Nobody’s a hero here

The thrill is gone:  today we find out that there will not be another Guitar Hero release anytime in the foreseeable future:

Activision Blizzard will close its music-game business division, laying off hundreds of employees, and cancel the Guitar Hero game that was in development for 2011, the publisher said in a conference call Wednesday.

The drastic move comes after significant industrywide declines in the music game business. In 2007, Activision sold 1.5 million copies of Guitar Hero III in its first month of sales. Last year, Activision only sold 86,000 copies of the latest game in the series, Guitar Hero: Warriors of Rock. Slowing sales of chief competitor Rock Band led Viacom to sell maker Harmonix and close the MTV Games publishing division.

Activision said that the decline of the genre, plus the high cost of licensing music and producing the games, led it to close the business. [emphasis added]

Arguably, Guitar Hero and Rock Band were fads (at least, at their white-hot sales peaks) whose time had passed.  Nevertheless, these games were probably some of the cheapest console games (from a technical/development standpoint) made in the last few years.  The real cost driver here had to be the music licensing fees.  At the right (i.e., low enough) price, these games probably could have been made indefinitely, but it appears that monopoly-imposed costs have outstripped demand and the dreaded deadweight loss triangle has destroyed the market.

Which begs the question:  why does the music industry continually insist on killing geese that lay it golden eggs? In my view, there’s a difference between profiting from risk taking (i.e., capitalism generally) and expecting other people to pay you an ever-increasing cut of the revenue stream based on the risks they took in finding and exploiting a new market which literally did not exist before.  As for the music industry’s attempt to parlay other people’s risk taking into ever bigger royalty streams for themselves, they can’t really complain when the market softens and no one can afford to pay their exorbitant fees.

(On a final, parenthetical note:  no-doubt-soon-to-be-former music industry execs should perhaps consider a career move into lottery management.  In addition to being the ultimate something-for-nothing industry, the lottery is bigger than porn, movies, and music combined. It’s also a regressive tax on the poor, a perfect money-laundering machine for organized crime, and easily rigged.)