In this corner, we have the developers of "Rock Band" and "Guitar Hero!" These games have been responsible for 15% of video game sales this year and 32% of the gaming industry's year-over-year growth! This industry has been booming this year with profits rising to $9.5 billion in the first seven months of 2008!
And in the other corner, we have the major record labels, who are infamous for not thinking forward and shooting themselves in the foot! They are going to try to put up a fight to obtain more revenue from the success of "Rock Band" and "Guitar Hero," which they lend they catalogs to.
Ladies and gents... LET'S GET READY TO RUMBLE!
...well, this is how I see the fight will start anyway. And it might get a little ugly.
Only a couple years ago, back when "Guitar Hero" was still being developed, major record labels underestimated the success that the gaming franchise would achieve and settled for a standard soundtrack licensing which provides a royalty based on the sales of units for all music included in the game at purchase and certain percentages of songs downloaded afterwards, according to Billboard. Interestingly enough, this amounts to less than the 70% split labels receive from iTunes. Bad move, labels. Now labels want more of a partnership to receive more of the percentage of total revenue.
Too late, guys. "Guitar Hero" and "Rock Band" has become way too powerful to mess with now. You definitely underestimated a sleeping giant. Not only has these games offered a new way to distribute music, they also serve as a promotional device for the music that is featured in its games. According to Nielsen Soundscan, after "Guitar Hero: Aerosmith" was released, Aerosmith's catalog sales shot up 40%. These games make a huge difference in music sales.
Yes, labels get less revenue than than the 70% split from iTunes, but that's because game developers have to spend more time programming each song for each title. There's no way you can compare this to the simple job online retailers do and ask for.
The way these games are evolving, it's only a matter of time that they will feature an iTunes-like store built in the game, so then not only can you play the music in the game, you can also listen to it on your iPod.
That is, if this inevitable fight between the labels and game developers doesn't prevent it. The problem is each side has a case to fight for and each side is able to flex their muscles at each other. But like many other times before this, labels continue to be stubborn and missing the success train, and when they do, they pout and try to find ways to make up for it. Wake up, labels! These games are going to help your sales! With the incorporation of a music store, these games can provide another awesome way for users to connect and buy music.
C'mon, labels! Learn from your mistakes and cooperate!
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