Analyst: Guitar Hero series to sell 7.5M in '07, two expansions coming

Wedbush Morgan Securities' Michael Pachter estimates the runaway hit of a rhythm game will put $550 million in Activision's coffers this fiscal year.


When Activision acquired RedOctane in 2006, many wondered if the Guitar Hero publisher's near-$100 million price tag was exorbitant. Those doubts were amplified when the game's developer, Harmonix, was itself purchased by Viacom subdivision MTV Games--a union that would lead to the birth of critical hit Rock Band.

However, as repeated NPD reports have shown, Activision has enjoyed a massive return on its investment in the Guitar Hero franchise. How big, exactly? Wedbush Morgan Securities analyst Michael Pachter thinks he has an idea. Following Activision's upward revision of its earning estimates this morning, Pachter issued a note in which he put a figure on the Guitar Hero franchise's sales for the publisher's current fiscal year, which ends March 31, 2008.

"We believe that this year's Guitar Hero sales reflect around 6 million units of bundles and 1.5 million units of disc-only sales, comprising around $550 million in total sales," said Pachter in a note. The figure includes all games in the series, including the recently released Guitar Hero III: Legends of Rock (PC, Wii, Macintosh, Xbox 360, PlayStation 2, and PlayStation 3).

Pachter went on to predict that the Guitar Hero juggernaut will be only slightly slowed during Activision's 2009 fiscal year. By then, the company will likely have started selling wireless Guitar Hero controllers a la carte.

"Our forecast presumes that year-over-year total unit sales will decline from 7.5 million to 6.3 million," surmised the analyst. "In order to deliver $410 million in sales next year, the company must sell approximately 3 million units of disc-only (around $145 million), plus 3.3 million units of bundles. Given our expectations for significantly higher download revenue and two expansion discs, we think these figures are easily achievable." (Emphasis added.) Pachter did not venture a guess as to what said expansions would be.

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