[UPDATE] Cowen and Company's Doug Creutz cuts sales projections for Activision's latest rhythm game by 61 percent, citing online demand that is "well below" expectations.
Beyond Call of Duty: Modern Warfare 2, arguably Activision Blizzard's biggest release for the holiday quarter would have been Blizzard Entertainment's Starcraft II. However, in the lead-up to Starcraft II's eventual delay into 2010, analysts and investors skittered away from the publisher's stock, fearing the impact it would have on Activision Blizzard's full-year earnings.
Now, at least one analyst is once again less optimistic about Activision's earning prospects. But the cause has nothing to do with a delay and everything to do with the sales performance of the publisher's flagging rhythm game business. In a note to investors today, Cowen and Company's Doug Creutz reined in Activision Blizzard's estimates, cutting full-year revenue projections by 10.8 percent to $4.49 billion and lowering earnings-per-share guidance to $0.75.
"The largest factor in our estimate reduction is the recognition that the declines in the music genre earlier in the year were not temporary, and are likely to persist going forward," he said. "We have significantly reset our expectations for Activision's various music genre Hero franchises in 2009 and 2010."
Notably, Creutz drastically cut projections for Activision's newest rhythm game franchise, DJ Hero. Having previously expected DJ Hero to sell 1.6 million units through the end of December in the US, Creutz lowered those projections to 616,000 units, a 61 percent drop. Looking at first-year sales, the analyst trimmed expectations from 2.5 million copies to 950,000 of the turntable-equipped rhythm game.
"Despite some recent positive comments from company management about preorders, we remain very cautious about the title's prospects at launch," Creutz said. "A survey of online retailers indicates a demand profile that is well below what we would have expected to see just a few days before launch for a title that was destined to be a big (or even modest) hit."
Speaking with GameSpot, Wedbush Morgan Securities analyst Michael Pachter agreed with Creutz's downsized assessment of DJ Hero sales in the US through December. He also noted that his own projections indicate the game will sell 1.2 million worldwide by the end of the year, though this figure could rise depending on how well Activision markets the game.
Looking at Activision's broader rhythm game portfolio, Creutz scaled back projections by 54 percent, on the weakness of Guitar Hero 5's September launch and Band Hero's expected slow start. According to the NPD Group's September US sales report, Guitar Hero 5 finished behind MTV Games' The Beatles: Rock Band, selling just 499,000 units for the 360, PS3, PlayStation 2, and Wii. Creutz trimmed sales expectations for the game to 1.2 million units through December, a 51 percent cut.
[UPDATE] Electronic Entertainment Design and Research's Jesse Divnich offers a counterpoint to Creutz emphasis on preorder strength auguring total sales. Though the analyst notes that his sales projections are only slightly higher than Creutz's, he told GameSpot that preorder interest can be misleading, due to the game being targeted at a mainstream audience.
"Because the Hero brands target a larger mainstream audience, pre-order extrapolation to sales will always result in a large margin of error," Divnich said. "For a comparison, the Rock Band brand has a larger install base of core gamers, which resulted in 95 percent more pre-orders for Beatles Rock Band over Guitar Hero 5. However, Beatles Rock Band only sold 20 percent more units than Guitar Hero 5 domestically."
Divnich went on to say that DJ Hero preorders are about 35 percent below those of Guitar Hero 5. However, as with Pachter, Divnich believes that DJ Hero's sales success will be reliant on how heavily Activision markets its newest rhythm game franchise.
"You have to look at the American consumer, as a whole; like a child, it's all about instant gratification. And like children, we don't know what we want until someone tells us that we want it. In most cases that means the television. Case in point, The Snuggie was not the first of its kind; it's a design that has been around for years. The Snuggie, however, was the first to create a huge mass-marketing campaign around the product. Sales took off. The people buying The Snuggie are the same type of people buying DJ Hero and Guitar Hero. It's mainstream America."
