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Analysts leery of EA, Guitar Hero

By Tor Thorsen, GameSpotPosted Dec 8, 2008 6:28 pm PT

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!

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