DJ Hero demand "well below" expectations
Analyst cuts sales estimates in the US by 1m units, as recession bites music genre
Demand for Activision's DJ Hero in the US is "well below" expectations for the game to become even a modest success, according to analyst Doug Creutz of Cowan and Company.
The company believes that the slow down in sales of music games is not a blip, and that casual and mainstream gamers are put off by the high price of music titles during a recession, while the buzz surrounding titles such as Guitar Hero has faded.
"On DJ Hero, despite some recent positive comments from company management about pre-orders, we remain very cautious about the title's prospects at launch," wrote Creutz in a note to investors.
"A survey of online retailers indicates a demand profile that is well below what we would have expected to see just a few days before launch for a title that was destined to be a big (or even modest) success."
Creutz anticipates that DJ Hero will only sell 600,000 units in the US during the fourth quarter, down one million units compared to Cowan's previous 1.6m estimate, with full year sales at 950,000, instead of 2.5 million.
However, he added that the sequels to DJ Hero will help the game become more established, and it will eventually become a significant spin-off for Activision.
"We still believe that DJ Hero will be an important part of Activision Blizzard's music franchise strategy, but we think it may take a few versions of the game for it to reach its full market potential (similar to the original Guitar Hero)."
Following a poor September for music game sales, Creutz is also reducing estimates for combined DJ Hero, Guitar Hero 5 and Band Hero sales by over 50 per cent, from $408 million to $199 million during the 2009 calender year.
As well as a decline in Wii sales to mass-market consumers which was a key platform for Guitar Hero MTV's The Beatles: Rock Band took a significant share of the market from Guitar Hero 5, added Creutz, and the hype surrounding the Hero franchise has died down.
"We probably underestimated the extent to which the 2007-08 peak in Guitar Hero unit sales was driven by the extreme amount of buzz around the product, offered Creutz. In retrospect Guitar Hero III likely attracted a lot of one-time buyers (that have not returned for subsequent franchise instalments) due to its 'it-game' status at the time."