Developed by FreeStyleGames, DJ Hero will be available later this week for the Xbox 360, PlayStation 3, PlayStation 2, and Wii. For more information, check out GameSpot's previous coverage.
"The Snuggie was not the first of its kind; it's a design that has been around for years. The Snuggie, however, was the first to create a huge mass-marketing campaign around the product. Sales took off. The people buying The Snuggie are the same type of people buying DJ Hero and Guitar Hero. It's mainstream America." Snuggie=DJ Hero and other music games? LOL! If that's what videogaming comparisons have come to, I guess it's time to give it up and I've been playing since the Nixon administration! I would love to see a "mainstream" male wearing a Snuggie and playing DJ Hero/Rock Band just so I could ridicule him!
Someone will buy, and someone else will like it, and then it will snowball. Guitar Hero sold much the same way. I had my GH days, but it only went so far before I felt like I was wasting a lot of time. With real videogames I never feel that way. I have a huge sense of accomplishment beating an RPG that took me 80 hours, as opposed to the time I wish I had back beating GH on expert.
I for one am not interested in this game and I am not suprised that it falling below its sales expectations. I think one of Activisions biggest mistakes is the overkill of one too many music games in the marketplace at the same time. There is too much competition for the dollar right now and the consumer doesnt need a new version of the same game each year yet alone the spin offs like Aerosmith, Metallica, or Van Halen. Give us a break already! I am not knocking DJ Hero, I am just saying that its unfortunate that this game is being released under the strain of mega holiday titles and should have been held back until spring to give consumers a chance to let there wallets breath.
I think DJ Hero looks like it might be pretty fun...but I'm kinda sick of more and more perepheral based games. Rock Band is fine with me. I'll stick with that one. And oh look, Tony Hawk Ride is doing the same thing! While the perepherals look like they might be fun and work well...I don't have the money to buy all this crap all the time. And Activision is just getting kinda greedy with it here.
Actually its more to do with the price of the product than people tiring of it, besides, work out how many people "air guitar" and how many people "air DJ", not many of the latter is there. DJ'ing is a smaller market and in the UK this games costs £90, I can actually buy RockBand -with the drums and everything, AND the Beatles game included, for the same price.
Hmmm....file this under "how did they NOT see this coming" We are in that era when people think you put the word HERO behind a game it will sell like gold. The "music hero game" genre has entered an area that the Wii has been in quite a while: Market Saturation. People just dont want it anymore.
This game is a joke. You spend more time pushing buttons than actually "DJing". Most of my friends and I are all real life DJ's and when we saw the live demo of this we all thought it was horrible. At least in the other music games you are somewhat doing something familiar to that pertaining instrument. Yea I know the guitar and bass your just strumming, but usually when you DJ you aren't pushing buttons or just scratching the whole time. This game will fail.
I don't know all these games sound pretty pointless. I admit I have the first guitar hero for PS2 but I bought that on a guess that it was going to be interesting...and it was. But as the others came out and got more and more expensive I realized that I could just as well buy a real instrument and learn to play for real, so that's wwhat I did. Now I can play the guitar fairly well, and play only songs that I like, rather than songs Activision has picked out for me
Activision only has themselves to blame for this one. From what I hear, DJ Hero is a very good game. But people are tired of and turned off by the music genre because it has been too much too fast and everything is too expensive. No one wants to pay another $220 for another plastic toy to go with a game. The music genre is over saturated and EA better catch on to that soon or they're going to head down the same path. It's not that the games lack quality, but how many "Hero" games are coming out this year? Guitar Hero 5, Band Hero, DJ Hero, Guitar Hero Metallica, Guitar Hero Van Halen (free pack in but still...), plus all the downloadable content. How many of these games do we need in one year? And the only real significant change to the genre seems to be more in the over priced plastic musical instruments that offer touch pads and slight differences but are required to get everything out of the newer titles. It's ridiculous! I used to praise EA/Harmonix for their restraint but they are coming to the point where they are no better. Rock Band Beatles, Lego Rock Band, and now there's talk of Rock Band: The Who (which most of the best songs are already available for download). It's too much! We need a good year or maybe even two before anyone releases another music game. The genre needs a rest. Keep the downloadable songs coming but lay off new full games for a while. Let us miss the games so we'll want to buy them again for that "new game" feeling.
