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Can the Beatles revive the video game industry?

When "The Beatles: Rock Band" video game hits store shelves on Wednesday the industry hopes it will provide the lift that retailers, publishers and console makers desperately need.
/ Source: Reuters

The Beatles are back — but this time the world's most famous rock band may be stirring more excitement in executive suites than in campuses and schoolyards.

When "The Beatles: Rock Band" video game hits store shelves on Wednesday — packed with 45 songs for players to sing, strum and drum along with — the industry hopes it will provide the lift that retailers, publishers and console makers desperately need for this holiday shopping season.

Developed by Harmonix Music Systems, published by Viacom Inc.'s MTV Games and distributed by Electronic Arts Inc, the game could sell 2 million units in the first month alone, according to analyst estimates.

"I think 'The Beatles: Rock Band' will be huge," said analyst Michael Pachter of Wedbush Morgan Securities, who sees the game drawing in entire families — a demographic that was first tapped by Nintendo Co. Ltd. for party games and fitness titles on its Wii console.

The game has won rave reviews from critics. "With all due respect to Wii Sports, no video game has ever brought more parents together with their teenage and adult children than 'The Beatles: Rock Band' likely will in the months and years to come," The New York Times said.

But not all analysts are convinced it will be a hit, due to the cost of its accessories and shifts in customers' musical tastes.

Another risk is that the new game debuts just days after Activision Blizzard Inc.'s latest version of "Guitar Hero," which includes songs by The Rolling Stones and Nirvana.

"It will have a great first month, due to lots of great marketing and advertising for it, which means that the fans will pick it up early," said Hudson Square Research analyst Daniel Ernst. "But I don't see it driving overall share for 'Rock Band' versus 'Guitar Hero,' and I don't think it's going to drive all kinds of new people into games."

Ernst figures that after sales of about 2 million games in the first month, only another 500,000 will be moved over the rest of 2009. "My view is that in the final tally 'The Beatles' will end up being a bit of a disappointment for games."

Don't let me down
With consumer spending drained by the recession, sales of video games are down about 46 percent this year, according to NPD Group. Console sales have slowed, too, leading Microsoft Corp. and Sony Corp. to cut prices on their consoles in recent weeks.

( is a joint venture between Microsoft and NBC Universal.)

Demand for the Beatles game could help reverse those trends, driving shoppers to stores where they may be tempted to buy more games or upgrade consoles. The game can be played on the Wii, Sony's PlayStation 3 and Microsoft's Xbox 360.

The hope is that it opens a new market of gamers: Baby Boomers who were the Fab Four's shrieking fans in the 1960s

"'The Beatles: Rock Band' is different, more special, than anything else out there," MTV Games General Manager Scott Guthrie said in an interview. "They have a unique ability to reach all audiences, and we plan on taking advantage of that."

Guthrie and his team have a lot riding on the success of the game. Sales of "Rock Band" fell sharply in the second quarter, and Viacom blamed it for much of the 8 percent drop in revenue from its Media Networks division.

"The Beatles: Rock Band" should bolster revenue, although it is unclear just how much MTV had to pay to secure rights to produce the game. Guthrie denied a published report estimating MTV Games would pay a minimum of around $10 million and up to $40 million depending on sales.

"Those numbers are way off," Guthrie said.

One big worry is whether consumers, particularly those new to video games, are willing to open their wallets to buy not only the game but also the costly accessories that go with it.

"The Beatles: Rock Band," like "Guitar Hero," will retail for about $60. But consoles run another $200 to $300, and the instruments needed to play the game run from $30 to $100 apiece. A "Beatles: Rock Band" package, including the game and instruments, will sell for about $250.

"My expectations for 'The Beatles: Rock Band' are lower than they were a month ago," said FTN Equity Capital Market analyst James Hardiman. "It depends on how big the music video game budgets are for these people."

Other concerns are whether the biggest gaming demographic — males 18 to 34 years old — dismiss the music as outdated, a relic of their parents' music collections, and whether serious music gamers find the songs too easy to "play."

"They run pretty slow. The core guys aren't going to go after this," Ernst said.

Janco Partners analyst Mike Hickey noted the game had been in development for more than a year. "The world has changed," he said. "It's unlikely that this would be green lit today."