Filed under: Products and services, Competitive strategy, Microsoft (MSFT), Viacom (VIA), Sony Corp ADR (SNE), Electronic Arts (ERTS), Activision Inc (ATVI)

Activision Inc. (NASDAQ: ATVI) doesn’t want to let Rock Band have all the fun. According to Reuters, Activision wants to turn its Guitar Hero platform into a truly direct competitor to its colleague. Come the fall, the publisher will release Guitar Hero World Tour, a package that will include a guitar, a microphone, and a drum set. There will be online capability; players will also be able to create their own tunes via a suite of digital-music tools. And all the major platforms from Sony Corporation (ADR) (NYSE: SNE), Microsoft Corporation (NASDAQ: MSFT), and Nintendo Co., Ltd. (OTC: NTDOY) will be getting this game.

Rock Band, which is developed by Viacom, Inc. (NYSE: VIA)’s Harmonix and sold by Electronic Arts (NASDAQ: ERTS), is no longer unique now that Activision has expanded the depth of its famous brand. Indeed, Guitar Hero still thrived even in the face of Viacom’s music game, but it looks like Activision is taking no chances; the publisher obviously realizes that, as time goes on and upgrades to Rock Band come along, the Guitar Hero franchise might see eventual erosion of its fan base as the fad matures. Evolution would certainly be justified at this point.

Yet, I am of two minds about this move. On the one side, I can understand why this had to be done. And I can see why it should work out; after all, Activision’s brand equity when it comes to this Guitar Hero game is incredible. Seriously, if you don’t know, a lot of players out there, both hardcore and casual, love this platform. However, there’s another side to me that wonders if traditionalists won’t necessarily enjoy the aspect of the additional instruments. Do they add value, or do they now make the brand seem clunky and complicated? On a gut level, I always theorized that those who chose Guitar Hero over Rock Band relished the fact that it was just one guitar. Then again, going back to the brand-equity thing, maybe current players will now want to try out a more complex musical-gaming experience since the Guitar Hero name is attached.

There’s another thing that bothers me, too, and this is strictly an anecdotal, of-the-gut worry that will probably have no bearing at all on the potential for success of this new Guitar Hero initiative (but I’ll mention it anyway). In my area, there definitely is still way more buzz for Guitar Hero than there is for Rock Band. Stores around me see some of the latter collecting dust outside of the holiday-selling season, unless there is a sale going on to push the package. Will this happen to Guitar Hero World Tour? It will certainly sport a higher price, so, when Christmas is over, will demand go down? If so, will this hurt the appeal of the traditional game?

Again, that is my own biased observation, and it is not to be taken scientifically. Obviously, I realize that Rock Band is a big game and has been a major driver for Viacom. What would be great, however, is if Activision played this really smart and concentrated on the expanded Guitar Hero during the Christmas season and gave it a rest during other times of the year, focusing at those periods on its traditional Guitar Hero brand.

No matter what, though, I do find this exciting as an Activision shareholder. So long as it doesn’t do anything to dilute the brand, I’m all for it (remember, folks, Guitar Hero is a major reason for the success of Activision’s stock, and any changes to this flagship product should not be taken lightly). Owners of PlayStation 2 and 3, Xbox 360, and Nintendo Wii, look out, because Activision will be rocking you yet again…

Disclosure: I own shares of Activision; positions can change at any time.

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This entry was posted on Saturday, May 24th, 2008 at 9:14 pm and is filed under Stocks News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.