From LA Times:
Rock Band has been a consistent money loser for Viacom, largely because of its plastic instrument-like controllers. Manufacturing them in China, shipping them around the world and packing them into boxes that fit on retailers’ shelves have proved more complicated and expensive than the company expected.
“Our core competency is media,” said Paul DeGooyer, senior vice president of electronic games and music for MTV Games. “Let [Activision] take on the burden of getting those super-tight margin instruments out there.”
The problem with marketing a game like Rock Band is, not only the super-tight margins, but the fact that so much retail space is being used in those boxed instruments that are becoming ubiquitous in peoples homes (and closets).
MTV Games, deemphasizing the instruments, looks to capitalize on Rock Band instrument sales in a different way. The upcoming The Beatles: Rock Band has a premium price of $250 with special replica instruments familiar to any fan.
MTV Games is also packing in the older, generic instruments in a value pack with The Beatles: Rock Band for almost $100 less than The Beatles full edition in an effort to move inventory that has just been sitting on store shelves for awhile now.
A great move would be to just focus on premium versions of Rock Band with special instruments, created in much lower quantities but for a much higher margin, akin to what MTV Games is currently doing with The Beatles: Rock Band. They may eventually give up the instrument market to Activision (who, frankly, have better quality hardware), but it doesn’t matter since those instruments work on both games.
