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Music Game Sales Fall Off A Cliff

Have music-based video games like "Guitar Hero" and "Rock Band" run their course? Viacom's Sumner Redstone warned that consumers may be growing bored with these games during yesterday's earnings call with reporters, saying that flagging sales of its popular "Rock Band" title dragged down earnings in its video game division. Numbers from NPD Group confirm it: sales of music games are down significantly from the same time last year.

As UBS analyst Ben Schachter writes in a research note, when you exclude "Rock Band," Electronic Arts (ERTS) saw sales growth of 21% year-over-year. But when you include Rock Band's 52% sales slump, EA's sales fell 6.2%.

Same thing with Activision's "Guitar Hero": sales were down 22% year-over-year. Silicon Alley Insider says Activision is "particularly poorly placed" because the video game giant is "doubling down on music." In a CNBC interview, Activision CEO Bobby Kotick started talking up the hip-hop themed "DJ Hero" as his company's next big game release. Says SAI's Eric Krangel: "We're a bit surpised at how quickly music game sales are falling, but not by the general downturn. Two factors at work here: First, music games sold so amazingly well the past few years the market is approaching its saturation point -- Most of the potential customers of a music game already own one. Second...all fads come to an end."

Read the whole story at Silicon Alley Insider »

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