Analysts blame 2009 slump on music genre, lack of innovation

Industry watchers pull varying lessons from the year's retail wreckage, predict return to growth in 2010.

The industry-tracking NPD Group yesterday released its US retail sales figures for December, closing the book on a difficult year that saw industry revenues slip 8 percent, and for the analysts themselves.

The music genre's performance this year was more befitting Wings than the Beatles.

In a note to investors, Pacific Crest Securities' Evan Wilson said 2009 was "certainly a year that many would like to forget." Wedbush's Michael Pachter echoed that in his own note, saying, "It is a relief to finally put 2009 behind us."

With consensus reached on that front, it became time to toss around blame for the year's poor performance, a topic on which there were more diverse sentiments. For example, Pachter laid much of the blame on the music genre, saying that software sales for December would have actually been up year-over-year if the music genre and its precipitous decline were removed from the equation.

"The year clearly demonstrated that the music genre phenomenon was not sustainable at last year's $1.66 billion level," Pachter said, "and this year's $876 million in sales, while impressive on a standalone basis, was 12 percent below the sales level in 2007."

Wilson said the culprit for the decline was a lower average selling price for games. And while he acknowledged the decline in the music genre contributed to that--specifically pricey full-band kits for series like Guitar Hero and Rock Band--he also cited an abundance of retail promotions that drove prices down during the year.

"The economy and weak release slate have clearly taken their toll," Wilson noted.

Electronic Entertainment Design and Research analyst Jesse Divnich acknowledged that decline in music games was "likely the biggest factor" for the year's sinking software sales, but he suggested it was a symptom of another, larger cause.

"All too often the economy is blamed for the recent industry contraction," Divnich said. "In reality, decreased sales in 2009 had more to do with a lack of innovation than economic recession. The growth of our industry now rests more on innovation than it ever has before, especially since nontraditional and casual markets consist of a larger share than in previous years. No longer can developers update a few maps, design some new weapons, add a few new characters, then throw a roman numeral at the end of the box and call it a 'sequel.' That may work for core targeted games (action, shooters, and RPGs), but this strategy is not ideal for nontraditional and casual gamers. "

To back up his assertion, Divnich noted that sequels in casual and mainstream-focused games often sell fewer copies than their predecessors, whereas sequels aimed at traditional gamer markets frequently grow sales with each iteration. On the Wii alone, Divnich pointed to Boom Blox, Brain Age, Guitar Hero III, The Bigs, Mario & Sonic at the Olympics, Rayman Raving Rabbids, and Cooking Mama as casual-oriented games that did better than their sequels.

On the other end of the spectrum, Divnich noted that games rated M for Mature (or 16+ and 18+ under PEGI) performed better than any other ratings group in 2009, with revenues flat year-over-year while every other category suffered double-digit declines.

"In fact, over the last five years, Mature games have had one of the most stable economies and reinforces a theory that whether a recession or economic boom, the core of our industry has and will continue to remain healthy," Divnich said.

Just as the analysts had different takes on what caused the decline of 2009, they offered varied projections for the current year. Pachter's predictions were the most detailed, as he pegged full-year software sales growth at 10 percent.

"We think that it is likely that sales will grow slightly in February, hit high single digits in March, and hit double-digit growth from April through October," Pachter said.

Wilson didn't offer an outlook for the full year, but he was slightly more pessimistic on the first quarter of the year, saying, "We expect January and February results to be down mid-single digits and for March to be up mid-single digits, for total Q1 results that are roughly flat year over year."

Divnich didn't give his predictions for software at all, but his full-year hardware forecast called for the number of systems sold to be down a sobering 17 percent. Divnich expects the DS, Wii, and PSP to be responsible for most of the decline, with the PlayStation 3 and Xbox 360 "likely to post modest unit gains in 2010."

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333 comments
Cloud737
Cloud737

@Jango-Man "they are not they sharpest tools in the shed, but they most certainly are tools." Haha, that sounds about right. Pretty much described the whole world there. :P @KieranCottrell I am not saying that you can't enjoy that genre, what I get fed up with is your constant need to defend that genre. Sure, you like it, it's really great, especially since it's an innovative new genre. What pisses me off is when people go out of their way to defend their genre with pretty much stupid arguments just because they feel some kind of need to do this. That's called trolling, and it doesn't matter the genre it's about. So, to sum it up, it's not like I don't like the genre (actually, I do, I have no problem with it) and thus have to impose my opinion on someone else, what constantly annoys me is that fanboys feel the need to come bashing me and blitz-down-thumb me just because I said something true about a genre. I'm sure that the same with most other people in that majority. There's really no tyranny of the majority here.