yeah really the tracks are bad as it is, and mixing 2 bad songs does not make a good song.. just like the saying "2 wrongs don't make a right"
I hope these games go away someday. Actual creativity in music games is completely absent because of this shovelware, just look at what this game did to Scratch DJ. I hope this junk still bombs no matter how much I like Jigga. Go buy a Simon Says and turn your radio on. Save well over $100 and you won't look as silly.
Everyone's got a pair of shoulders, that's what made Guitar Hero work. The drums have stands. What about this thing? I know the special edition or whatever they're calling it has a case that doubles as a stand for the turntable but what about everyone else? There's nothing in my room that I can set it on to play comfortably other than my lap, and that's not all that comfortable either. Am I supposed to pay for some sort of table too on top of the cost for the game and controller? I'm out... not that I was ever really in in the first place but yeah.
If you guys stop just trying to milk stuff to the point where it is redundant to buy it because some new fancy accesory will come out later your sales will do better. Stop milking the industry EA and Activision.
I know alot of the reason is bad timing. With Modern Warfare 2 coming out in about two weeks, most people I know dropped 80, or like me, 150 dollars on the special editions, and quite honestly, I can't afford to pay 120 for another game. I will buy this, hopefully for Christmas, because I think the game looks great. I played it at BB, and love it. Don't hate because its too expensive, give it a try first.
Just because its a DJ game and toss in Daft Punk doesn't make it a great game, especially when the tracks mixed with daft punk don't make sense.
Although I won't be getting this due to me not really liking the track selection, I have just watched the intro video to the game, and it's one of the most impressive CGI intros I've seen to any game... very nice. Shame it won't sell, despite good reviews. This is going to be a Stranger's Wrath and Mark Ecko : Getting Up all over again.... quality without matching sales figures
Seems like I say the same thing each time, but bad market research. Just because a few people say they'd love a DJ Hero doesn't mean it will sell well.
I have said it before and I will say it again: STOP RIPPING OFF BEMANI YOU UNORIGINAL DIRTBAGS! This game was great when it first came out 12 years ago and was called "Beatmania II DX". Same thing with Guitar Freaks, Drum Mania, and (I am sure Activision will rip this off soon) Keyboard Mania. What's next? A rip off of Para Para Paradise and Pop N' Music? Get your own ideas!
that video they posted above told me absolutely nothing about the game and made me wonder how that is supposed to promote the game....looks insanely lame
I have had this game for a few days now and it has blown guitar hero and rock band out of the water. This on party mode at a house party = good times.
Well, who has air guitared in their life and who has air dj'd? I would think the ratio be something like 1000:1 or more. Thou, from IGN's gushing review, you would think that it would sell out everywhere. Guess that guy is like the few who will buy this game, new to that type of music.
I won't be buying DJ Hero but I'll be checking it out in my Snuggie at my friends house later on tonight!
@ Rottenwood I agree 100%, although we don't have the Beatles Rock Band (although I do want to buy the disc) we have GHWT and storing the peripherals (thats right, not instruments) is a pain. We keep a simple living room setup with all of our consoles and components in a media closet and with all these new "controllers coming out for games is almost enough to deter me from even buying them. I know I will catch flak for this, but the aforementioned headache of to much clutter is just one more reason I am very excited about Natal...
The whole reason I haven't been buying these music games is because of the price. There's a reason we play video games instead of doing the real thing, and paying all that money for items that emulate the real thing in some way when you can spend the same amount of money on the actual real thing seems kind of silly. Yeah, it's not really the point. Not everyone's musically inclined. So drop the price a bit to lower the barrier of entry.
