Activision: $2 billion Guitar Hero milestone, GH5 confirmed

Activision has officially confirmed earlier reports that it will expand its 2009 rhythm game line-up this Fall with Guitar Hero 5, DJ Hero, and Band Hero. Additionally, the publisher has announced that the franchise has reached a USD 2 billion milestone, and is only the third gaming franchise to do so.

According to a press release issued today, Guitar Hero 5 "gives players an unprecedented level of control over the way they play the game with the ability to drop in and out of songs and change band members, instruments and difficulty levels on the fly." Band Hero meanwhile is an attempt to expand the franchise to a younger audience, and DJ Hero, which has seen some court attention recently, introduces a brand new turntable peripheral. All three titles are slated for fall of this year.

During a conference call discussing the publisher's quarterly financial results, Activision expanded on its music genre strategy, revealing that the Guitar Hero franchise has now generated USD 2 billion in sales.

In response to a question by Deutsche Bank analyst Jeetil Patel, Activision CEO Robert Kotick said "We feel very good about our holiday slate."

"The Guitar Hero franchise in fact, this quarter, surpassed the USD 2 billion dollar mark, and was only the third franchise in the history of gaming, besides Super Mario and Madden, to ever achieve that milestone," he continued. "So, it's got a strong foundation."

In regards to music titles from other publishers, Kotick said "We're much more focused on our own business than the overall market, because we can't really control what happens with the other titles, such as Rock Band, where we've seen a rather precipitous fall-off of that franchise."

Kotick also said that Guitar Hero Metallica is "off to a good start," and that the publisher will be sponsoring the band's European tour next month - just in time for the game's European launch. "We think that's going to be a very positive addition," he said.

"And then the triad that we've got in the holiday, between Guitar Hero 5, DJ Hero and Band Hero, we think will not only serve the current user base, but also provide significant additional expansion opportunities to new genres, so that we can start tapping into the significant number of households that are a part of the 170 million install base of hardware, but haven't yet engaged with Guitar Hero."

"So, I think we're feeling that we've got a very strong programme in the year ahead, and we're bullish on the music category."

In response to an additional question from Piper-Jaffray analyst Anthony Gikas, Activision CFO Thomas Tippl spoke briefly on the profit margins for the Guitar Hero franchise, saying that "margins have been compressed as a result of the hardware cost related particularly to the band products," but that the publisher expects profit margins on the franchise to improve later this year.

"What we expect to see is that margins will improve as we get into the latter part of the year, where we will have new hardware out that is not only better and innovative, but also cost-optimised," he continued, also adding that another factor for higher margins will be a heightened focus on software over hardware, which has significantly lower manufacturing and freight costs.