Analysts leery of EA, Guitar Hero

Colin Sebastian believes poor showing of Mirror's Edge could lead to more layoffs and cancellations; EEDAR's Jesse Divnich thinks Activision's rhythm game has "peaked."

With November 2008 US sales figures from industry-research firm the NPD Group expected later this week, the top game-industry analysts have released their own estimates for the month. The consensus is that the traditionally frantic holiday season was subdued somewhat by the surging recession, with game sales enjoying only a modest year-over-year increase. Though he believes that all three consoles sold in record numbers, Wedbush Morgan's Michael Pachter thinks that overall, domestic game revenue was $1.4 billion, up just 7 percent from $1.31 billion in 2007.

Although cautiously optimistic about the industry as a whole, analysts gave unusually downbeat assessments of two pillars of the game industry. First, Pachter estimates that Electronic Arts will see a 16 percent year-over-year decline in revenue, thanks to poor showings of the new property Mirror's Edge (300,000 units for the month) and Need for Speed Undercover (350,000 units). Though it enjoyed better reviews, Rock Band 2 also sold a disappointing 350,000 units during the month on two platforms, the Xbox 360 and PlayStation 3. (PlayStation 2 and Wii versions are due out next week.)

Colin Sebastian of Lazard Capital Group, the firm helping Midway stave off bankruptcy, went one step further. He thinks the underperformance of Mirror's Edge, Rock Band 2, and Need for Speed Undercover might lead to more layoffs and Tiberium-esque cancellations. "We believe EA is continuing to review its cost structure and franchise base, and it is possible that management will announce further cuts in headcount and the development pipeline (including existing franchises) over the coming quarters," he summarized.

Although EA's woes are likely pure schadenfreude to Activision Blizzard executives' ears, this week also saw Pachter predict that the latter company's sales would slip 14 percent year on year. This slide is in large part due to one of the megapublisher's top franchises hitting market saturation.

"Probably the most talked-about issue this month is the lack of sales for Guitar Hero World Tour," declared Jesse Divnich of Electronic Entertainment Design and Research (EEDAR). "Currently, we expect unit sales to decline by more than 50 percent series-over-series for November. This is coming off the October month where series-over-series units declined by more than 60 percent."

Divnich also pointed out that, rather than command a premium like Wii Fit, Guitar Hero World Tour is beginning to sell under its suggested retail price on the eBay auction service. "It is pretty clear that the series has already reached its peak among the mass-market audience," he explained with the following caveat. "Of course, we are not suggesting that the Guitar Hero (or Rock Band) franchise will be disappearing anytime soon."

129 Comments

  • shakensparco

    Posted Jan 15, 2009 7:08 pm PT

    Mirror's Edge has the potential to be a lot more. If a level editor was added, this game would sell much more. It would be cool if there was also some sort of multilayer mode like Splinter Cell where one team plays as dudes with guns while the other team has Runners trying to capture something. Good stuff.

  • StSk8ter29

    Posted Dec 15, 2008 6:17 pm PT

    We didn't need Guitar Hero: Rocks the 80's or Guitar Hero: Aerosmith; we just needed a DLC. That's what annoys me...

  • gmagnus

    Posted Dec 15, 2008 3:47 pm PT

    "$65 for basically a song pack"

    You'd rather pay the 84 x $2 ($1 if you're LUCKY) it would cost if it was DLC? You need to brush up on your math, quick.

  • Nater2010

    Posted Dec 15, 2008 12:34 pm PT

    To echo many other gamers, DLC is the key for both of these companies. There are millions of dollars to be earned off of selling tracks online. So many great artists have not made their videogame debuts. Instead of slapping individual bands on cookie-cutter games, EA and co. should pursue an aggressive DLC-centric strategy that will empower users to download artists and songs that they want. In the end, I believe this will result in great revenues for the companies and happier gamers...

  • BikerPunk

    Posted Dec 15, 2008 9:04 am PT

    The music games hae NOT REACHED thier potential. There is always room for improvements...

    that being said however, the MUSIC GAME PLAYERS have PEAKED!!! Guitar hero was awesome, 1, 2, & 3....Aerosmith? WTF!

    Rock band was the next big thing!!! OMG drums guitars and sining! HOORAH!!!.....we've played it! it WAS awesome....

    but now they are trying to sell us the same thing over and over again....they are selling us drums....again! and songs can be covered in DLC!!! or you can provide the update thru DLC!! what im saying, is we've been there, done that. i have 3 guitars the drums and 3 mics....i dont need another Special Edition, and $65 for basically a song pack...thats just RUDE!

  • I1yodsyo1I

    Posted Dec 15, 2008 8:12 am PT

    Guitar Hero & Rock Band's future lay in DLC, and Rock Band is crushing GHWT in that category.

