Iconic 'Guitar Hero' video game gets the ax

Feb 09, 2011

(AP) -- These days, guns are more popular than guitars, at least when it comes to video games. The company behind "Guitar Hero" said Wednesday that it is pulling the plug on one of the most influential video game titles of the new century.

Activision Blizzard Inc., which also produces the "Call of Duty" series, is ending the "" franchise after a run of more than five years. The move follows Inc.'s decision in November to sell its money-losing unit behind the "Rock Band" video games. Harmonix was sold to an investment firm for an undisclosed sum. Harmonix, incidentally, was behind the first "Guitar Hero" game.

analysts have long lamented the "weakness in the music genre," as they call it - that is, the inability of to drum up demand for the products after an initial surge in popularity in the mid-2000s. Music games are often more expensive than your typical shoot-em up game because they require guitars, microphones and other musical equipment. While extra songs can be purchased for download, this hasn't been enough to keep the games profitable.

Activision's shares tumbled after the announcement, but investors appear more concerned with the company's disappointing revenue forecast than the demise of the rocker game. As far as investors go, discontinuing an unprofitable product isn't the end of the world, even if "Guitar Hero" fans disagree.

"In retrospect it was a $3 billion or more business that everybody needed to buy, so they did, but they only needed to buy it once," said Wedbush Morgan analyst Michael Pachter. "It's much like 'Wii Fit.' Once you have it, you don't need to buy another one."

"Guitar Hero" was iconic and often praised for getting a generation weaned on video games into music. But its end after a mere half a decade is a big contrast to other influential video game franchises, such as the 25-year-old Mario series from Nintendo. "Call of Duty" first launched in 2003, two years before "Guitar Hero."

In a conference call, Activision said its restructuring will mean the loss of about 500 jobs in its Activision Publishing business, which has about 7,000 employees. But the company's overall work force numbers are not going to change much because it is hiring people elsewhere.

Activision did better than expected in the fourth quarter, which ended in December, but that already was anticipated. After all, it launched "Call of Duty: Black Ops" in November. That game, which is mostly set during the Vietnam War, made $1 billion after just six weeks in stores. Its latest "World of Warcraft" game has also been doing well.

Bobby Kotick, Activision's CEO, said the company's big franchises "have larger audience bases than ever before and we continue to see significantly enhanced user activity and engagement for our expanding online communities." Revenue from so-called "digital channels" - that is, downloads, subscriptions and extra game content sold online - now accounts for 30 percent of the company's total revenue.

Activision said Wednesday it lost $233 million, or 20 cents per share, in the latest quarter, compared with a loss of $286 million, or 23 cents per share, in the same period a year earlier. Net revenue fell to $1.43 billion from $1.56 billion.

Its adjusted earnings of 53 cents per share were better than last year's 49 cents and beat analysts' expectations of 51 cents, according to FactSet. Revenue that's been adjusted to account for games with online components was $2.55 billion, up slightly from $2.50 billion a year earlier and above analysts' $2.25 billion forecast.

For the current quarter, which ends in March, Activision forecast adjusted earnings of 7 cents per share, and adjusted revenue of $640 million. Analysts are looking for earnings of 10 cents per share on higher revenue of $771 million.

Activision Blizzard also said its board authorized a new $1.5 billion stock buyback plan. And it declared an annual dividend of 16.5 cents, an increase of 10 percent from the dividend it issued in February 2010, its first ever.

Shares of the Santa Monica, Calif.-based company, which is majority-owned by France's Vivendi SA, tumbled 94 cents, or 8 percent, to $10.75 in after-hours trading. The stock had closed the regular session down 19 cents at $11.69.

Explore further: Theme parks offering smart-phone options to improve visitor experience

1 /5 (2 votes)
add to favorites email to friend print save as pdf

Related Stories

Activision 2Q net income climbs, revenue falls

Aug 05, 2010

(AP) -- Activision Blizzard Inc. posted a higher net income for the second quarter Thursday as development expenses and other costs declined, but fewer game launches pushed revenue lower, shy of Wall Street's expectations.

Activision 3Q earnings more than triple

Nov 04, 2010

(AP) -- Continued strong demand for the latest "Call of Duty," "StarCraft" and "World of Warcraft" video games helped more than triple Activision Blizzard Inc.'s third-quarter net income and pushed overall results well above ...

Activision 1Q profit up, shoots past expectations

May 06, 2010

(AP) -- Continued strong sales of "Call of Duty" and a steady stream of revenue from "World of Warcraft" subscribers helped double Activision Blizzard Inc.'s first-quarter net income.

Activision Blizzard: 'Call of Duty' has made $1B

Jan 13, 2010

(AP) -- Video game publisher Activision Blizzard Inc. said Wednesday that the game "Call of Duty: Modern Warfare 2" has brought in more than $1 billion in revenue since it went on sale in November.

Activision posts 3Q profit, backs 2009 outlook

Nov 05, 2009

(AP) -- It's been a rough year for the video game industry, but Activision Blizzard Inc. reported a profit for its third quarter because of a good response for games such as "Guitar Hero 5" and "World of ...

Electronic Arts lowers 2010 guidance as sales weak

Jan 11, 2010

(AP) -- Video game publisher Electronic Arts Inc. cut its full-year guidance on Monday, as ongoing weakness in its game disc sales didn't ease up over the holidays as the company had hoped.

Recommended for you

Researchers jailbreak iOS 7.1.2

19 hours ago

Security researchers at the Georgia Tech Information Security Center (GTISC) have discovered a way to jailbreak current generation Apple iOS devices (e.g., iPhones and iPads) running the latest iOS software.

Smartphones as a health tool for older adults

20 hours ago

A team of researchers from the Universitat Politècnica de Catalunya · BarcelonaTech (UPC) and the Universitat Autònoma de Barcelona (UAB) is creating a smartphone app that will help older adults to understand ...

Can you trust that app?

20 hours ago

You're on your smartphone, browsing through Facebook. In a fit of productivity, you search for, say, a project management app to help you use your non-Instagram and cat video time more effectively. You download ...

Facebook's Internet.org expands in Zambia

Jul 31, 2014

(AP)—Facebook's Internet.org project is taking another step toward its goal of bringing the Internet to people who are not yet online with an app launching Thursday in Zambia.

Body by smartphone

Jul 30, 2014

We love our smartphones. Since they marched out of the corporate world and into the hands of consumers about 10 years ago, we've relied more and more on our iPhone and Android devices to organize our schedules, ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

GH_lives_online
not rated yet Feb 10, 2011
Limited content... No wonder GH and RB wiped out. There is nothing like TubeHero.com the freedom to play any song online.