This should come as no surprise. Last summer, as I was preparing to submit the manuscript for Innovation and Marketing in the Video Game Industry, I wrote,
Despite all of the hype and the high-profile licensing agreement surrounding the Fab Four's video game appearance in Harmonix's The Beatles: Rock Band, MTV Games has conceded that the title didn't meet commercial expectations.
Nintendo almost destroyed the Mario brand in the 1990s by trying to extend the franchise too far. Not only did the quality of the games decline, people grew tired of the famous plumber. Guitar Hero and Rock Band appeared to be following the same path, as prices for games like Rock Band 2 and Guitar Hero Aerosmith plummeted. By the 2008 holiday season, band kits that once sold for $99 had to be discounted to $30 or less. Nevertheless, Harmonix, RedOctane, and Konami continued to release new rhythm games and spin-offs of existing titles.
When the game was finally launched a month later, sales exceeded expectations. However, the market issues did not disappear. At the time I wrote,
To reignite interest in the genre, Harmonix enlisted the support of the two remaining Beatles to create The Beatles: Rock Band. However, at $249, Harmonix may find that the game is so overpriced that not even the lads from Liverpool will be able to stimulate interest in the title.
Although it is still too early to give a final verdict on [The Beatles: Rock Band], even if it continues to sell well, the genre will have a difficult time maintaining the momentum generated by early versions of Guitar Hero and Rock Band.
A Typical Product Life Cycle
In fact, it didn't take long before sales fell off. According to the Gamasutra report, MTV Games general manager Scott Guthrie has been unhappy with the performance of the Beatles game. "We were expecting higher sales," Guthrie admitted. Nevertheless, Guthrie continues to maintain that factors other than market saturation, product life cycles, and diminishing marginal utility are at play. Specifically, he feels that the game would have performed better in a healthy economic environment.
We got caught in a few things that happened last year. It was a tough economy; there was a lot of competitive products out there, and I think Beatles probably had softer sales than it would have if some of those things weren’t in play...We really believe that with the launch of Rock Band 3 -- which is a significant upgrade to what we had before -- we believe we can take market share away from [Activision].
According Daniel Kahneman, a Nobel Prize winning behavioral economist, these types of statements reflect an unconscious psychological bias to be overly optimistic even when faced with overwhelming evidence, resulting in an “aversion to cutting one’s losses, often compounded by wishful thinking.” It also suggests that MTV may be unwilling to adjust its product strategy to ensure the longer term viability of the Rock Band franchise.
Kahneman, D. and Renshon, J. (2007) Why Hawks Win, Foreign Policy, pp. 34-38