overview

Guitar Hero Won't Make Billions For Activision

Guitar Hero Won't Make Billions For Activision
Related ATVI
When Bull Markets Die: What To Watch For, What Stocks Could Be The First To Get Hit
Making Gains In Video Games: Analyst Gets Bullish On Activision, EA And Take Two

Activision Blizzard, Inc. (NASDAQ: ATVI) is bringing back "Guitar Hero," a franchise that once earned $2 billion in a single year. The new game, "Guitar Hero Live," is scheduled for release this fall.

The game will go head-to-head with a new chapter in the "Rock Band" series from Mad Catz Interactive, Inc. (USA) (NYSE: MCZ), which is big news for fans of these franchises. It may not, however, be big news for the companies' bottom lines.

"I think it's gonna be a fraction of the market it was, but it was a multi-billion-dollar market," Benchmark analyst Michael Hickey told Benzinga. "After a five-year break, on new consoles, they're gonna have reasonable success."

Wedbush analyst Michael Pachter said there's "no chance" that these music franchises will ever approach the billions of dollars they earned in 2008.

"More likely $300-$400 million combined annually," Pachter told Benzinga. "Guitar Hero will have better marketing support and has a larger brand, so it should capture 60 percent of the market."

Related Link: Wii U Launch Sales Disappointed Activision Execs

Tough Road Ahead

Hickey is a fan of the "Guitar Hero" and "Rock Band" games. He said that if you look at their fundamentals, "it is really creating an opportunity for you to participate in music in a way that most people never had before."

"It felt like you were really part of it," said Hickey. "The actual gameplay was easy but it was a blast. I think most people that played it, they had fun. It was a fun game. Changing the perspective and the crowd [in 'Guitar Hero Live'] and that sort of thing, that's all cool. But it's not gonna be what it was. There's no way, I don't think."

That's not to say Hickey believes this revival is a bad idea.

"People still love music and games," he said, adding that when you bridge these two together, you're going to be successful. He believes Activision could pick up a new group of consumers (those who were too young to play "Guitar Hero" the first time around), but he's not sure how far it can go.

"I don't think people are going to invest their time and money in an experience that, for the most, is played out," Hickey concluded.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Editor's note: A previous version of this story incorrectly stated Electronic Arts Inc (NASDAQ: EA) could benefit from the new "Rock Band" release. EA is not distributing or producing the new "Rock Band 4." The game is actually being released by Mad Catz.

Posted-In: Benchmark guitar hero Guitar Hero Live Michael HickeyAnalyst Color Top Stories Exclusives Tech Best of Benzinga


Related Articles (ATVI + EA)

View Comments and Join the Discussion!