  • ItsEvolution

    Posted Dec 12, 2008 9:29 pm PT

    klugenbeel, you do realize that you just said GH:WT was better than RB2, but then proceeded to list all the things that RB2 does better than GH...right?

  • klugenbeel

    Posted Dec 12, 2008 10:51 am PT

    GHWT is the better of the 2 (RB2) in my opinion, but what is lacking is a few things on GHWT. First, one of the nicest and best features of GHWT is the Band vs Band multiplayer mode, sadly it takes too long to find a full band for both sides, if you can even find a game at all. The other issue is the music, GHWT out of box has a better track list then RB2, but RB2 has a larger library and a way better selection of downloaded music. I find myself playing RB2 with my friends and girlfriend more, because I have around 300 songs to pick from on RB2, and the variety and selection is a big perk. On that same note, GHWT downloads are also lacking. They are loading too much of the same bands (Oasis) in download packs, rather then spreading it out. Also i think it would be in GHWT's best interest to release double or more the downloads that RB offers for at least a year or so to allow GHWT to catch up in download library size, obvisouly once they catch up to RB they can slow down. GHWT has better features and the slide bar on the new Guitar is A LOT of fun to play with, but GHWT needs more music to download and also needs to get it's player bass up to get online modes, more accessible (Band vs Band). Not to discredit, RB is a great series, but GHWT is a better game and a vast improvement on previous GH games and even RB series.

  • lannyboy334

    Posted Dec 12, 2008 12:07 am PT

    This is all bush league, I swear analysts will make anything seem bad, the game industry did great throughout November, even though their were fewer post-Black Friday days! "Guitar Hero has reached saturation, Wii Fit has reached saturations, Rock Band is screwed, EA is failing" Bla Bla Bla. This is a less predictable market because of how mainstream reviewing and quality of product has become. EA will be forced to make a good video game, and I am quite positive we will see a resurgence, that is the only thing in this article that wasn't garbage and had some validity to it.

  • djtim_3000

    Posted Dec 11, 2008 8:39 pm PT

    Poorly!? If you're not making any money off a game that made 15million dollars in ONE MONTH then you're doing it wrong.

  • TheClown24

    Posted Dec 11, 2008 1:45 pm PT

    the thing about guitar hero and rband is that although they are good games, they are not actually better than some games that you can pick up for £40 so with the reccession people are just going for the cheaper options and i am really sad about the mirrors edge sales, however despite it being crittically mehified im still picking up a copy for christmas

  • YoJim8obaJoe

    Posted Dec 11, 2008 6:37 am PT

    Bout time Guitar hero died,they been spamming them like no tomorrow

  • NatBat1991

    Posted Dec 11, 2008 2:59 am PT

    Sales aren't up at the moment because people are waiting for christmas to get the games. GH:World Tour hasn't been selling well because, in my opinion, they should of stuck to just the Guitar - if you want the whole band package, buy Rock Band.

  • KLINGON

    Posted Dec 10, 2008 5:11 am PT

    Need alot more DLC like in Rock Band

  • franm1

    Posted Dec 10, 2008 2:19 am PT

    I guess they should wait untill Christmas is over, for the sales will definitely rise up again...

  • Skull-Fire

    Posted Dec 9, 2008 11:10 pm PT

    No way has GH reached its peak, thats a load of bull. Its obvious that there is room for improvement with that and RB.

  • Pete5506

    Posted Dec 9, 2008 7:55 pm PT

    Wow alot is said here, its to bad that people that own different music games have to use differnt instruments

  • JDWolfie

    Posted Dec 9, 2008 5:42 pm PT

    I'm a little surprised by this. Can't people who own Rock Band 1 Guitar Hero 3 buy Rock Band 2 or GH World Tour by the game itself? Can't they use the same instruments they bought before? These games in general with the instruments are still very expensive. I guess people really don't have much money these days.

  • Sydwynder

    Posted Dec 9, 2008 5:13 pm PT

    I almost feel bad for renting and nearly finishing Mirror's Edge and not buying it, but it just ain't worth my 60 bucks. I haven't touched a Guitar Hero game in over 6 months and have no intention of picking up GHWT or RB2. Have you been to an EB games lately? That store is packed to the gills with music instrument packs of numerous types for these franchises, and barely selling any of them. Here's an idea for boosting game sales- quit releasing all the good stuff between Oct 1 and Nov 25 and leaving the rest of the year seemingly bone dry.....

  • randomgod

    Posted Dec 9, 2008 4:32 pm PT

    Well it's a wake up call really, start producing higher quality games and start earning more money. Guitar Hero World Tour is brilliant but it's either that or Rock Band 2, people aren't going to buy both so why develop both? Mirrors Edge is a big dissapointment and the NFS Franchise really needs to be re-invented, we buy if THEY deliver!