KieranCottrell
KieranCottrell

@cloud737: "Don't you think you look a little weird, being the minority that actually defend it when everyone is against it?" This is what we call the tyranny of the majority. Just because you don't like the genre doesn't mean no-one else can, nor are others wrong simply because they disagree with you. I don't think anyone can suggest that the genre isn't being spread a little thin, but ultimately people still buy most of these games in their millions.

Autolycus
Autolycus

more proof that Analysts are retarded

mrpantalones
mrpantalones

While I also don't like the idea of using indie as if it were mainstream, at the same time, indie developers are truly trying to innovate. And in a way that makes sense by now. Truth be told, how much more unique can you get? There was a game I looked up recently called 'Eyeless'. It's a free source game for PC that's basically what you would call a sound maze. You'd use your ears. To navigate a maze. I mean, that's rather freakin' unique, if you ask me. And innovative. But at the same time, look at the idea: Is that something that'd sell in the market? I'm not sure. While with the rise of avant-garde films has become popular in movies, indie games are questionable, atm. Still, an accelerated rate of growth insures it'll happen soon, and whether we'll like it or not, who knows.

mrpantalones
mrpantalones

Admittedly, I enjoy the Rock Band series of the music genre. I also feel that they know how to handle the market better. As it comes down to it, true innovation has been MIA for awhile. The Wii is old news, and Sony and MS are basically just trying to revive it's ideas. I won't be surprised if in the future, someone will suggest motion/camera based gameplay for Onlive. Problem is, just like other parts of the market, the video game industry has fell into the trap of greed. Say what you will about corporate business, but there was a point where games were being developed because people not only enjoyed making them, but because they enjoyed seeing the consumer enjoying their product. While money was in thought (cause that's just how it is), it wasn't so much as an after thought, as it was.. a mid thought.

LoserMike
LoserMike

Especially Activision. Why would they release 6 music games in one year? I could understand why the released Guitar Hero 5 and DJ Hero. But that's it. I didn't understand the point of Band Hero, Metallica, Van Halen, and Smash Hits. The way they created Metallica and Van Halen felt like DLC rather than a full game like The Beatles Rock Band.

ZedX-14Pilot
ZedX-14Pilot

This is one of the more productive line of comments I have seen on this site. Also, I do agree that the music genre is a mess at this point. DLC is too expensive, IMO, and everything has been done to death. I personally haven't played any of the games, but my daughters do, and I am not impressed with these games. I also think people are sometimes too cynical about sequels. Assassin's Creed 2 was a great sequel, as was Uncharted 2. In both cases, they were better than their original releases. I also do feel that game makers are stumped at the moment in regards to creativity. My biggest pet peave though, sports games. $60 EVERY year for what are essentially roster updates, and marginal improvements is just flat out robbery. The Fight Night series has the formula right. Madden should be no more than $30 for the lame yearly update they publish. Madden 10 was probably the biggest overhaul they have done in years, so I bought it this year, and have thoroughly enjoyed it. For the most part, 2009 was a slightly above average year for game releases due to some home runs, and epic failure in regards to innovation, and overall operational management.

CaptainHerlock
CaptainHerlock

I always see the word "innovation" yet nobody ever explains what they mean by that. It just seem it's a buzz word that certain people use to make themselves look smarter than they actually are. As for the music genre, everytime somebody comes up with a good idea it gets run straight into the ground. How many of these games do we really need? I'm a huge Beatles fan so yes I did buy that particular title, but as far as the rest of the games I have little interest in them.

jadefury27
jadefury27

@ bumsliepsp: Agreed 100%. They keep creating these massive sets for music games, and add ons for them rather then just selling DLC or discs to keep them playable for another year of two. their appeal would last if they weren't trying to jam them down our throat every 3rd and 4th qtr.

bumsliepsp
bumsliepsp

I hope that the videogame companies were aware of this trend before it happened. It really is common sense. Once everybody has bought the guitars, microphones, and drum sets they need obviously the sale of these items would decrease. Why do analysts and the like always think that things should increase year after year and if they don't it is a failure. Sometimes it doesn't work like that but if you are smart you plan for that in the first place. If you are a stupid CEO and continue to pay yourself more and more thinking that every year you will make more money your company will fail. Am I the only one who feels like they are taking crazy pills?

