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Video Gamers Have Quit the Band

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What's ahead for the music-game genre after a dismal 2009.

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There are no calls for an encore and lighters remain in pockets. Video gamers seem to have had their fill of the genre made famous by Guitar Hero and Rock Band, causing the music-game category to take a massive sales hit in 2009. Even with The Beatles: Rock Band's guaranteed fan base and the innovative controls in DJ Hero, strumming and scratching along to scrolling discs has worn out their welcome this year almost as quickly as auto-tune.

Speaking with Reuters last week, Wedbush Morgan Securities analyst Michael Pachter predicted the music-game genre to crawl to $700 million in 2009 -- roughly half of what music games collectively earned in 2008. The main reason for this drop, Pachter suggests, is the saturation of the market and customers being overwhelmed by the number of titles.

"(Game) publishers have probably done themselves a disservice by giving us way too much value for our money with each of these games," Pachter tells Reuters. "You just get way too much content. The installed base has a lot of music, and they don't really need a lot more. It's sort of like buying more books when you have a stack of books left to read. You just don't."

Pachter's theory is reflected in the lackluster sales numbers of MTV Games (VIA) and Electronic Arts' (ERTS) The Beatles: Rock Band, which surprised analysts by only selling 800,000 copies since its release -- falling short of the one million expected in its first month. Concurrently, Activision's (ATVI) Guitar Hero 5 had a sizable but diminishing debut compared to its predecessor -- the fifth entry sold 500,000 in its first month whereas Guitar Hero III unloaded 1.4 million in the same amount of time.

While the tired plastic guitar may have contributed to the poor sales of Guitar Hero 5, few can deny that the gyrating antics of a playable Kurt Cobain singing Bon Jovi hits are much more off-putting.

Showing even more disappointing sales records is DJ Hero, a game where players use a simplified turntable to mix and scratch rock, dance, and hip-hop tracks. Analysts expected the unique design and game play to be a hit with rhythm game fans itching for something different, but the $120 price tag and new bulky controller taking up space under the couch didn't sit well with gamers. At 123,000 units, the title fell short of projected sales, leading analysts at Cowen & Co. to reconsider their sales forecast of 1.6 million this year and reduce it to 600,000.

However, despite the significant drops the genre has weathered, Pachter expects it to retain a dedicated audience with sales eventually plateauing between $500 million to $600 million annually. And that's not including in-game sales -- such as purchased tracks at an average of $2 a pop -- which aren't reported by game publishers.

But with live, one-on-one motion controls a hit on the Wii and being implemented into the PS3 (SNE) and Xbox (MSFT), what will take the place of plastic guitars and drums on gamers' wish lists?

Hopefully, actual musical instruments.
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