The music industry is like a mosh-pit casualty, battered on one side by song-swiping file sharers and on the other by competing entertainment options, including, yes, gaming. Record companies looking for new ways to sell and promote their music can't have helped noticing that Guitar Hero was the most popular game in the U.S. for the first eight months of this year, according to NPD Group. In November a Viacom (VIA
)-owned rival called Rock Band will join Guitar Hero. This holiday season the two games are expected to sell a combined 3.5 million copies (at $100 and up). And everyone from the Sex Pistols to former Guns N' Roses axman Slash wants in.
Gaming won't save the music industry. But the major labels see it as another way to introduce people to artists, new and old, and build anticipation for tours, where increasingly they will find their revenue. There even has been discussion of including a "buy button" in the games for impulse purchases. "This is our core demographic, the people who play video games 30 hours a week," says George White, Warner Music Group's (WMG
) head of digital sales. "It's very important for us to maintain their share of mind."
Guitar Hero was a surprise hit when it appeared in late 2005. The game won a following among people who can't play a lick of guitar but have always wanted to, as well as fans of music-related TV shows such as American Idol and Hannah Montana. As avatars perform onscreen, players join in on a guitar featuring five buttons that are punched in time to cues from the game. You win points by hitting the right buttons. For the game's architects, the best news was that Guitar Hero's appeal transcended hard-core, shoot-'em-up geeks: Parents bought the game for their kids and ended up playing, too. (You know who you are.)
Game companies and Big Media took notice. In May, 2006, game giant Activision (ATVI
) bought Guitar Hero publisher RedOctane for $100 million. Four months later, Viacom paid $175 million for Harmonix Music Systems, which developed Guitar Hero but didn't own it. For Viacom, Harmonix created Rock Band, which also features a microphone, bass, and drums.
The first iteration of Guitar Hero featured re-recorded songs because it was cheaper than licensing the real thing. "We weren't sure it would make much of a difference," says Harmonix CEO Alex Rigopolus. Players demanded the real recordings. In May Guitar Hero II began selling downloads at $6 per package of three songs. Both Guitar Hero III and Rock Band will include original and re-recorded tracks in their games and will release downloads after that.
It's doubtful that the record companies will make a lot of money selling downloads through the games. But the promotional bang could be significant--even for acts that broke up three decades ago. This summer, the Sex Pistols re-recorded a version of Anarchy in the U.K. for Guitar Hero III. The game's release will coincide with a short Sex Pistols tour and a 30th anniversary edition of the Pistols' album Never Mind the Bollocks, released by Virgin Records.
'YOU CAN DO ALL SORTS OF STUFF'The great thing about games is that you can dress up promotions as rewards for playing skill. Players who reach a certain level on Guitar Hero III will unlock video interviews with their favorite guitarists, including Tom Morello of Rage Against the Machine and Bret Michaels, whose band Poison will perform a rooftop concert above a Best Buy in Los Angeles on the night of Guitar Hero III's release.
For its part, Viacom can use shows on its MTV, Nickelodeon, and Country Music Television networks to build excitement around Rock Band--and vice versa. Promos for the recent MTV Video Music Awards featured backstage clips of bands playing the game, including the Gym Class Heroes, who almost missed receiving their award because they were too distracted. "Our heritage is music," says Van Toffler, who runs Viacom's music-related cable networks. "We'll do a whole bunch of games around music and dancing and seamlessly integrate them on air."
That's just the beginning of the promotional opportunities, some say. "Why not have Coca-Cola sponsor a free download?" asks Michael Pachter, a video game industry analyst at Wedbush Morgan Securities. "You can do all sorts of stuff you can't do with traditional video games."
How do musicians feel about being part of a game? Slash says he was "giddy with excitement" when he heard Activision wanted to feature him as a character in Guitar Hero III. Slash donned a motion-capture suit and recorded some original licks for the game. Reached on tour with his band, Velvet Revolver, Slash said: "I'm on a bus in New Mexico. I've got nothing to do but play video games." By Christopher Palmeri, with Tom Lowry