Why Guitar Hero died

As the dust settles on Activision's decision to put an end to its world-famous peripheral-based music franchise Guitar Hero and the difficult work of sacking those who helped create it begins, one question remains: where did it all go wrong?

Only three years ago Guitar Hero shot through the $1 billion revenue mark – in the US alone.

Now, in what can only be described as a spectacular fall from grace, Guitar Hero is no more. Why? Why did Guitar Hero die?

To accuse Activision of milking the franchise dry with multiple games launched too close together may be an obvious start, but according to leading industry analysts it's a perfectly valid one.

"By 2007 Guitar Hero was available for most platforms and Activision continued to stripmine the franchise," M2 Research analyst Billy Pidgeon told Eurogamer.

"It is relatively easy to prepare iterative versions of a music and rhythm game once the formula has been set, and this dynamic facilitated the brand's over-exposure. In 2009 Activision released five separate SKUs of Guitar Hero and the brand essentially lost its relevance."

A damning verdict indeed – but it is one shared by many who are trying to make sense of Guitar Hero's demise.

"Guitar Hero was a victim of its success," said Wedbush Securities' Michael Pachter. "The game was incredibly well-conceived, the peripherals were great, and the music offering was deep and broad. All of those factors led to unprecedented success, and each contributed to its demise."

For Pachter, the fact gamers could play new Guitar Hero games with the peripherals they already owned proved to be the killer blow.

"Once people bought the band kit, for example, they didn't feel compelled to upgrade, as the one they bought was high quality and did the job well," he said. "Once people bought a game, they had 60 - 80 songs to master, and few mastered all of the songs offered.

"Thus, when a new version was released, most consumers did not feel the need to buy it, since they still had 40 – 50 songs remaining to play from last year's version."

One analyst who cast's Activision's role in a brighter light is EEDAR's Jesse Divnich. For him, "nothing went wrong with Guitar Hero" and there was nothing Activision could have done to prevent its decline.

"Much like most entertainment products, consumers tend to get their fill quickly. There is a reason why most successful movies rarely go past their third-iteration.

"When the first Guitar Hero was sold, the time clock of its success and ultimate demise started and there wasn't a single strategy Activision could have implemented to hinder it. If Activision hadn't flooded the market, someone else would have, and the state of the music genre in 2011 would have been unchanged.

"There is absolutely nothing Activision nor anyone could have done to save the music genre. We should remember Guitar Hero for what it was, not where it's at now."

Gaming Insights director Nick Williams is more pragmatic – Guitar Hero died because gamers stopped buying it. "Activision's decision to cancel Guitar Hero and DJ Hero is probably a surprise to many gamers, but the momentum shift away from music games has been in the works for a few years now," he said.

"Trended data from Ipsos OTX's GamePlan Insights tracking study support the idea that music related games are becoming increasingly risky investments. The percentage of active gamers who like to play music games 'a lot' has dropped steadily over the last two years (from 38 per cent in Q1 2009 to 28 per cent in Q1 2011), which corresponds to measurable decreases in purchase interest for each new Guitar Hero release.

"During the same time, the incidence of active gamers who like to play shooter games 'a lot' has increased from 40 per cent to 47 per cent, with Call of Duty leading the charge."

With the axe ready to fall on DJ Hero developer Freestyle Games and the promise of 500 job cuts across Activision's gargantuan network already biting, Guitar Hero's death feels final.

But, like with the best superheroes, dead doesn't always mean dead.

"I wouldn't classify Guitar Hero as 'dead', but rather hibernating'," Divnich said. "It may take three to five years, and likely a whole new generation of consoles, but I see a possibility of a short revival in the future."

Pidgeon agrees. "It is possible that Guitar Hero will return, but a re-launch would have to be managed on a far smaller scale. Production costs would have to be minimized to enable profits on unit sales in the hundreds of thousands rather than in the millions."

Pachter's conclusion? "The franchise can support sales at the $200 million level annually, so it will still generate profits, but with license fees and manufacturing costs, margins are not that great, and certainly not enough to keep 200 - 250 people employed working on a new version each year."

Hero developers across the world no doubt know that better than most.