  • coolguy681

    Posted Dec 9, 2008 3:47 pm PT

    these rhythm games r too expensive. You can get too top notch ps3 or x360 for less then one of these.

  • DeanSMASH

    Posted Dec 9, 2008 3:24 pm PT

    It's a shame Mirror's Edge has performed so poorly, it's quite a fun (but annoying) game. The whole "Guitar Hero" is dead to me, I don't think there's much more you could possibly get out of it. Anyone care to share any ideas?

  • kollin_1

    Posted Dec 9, 2008 3:17 pm PT

    I'm glad you used the word "schadenfreude."

  • Zippedychick

    Posted Dec 9, 2008 3:05 pm PT

    I got Mirror's Edge but I wish I hadn't. Too much money for such a short game.

  • malfarf15869

    Posted Dec 9, 2008 1:48 pm PT

    i'm actually kinda glad to see guiter hero slow down some. i think its rediculous that they keep putting games every few months with no changes. the first one was a genuinely great idea. a sequal can be appriciated too. but 8 or 9 games later, it's just to much

  • Mystoksor

    Posted Dec 9, 2008 1:42 pm PT

    this truly sucks. EA had almost nothing good in the last few years besides more repetitive sports games and sims 2. now they have awesome titles like dead space and warhammer online and they're losing money?

  • Greenlight23

    Posted Dec 9, 2008 1:17 pm PT

    All this talk about innovation is making me hungry.

    I think that Harmonix has a better chance of making another innovative product than Activision and Neversoft. Of special note is the upcoming Beatles-themed game, which Harmonix claims is not another Rock Band. Whether that idea will flesh out enough to reach the mass-market is left to be seen, but the company has had a pretty awesome track record, so I have faith in them.

  • flameducky

    Posted Dec 9, 2008 12:33 pm PT

    Just wait, once The Sims 3 is released and we get our first Spore expansion, EA we'll be on it's way back to the top!!

  • djmillard2

    Posted Dec 9, 2008 12:16 pm PT

    /agree with amir29. chill with the peripherals, only release a new game if there are true updates. otherwise just have new songs on dlc

  • doctorwang12

    Posted Dec 9, 2008 12:14 pm PT

    i agree with JJS29...if GH/RB would just slow down and skip every other year or so, they would get back on track. not much people have alot of money these days so we arnt going 2 spend $200 (or maybe more) a year on rhythm games

  • SpeedMan72

    Posted Dec 9, 2008 11:38 am PT

    yeah but what about the month that rock band 2 was out only on 360? did they count that in?

  • Amir29

    Posted Dec 9, 2008 11:19 am PT

    I agree with HVAC0120... Both Rockband and Guitar Hero brought us something great, but they've simply overdone it. Keep coming out with songs and make your money that way. When it comes to new peripherals and sequels, take a long break and come out with something truly innovative that will bring back the excitement.

  • smackedfortrust

    Posted Dec 9, 2008 10:44 am PT

    Sweet. everyone is an analyst again. People grow up, not everyone is going to like the same games as you. Do you seriously think your going to change that with a comment?

  • nappan

    Posted Dec 9, 2008 10:41 am PT

    The only thing that worries me here, is the possiblity that we won't see a sequel to mirror's edge. Knowing EA they'll throw out the baby with the bathwater. *sigh*

  • NoEbay

    Posted Dec 9, 2008 10:29 am PT

    you would think by now they would have added a way to string up the peripheral and turn it into a real guitar. Come on guys, make learning fun. It's the obvious evolution. After the rock bank drum set law suit i won't buy rock band.

  • FalsePlacebo

    Posted Dec 9, 2008 10:28 am PT

    It really kind of sucks that Mirror's Edge hasn't sold better. Personally I loved it as it was *gasp* a new concept. Its really too bad that people only seem willing to buy sequels and new IP's don't sell nearly as well as they should because of it.

  • King_Chozo

    Posted Dec 9, 2008 10:22 am PT

    I can't believe that Rock Band 2 isn't selling that well, especially since World Tour has sold so much more than it because Rock Band 2 is a much better game than GH World Tour.

  • otanikun

    Posted Dec 9, 2008 10:18 am PT

    Oh yeah, it's totally peaked, except not, I could care less about the numbers.
    I'm pretty sure it can still go strong, it's not just a party game.

  • FalsePlacebo posted Dec 9, 2008 10:17 am PT (does not meet display criteria. sign in to show)

    FalsePlacebo

    Posted Dec 9, 2008 10:17 am PT (hide)

    Well glad to hear Guitar Hero isn't selling that well, that entire series has been crap since activision took over. Not that rock bands all that great either. Here's a novel idea, go buy a real instrument and play that.

