The music genre is suffering a decline because the peripherals market is saturated, but sales of digital songs and software are still strong, according to MTV Games.
Speaking to Paid Content, MTV Games' SVP Paul DeGooyer said that while revenues have fallen in the once booming genre, players are still using their existing hardware with new digital and disc releases.
"Certainly, music games have cooled substantially," said DeGooyer. "But its not as steep a decline as you might think."
"Whats encouraging for us is that most of those sales were software, meaning people who have Rock Band or Guitar Hero guitars are using those instruments to play a new game." He added: "The majority of people are buying software-priced units. Thats a pretty critical piece of the business, going forward."
Format holder Microsoft said late last year that while sales of high-priced music bundles were in decline in 2009, DLC song packs were still performing well over Xbox Live, with users willing to make "an investment in a music library".
Plastic instruments can be intimidating to new users, said DeGooyer, and new ways of interacting with music games are necessary to take the genre from the core to mainstream markets.
"Songs and music games need to be a part of peoples self-expression. Developments in terms of console interfaces are going to make it, literally, more gestural to interact with music."
"The challenge for us in the space is ... music fans overall would love to interact with music in this way but may not be able to get over the plastic instrument. The category needs to break out of that core constituency and go beyond that."