FF_fan2004
FF_fan2004

Too many sequels and not enough unique ideas. Sequels seem to be the "safe" option for gaining some sort of profits.

maldoror19
maldoror19

That's what happens when you saturate the market with familiar and unimaginative games.

mrpantalones
mrpantalones

Honestly, at this rate, the gaming industry is just gonna' fall at where the film industry is heading to; indie-developed games. In the 90s, we saw a rise in small indie films, including a famous one that brought a director into mainstream popularity as well as a cult fan base. And with games' timelines basically being an accelerated form of film and television (films have been in development for at least 100 years, starting out in black and white and staying like that for about 50+ years. Video games started mainly in the 70s, and had about.. 5+ years in the same monochromatic style). Seeing as developers have obviously started massive supporting indie games in their digital libraries, now it's only a matter of time before indie goes mainstream, like it did in films. Something that never made sense to me. :I

grungeman91
grungeman91

I like the Music genre, but it's been milked to death over the past 2 years...Thanks a lot, Activision.

blazey09
blazey09

rockband 2 was the last game i bought and everything else is dlc. to bad theese guys are wrong its not the music genre fault its every1 fault for not makeing games that are worth our time and money. And if there is any1 else thats like me and cant afford to buy every single game that comes out. I mean cmon theres like 5 games that come out for the holidays. i just think alot of people are just watching what they buy.

NoLifeGamin
NoLifeGamin

Well this just shows that, fortunately, gamers aren't as dumb as people make them out to be. Analysts on the other hand.......lol how ironic.

osiris
osiris

Lack of innovation... Damn, finally someone thinking that new IP's and new/more M rated games instead of Guitar Hero 86 might do the market (i.e. - us!) some good. Hopefully the game-making companies actually look at this. Mature games that are involving are oh so much better than said Guitar Hero. I mean, its not like we've been saying this for years or anything. I wonder who actually read what the customer wants for once?

Jango-Man
Jango-Man

@Cloud737 How very true. So many people that get their money easily tend to lack common sense as well. I live in an area where people make a lot of dough do to the oilfield, and let me tell you, they are not they sharpest tools in the shed, but they most certainly are tools.

th3chos3non3
th3chos3non3

good products sell regardless of economy. wanna sell products and see gains and economic growth? develop a good product worth a consumers time, money and interest. pretty simple really.

judge__judy
judge__judy

Don't you think these analysts always state the most obvious facts

iucidium
iucidium

'Analysts blame 2009 slump on music genre' more like ACTIVISION saturating the market - lack of innovation indeed - didn't kotick say he wanted less innovation? BLAME ACTIVISION!

iucidium
iucidium

'Analysts blame 2009 slump on music genre' more like ACTIVISION saturating the market - lack of innovation indeed - didn't kotick say he wanted less innovation?

iucidium
iucidium

[This message was deleted at the request of the original poster]

-HCMF-
-HCMF-

I think the biggest disconnect is that the analyst have a huge disconecct with the pulse of the consumer. Meaning did they really think that the short attention span american consumer was going to play and pay way to much for rock band songs forever? seriously? is it a new revenue stream for the music biz, sure, is it the answer, no, no it is not.

stziggy
stziggy

The recession hit the gaming community two fold. 1) We the customer are buying fewer games. 2) Companies developing fewer games because of drops in revenue to fuel development. We don't buy the cheaply/underdeveloped/uninspired games that drives revenue even lower. The gaming industry is caught in a catch 22.

nakasa5
nakasa5

How do you become one of these "analysts"? I want to get paid to give my opinion of the video game industry. While I agree that there needs to be further innovation (as always), I also think 2009 was a down year because of a slumping economy and the cyclical quality of games. 07 and 08 were phenomenal years. It is extremely difficult to stay at that level. There were great games, but not as many multiplatform AAA titles as there have been in the last few years.

Elem3nt
Elem3nt

A handfull of worthwhile games came out last year, and even those could not hold my attention for more than a couple of days. The gaming industry is getting so burnt out on itself. As soon as someone comes out with some new and interesting game idea, everybody jumps on the bandwagon and does something similiar, untill that idea gets worn out. Then everyone just gets up and moves onto the next good idea, doing it to death. Rock band 9 1/2, call of duty 13, etc... etc.. etc...You can polish a turd, but in the end its still a turd. Stop pumping out garbage in the hopes that consumers will be douped into buying it. I refush to shell out 70 bucks for a sequel to a game, or a game whos mechanics have been designed and fully realized 100 times before.

BrianB0422
BrianB0422

Wow, for once I agree with an analyst. Innovation is needed in any industry. The cookie cutter games that get pumped out month after month are just crap. With big companies like EA, ActiBlizzard, and the like, it's no wonder innovation is stifled. Bobby Kotick and those like him will be the death of gaming.