  • mjc0961 posted Dec 9, 2008 10:14 am PT (does not meet display criteria. sign in to show)

    mjc0961

    Posted Dec 9, 2008 10:14 am PT (hide)

    It's about damn time that the Guitar Hero/Rock Band fad started dying.

  • NoEbay posted Dec 9, 2008 10:13 am PT (does not meet display criteria. sign in to show)

    NoEbay

    Posted Dec 9, 2008 10:13 am PT (hide)

    EA has good games coming up? News to my ears, i'm amazed when they release a game with out a 2, 3 or 4 after the title. Nice try with mirrors edge but come on, how did an idea like that make it past the R & D department. Imagine this. spider man with no super powers. GENIUS! lol

  • gunswordfist

    Posted Dec 9, 2008 10:04 am PT

    I just hope that EA doesn't cancel any good upcoming titles.

  • jknight5422

    Posted Dec 9, 2008 10:01 am PT

    It could be these rhythm games are faddish & it's time they made a hasty exit. I think EA's strategerie of trying to become the Wal-mart/McDonald's of video gaming is going to be a tremendous belly flop. The games market is a fast, moving target, that can't be tracked to something as simple as a hamburger or cheap wares from foreign countries.

  • Hvac0120

    Posted Dec 9, 2008 9:57 am PT

    Let's see...GH:III, GH:Aerosmith, GH:World Tour, GH:On Tour (DS)... That's all over the past year. The series first relased in November 2005. So in 3 years we've seen at least 6 GH titles.

    Rock Band just started as a new IP in 2007 and has already released a sequel.

    The problem is called the EA-effect. Where the publisher and/or developer want to keep putting out yearly releases because they know that the money will flow in no matter what the quality. As long as it at least fits in the "more of the same" category.

    GH and Rock Band need to take a couple years off and come up with some real innovations and get some new, exclusive record deals. They also need to greatly improve on the instruments before the next release.

    They can't expect to come out with all this new stuff year over year and think that people will spend $200 every time for it.

  • Thebomb44

    Posted Dec 9, 2008 9:41 am PT

    You can't expect a $200 game to sell like GH3 did costing a lot less, especially with the recession and its quick release compared to GH3. I think it's clear what this says about Mirror's Edge. Only people well-versed in gaming news are excited about it, despite it being a great game. It doesn't help that's it's really a rental game from what I've seen.

  • jmartin1016

    Posted Dec 9, 2008 9:21 am PT

    I agree that Rock band and Guitr Hero are at market saturation. There are too many of them coming out at a fast rate. Mirror's Edge is OK, but cannot spark the interest it deserves when going up against goliaths like gears2, fallout3, resistance2, Fable2, Little Big Planet, etc, etc, etc, etc, etc. It would have faired better for sells in January, before the winter games hit the shelves(Killzone 2, Resident Evil 5 etc.)

  • MajinDante

    Posted Dec 9, 2008 8:43 am PT

    ww2 games and aliens invading earth games are killing the market. and mirrors edge was just boring(My opinion if yours is different fine).

  • jazilla

    Posted Dec 9, 2008 8:35 am PT

    If the people releasing games would just pick a window to sell their game that didn't have 25 other blockbuster titles in it, then they would all sell well. That fact that Dead Space only sold a few hundred thousand units speaks volumes to this. Too bad really that suits can't seem to figure this out. They think they are helping their bottom line, but in fact that hurt it. Do your research when releasing a game, and don't release it in the same month as all of the other big releases, especially with a new IP.

  • StJimmy15

    Posted Dec 9, 2008 8:24 am PT

    Rock Band is wayyy better quality than Guitar Hero. It just looks better, not to mention the songs are way better. (except guitar hero got the korn and lp songs... =(

  • OldStupidGeezer

    Posted Dec 9, 2008 8:12 am PT

    gameweasl Posted Dec 9, 2008 5:59 am PT These fresher minds should learn from history, for those who don't know google the video game crash of 1983. Developers flooded the market with games that were sub par which caused consumers to become warry when they have to spend $60 on a game and they have been burned so many times. Eventually consumers stopped spending and most games went into big brown drums called bargain bins. 18 months later nintedo took over for a decade and a half and brang a new energy to video games. It needs to be quality not quantity. Developers need to be ready to patch and update existing games instead of pumping out the same game every year...

    true that this happened, but another more important reason for the fall of home consoles was that arcades came along to give consumers something that they could not get at home (bigger machines, better graphics, guns, online play, etc). but now arcade machines are about the same as consoles. arcades are dying. at the peak of arcades, there was about 3000 of them, now only about 100 are still going, and many of them gave up on games and only let you win prizes. home cosoles will stay, but developers really need to come up with new genres. mirror's edge was a good beginning, but they need to improve on how we play the levels before the next installment

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