"The people buying The Snuggie are the same type of people buying DJ Hero and Guitar Hero"....? Divnich trying to explain his counterpoints with broad generalizations is ridiculous. You don't have to be an "analyst" to figure out that more marketing = more sales for 95% of products.
Finally people are releasing how pointless music games are. Why not save your money and get Assassins Creed 2 which is going to be great
Umm...there's already too many music games and sequels are coming out every year now. DJ Hero is just a stupid gimmick in my opinion and you're just trying to milk the music games for all they're worth...thanks for nothing Activision
I wasn't going to get this but I played it the other day at Best Buy and really liked it. Then I saw the setlist and now I'm for sure going to get this....
The market is saturated with rhythm games, ridiculous pricing and narrow market interest makes this game the largest failed game of next year.
Sadly, I think this one is going to drop to the discount bins after 2 weeks on the shelves. I say sadly, because the DJ's I have known are very passionate about their hobby or vocation, and it would be nice to see something like this succeed. As much as Activision thinks they can bring a turntable to the mass market, they are so wrong that it is nearly as ridiculous as them pulling projections out of thin air. Next year list makers will look back and proclaim DJ Hero THE #1 BUST of 2009
I'm assuredly not the target audience for this game anyhow, but I think it's safe to say the market is saturated. Besides, my wife and I got all the equipment to play the Beatles game, and already, the gaming area feels cluttered. Which isn't to say the game isn't great, because it is, but you need a lot of storage space for all the controllers. And for people who like a simply decorated home, it's something of a problem. Now Activision wants to sell us a skateboard, and a turntable, and nightvision gear, and who knows what else. Never mind the money, I neither have the space nor inclination to devote an entire room to devices used in a mere handful of games. One of the beautiful things about this hardware generation is having three machines with cordless controllers, which nicely limits the 'crap at my feet' factor. Slow down, Activision.
no matter how stupid activision customers are, they will eventually get tired of seeing the same game 5 times a year
That's not quite true, LittleDuck - as a DJ and guitar player, I have to say that both prospects are fun for me, but the crucial thing with a DJ game is the music appeal. With a guitar, it's a much broader horizon of general acceptance to say that someone who plays a guitar based game will like to rock out to Rock music (and it's many sub-genres).... with a DJ based game, the music track choices are crucial as to whether you'll pick it up or not. The DJ "talent" spans a far wider chasm of musical genres, so what one DJ will want to spin, another will hate. Yes, I know you can argue that not everyone likes the same type of Rock music, but it's still a more "funnelled" group of people compared to a DJ. At the end of the day, a true DJ will have an amazing setup of real peripherals right next to where his PS3/360 is and will likely opt to just spin their choice of music on there instead of shelling out £90 to do it to some music they probably don't like.
The main reason no hype is being built up is because no one wants to sit on the sofa pretending to spin a disk, wheras air guitaring with a bit of plastic and a few mates is great fun.
The way analists just pulled those numbers out of thin air is mesmerizing. Not knowing anyone interested in gaming, they go and predict 2,5 Million yearly sales for a game no gamer expressed interest into... "And like children, we don't know what we want until someone tells us that we want it." Maybe wishful thinking there, Mr Big Man?? Please tell me how bad I want this game and Modern Warfare 2 (another Activision release that I'll be sure to avoid)... go ahead, try me, see where my money goes... Bet your job on the fact it isnt going into Activision's account... Rest assured I won't encourage a company that believes people are actually so stupid that they need to be told by accountants what game they should be playing.
There is a standard version available for $119.99 which is...gasp...less than GH:WT when it was released. Read people! Read! It may be overpriced at the 199.99 price point, but $119.99 is just about right. Wasn't GH3 99.99 when it came out????
I agree with you bandit7319, there's just too many of those games out now and not alot of people want to play them anymore because they've already seen what they had to offer. I personally think it got ridiculous with the release of lego rock band.
What were they expecting to happen? Activision needs to take a break from the rhythm game genre for awhile.