MooseMcDowell
MooseMcDowell

@pirul83 - great comment. People keep in mind THIS IS ALL PRETEND. At least the music genre games make you look like someone who could potentially be sociable without the earbud or headphones on your head. It's like when some people keep wine coolers in their fridge - not because they like it, but because they know some ladies do, and the idea of having a lady (or gentleman) at your place may interest you. If you have no rhythm, at least pick up a copy of scene it for when people come over...trust me you'll be glad you did.

pirul83
pirul83

@ dgnr82cool yeah you're right you are only pretending to play an instrument, as when you play MW2 you are only pretending to shoot a .50 Cal Barret sniper riffle... these are games, are made to play. I play real guitar, and i enjoy playing guitar hero with my buddies. Besides all that... a friend of mine that is a real life drummer, came the other day to play guitar hero world tour with me, and said that the drumming its pretty much the real thing. His exact words were: "you just bought a drumming learning course. When you reach expert, come to my house and play my real drums and see what im talking about". Right now im playing in medium, so when i get to expert we'll see...

ECWMANIAC
ECWMANIAC

You can't spell crap without RAP!

ECWMANIAC
ECWMANIAC

R = Retards A = Attempting P = Poetry

ECWMANIAC
ECWMANIAC

Rap ain't music! It's just talking/rhyming like a idiot!

dgnr82cool
dgnr82cool

What? You mean making a game where you scratch on a hip-hop turntable did NOT become the mainstream money juggernaut that they all thought it would? You mean building a rockband franchise around a band that split up 40 years ago DIDN'T draw in the kiddies? Understand this, the innovation will only go so far in these genres, because, despite all the cute little peripherals they give you (turntable, guitar, drum, kazoo, bagpipe, WTF-ever) it will always stop short of being a REAL instrument. You will always just be using a multi-colored fisher-price toy to PRETEND you are playing music. The genre has run its course, and these companies just trying to SQUEEZE every last dollar out of them will find that they have eliminated a huge support base. PS - Had to edit this... someone below said something that reminded me of something I saw about couple years ago or so that made me crack up. I was in a gamestop, and this gamestop is located in the parking lot of a Target near my home. I was near the counter, and this guy from the target store comes in with his arms full of sealed guitar hero 3 copies, and he TRADED them in for cash. I asked him how he could do that without getting fired or worse, going to jail, and he told me that his manager had SUGGESTED it. Apparently, they had so many left over, that those types of games were just junk inventory, and were shoplifted often anyways, so the manager apparently told his employee to go sell them to the gamestop for cash. I just thought that was pretty funny.

ECWMANIAC
ECWMANIAC

The 100% #1 reason for the slump on music genre is F***ing DJ HERO!!! The game s-u-c-k-s!

me729
me729

They certainly didn't get any of my money for any of these Queer-O games.

nohabs
nohabs

maybe their games are to blame here

Virtual_Erkan
Virtual_Erkan

@SolidTy It is not only Activision there are others that I really HATE you will see in my blog

zintarr
zintarr

Been saying since they came out that they sucked.

Shimonhead
Shimonhead

[This message was deleted at the request of the original poster]

Cloud737
Cloud737

To all those rhythm genre fanatics that feel threatened and angry when someone says something bad about your genre: there's a reason why everybody is kinda pissed and dis it. Don't you think you look a little weird, being the minority that actually defend it when everyone is against it? That is to say, I'm sure most people aren't mad at the rhythm genre itself, just the milkage happening in it. I'm sure that if there would be only 1-2 games released every two years, and those with innovations that are clearly not for DLC, then I'm sure most would stop dissing your favorite little genre that you defend to the death. I for one like the idea itself, just that I don't like it when they try to suck all the money out of me with rip-offs.

a7051
a7051

i wouldn't be surprised to hear about another 1983 Atari New Mexico type incident happening in 2010.. except this time it's the dumping of unwanted music games...

langrisser2005
langrisser2005

When you make the same things again over and over again, people will eventually get bored of it.

Virtual_Erkan
Virtual_Erkan

@SolidTy I agree 100% with you! These guys just went crazy of how to make money in the easy way! I was going to write a blog about these unwanted stupid non-sense sequels about the games. May I use your comment in my blog as a quote?

St_muscat
St_muscat

Activision only have themselves to blame for decreasing sales in music genre games, seriously in 2007 and 2008 it was milked for all it was worth and finally in 2009 it started to run dry. Seriously they need to give it a break for a while, because if they don't their going to kill it all together.

Patrickstar1986
Patrickstar1986

@Poison_Me_Rum. As much of a bummer as it is to say, "It's not what the cool kids do" well not anymore at least. Also that Rock Band Network idea seems too hands on for it to even matter as a result. I really enjoyed Guitar Hero, however I'm not going to play it much anymore and I really don't know anyone who used to that does now. In all essence it was the "big xmas toy" for everyone including their grandma, but now everyone has a copy. Also, I haven't met any real musicians that either play them, or even enjoy video games for the most part even though I'm sure a handful exist. I would assume because they can just do the same thing, but have it actually mean something. Honestly, is there a market for this game anymore?