Billboard reported Monday that MTV Games, a division of Viacom Inc. (NYSE: VIA), will release the second installment of the popular Rock Band game this September. Rock Band first came out late last year in direct competition with Activision Inc.'s (NASDAQ: ATVI) Guitar Hero franchise, but where Guitar Hero only offers guitar simulated play, Rock Band offers a wide range of instruments and vocal game play. Rock Band also features an online store where users can download additional tracks for the game.
Rock Band 2 will be released at a time when a number of other music-related games, and according to MTV Games the game will feature "new and 'improved' drum and guitar controllers, a larger soundtrack, and new online modes and customization options." Additionally, all previous controllers and downloaded songs will also be compatible with the new game, so players will not lose those features or be required to buy new input devices. The game will initially only be available on Microsoft Corporation's (NASDAQ: MSFT) Xbox 360 platform but will expand to other systems by the end of the year.
Rock Band and Guitar Hero alike have revolutionized many listeners' interface with the music they love, simply because it expands the "play-ability" of many users who may not have ever picked up or tried to play actual instruments. Those listeners aren't lazy by any means, but these two game franchises expand the experience of playing music in a way that has never been possible before.
The Financial Timesreported last week that representatives for The Beatles, Activision Inc. (NASDAQ: ATVI), and MTV Games, a division of Viacom Inc. (NYSE: VIA), are in talks about developing Beatles-themed video game versions of Guitar Hero and Rock Band "in a move that could pave the way for a broader licensing of the Fab Four's catalog." Although the final deal would eventually be worth several million dollars, it would have to win over both Apple Corps and the EMI Group, the two companies that oversee the band's business interests and the master recordings.
The Beatles have been one of the major artists to resist any move into the digital world, but if such a deal were to occur it would likely happen simultaneously with any move by The Beatles into digital stores and the digital market. In the past year and a half, numerous rumors have appeared that cited 2008 as the year that would see the move, including comments made by Olivia Harrison, George Harrison's widow. Unfortunately, no such appearance by the band into stores like Apple Inc.'s (NASDAQ: AAPL) iTunes or Amazon.com Inc.'s (NASDAQ: AMZN) MP3 Store has happened even with a new management team led by former Sony BMG executive Jeff Jones.
Any deal would send a massive shockwave through the music industry and no doubt come with numerous marketing and advertising techniques that have become popular and successful in recent years. Although many Beatles purists and fans might be put off by an iTunes-themed commercial featuring The Beatles and the band's music, the exposure provided by such a method would increase awareness of the band to younger and newer audiences.
At least one of my stocks is doing pretty well in this terrible, depressing market environment. Activision (NASDAQ: ATVI) hit a new 52-week high of $36.84 on Tuesday. It closed a little below that, but it was a great, high-volume day for the stock, one that saw the shares rise almost 5%.
Yes, with the Dow Jones index shedding 100 points, with every other stock in my portfolio in the red, including MFA (NYSE: MFA), which closed down to $6.66 -- the number of the beast, my friends -- Activision not only held its own, but it powered higher. Perhaps it's due to the new Guitar Hero game coming out for the DS. Perhaps there's a new wave of excitement over the merger now that investors are receiving their documents (I just got mine the other day, a big book full of wonderful information about the Activision/Vivendi agreement). No matter, though, it was Activision's day, since competitors Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) were down Tuesday, and THQ (NASDAQ: THQI) closed up only four measly pennies.
I love this price action, and I think it might be predicting a prosperous Q4 holiday season for the company, which will eventually be called Activision Blizzard after the merger. I'm also hoping the action indicates that the stock will be reasonably stable during the summer, which I think is going to be rough on the markets as oil and inflation headlines dominate the tape.
The next installment of Activision, Inc.'s (NASDAQ: ATVI) Guitar Hero franchise, Guitar Hero: Aerosmith, is coming out this month, but that has not stopped rumors about future installments, namely one based on the music and career of Metallica. No official announcement from Activision has been made, but Billboard cites a recent SEC filing and a Gamespot post that fuels the rumor. According to Gamespot, the new game is the second rumored title relating to Metallica, a vehicle-based shooting game was announced and canceled a few years ago.
Guitar Hero 4, now known as Guitar Hero: On Tour, is expected for release later this year, but if speculation is correct then a Metallica-based game could see release next summer similar to the release schedule for the Aerosmith version. On Tour will feature a full compliment of instruments like the Rock Band game. Guitar Hero: Aerosmith follows the career of the band from their beginnings in Boston and uses the band's music prominently, "along with a smattering of songs from bands that Aerosmith wanted included." Aerosmith appears in the game as motion-captured animated versions of themselves.
Like Aerosmith, a Metallica-based game would provide a lengthy career storyline to follow, as well as numerous songs that have remained a staple of the band's live acts over the years. It would also present an interesting case to examine success with Metallica since the band seems doomed forever due to band member's stances on illegal music trading and Napster in the late 1990s. Not that the band does not have a large and loyal fan base, but the lasting stigma from that debacle has not abated in the last few years.
Activision Inc. (NASDAQ: ATVI) doesn't want to let Rock Band have all the fun. According to Reuters, Activision wants to turn its Guitar Hero platform into a truly direct competitor to its colleague. Come the fall, the publisher will release Guitar Hero World Tour, a package that will include a guitar, a microphone, and a drum set. There will be online capability; players will also be able to create their own tunes via a suite of digital-music tools. And all the major platforms from Sony Corporation (ADR) (NYSE: SNE), Microsoft Corporation (NASDAQ: MSFT), and Nintendo Co., Ltd. (OTC: NTDOY) will be getting this game.
Rock Band, which is developed by Viacom, Inc. (NYSE: VIA)'s Harmonix and sold by Electronic Arts (NASDAQ: ERTS), is no longer unique now that Activision has expanded the depth of its famous brand. Indeed, Guitar Hero still thrived even in the face of Viacom's music game, but it looks like Activision is taking no chances; the publisher obviously realizes that, as time goes on and upgrades to Rock Band come along, the Guitar Hero franchise might see eventual erosion of its fan base as the fad matures. Evolution would certainly be justified at this point.
Yet, I am of two minds about this move. On the one side, I can understand why this had to be done. And I can see why it should work out; after all, Activision's brand equity when it comes to this Guitar Hero game is incredible. Seriously, if you don't know, a lot of players out there, both hardcore and casual, love this platform. However, there's another side to me that wonders if traditionalists won't necessarily enjoy the aspect of the additional instruments. Do they add value, or do they now make the brand seem clunky and complicated? On a gut level, I always theorized that those who chose Guitar Hero over Rock Band relished the fact that it was just one guitar. Then again, going back to the brand-equity thing, maybe current players will now want to try out a more complex musical-gaming experience since the Guitar Hero name is attached.
No matter how you slice it, whether you look at GAAP or non-GAAP statistics, Activision, Inc. (NASDAQ: ATVI) kicked it during the quarter. And I mean really kicked it.
Net sales for Q4 set off at warp factor 11, rising 93% to $602.5 million. Earnings per diluted share on a reported basis came in at $0.14, reversing a year-ago loss of $0.05 per share. For the full fiscal year, Activision grew revenues by 92% -- again, sales growth in the 90's! -- to $2.9 billion. Earnings per diluted share were $1.10 in 2008 versus a measly $0.28 in 2007. Take that, Electronic Arts Inc. (NASDAQ: ERTS) and THQ Inc. (NASDAQ: THQI)! Activision is truly taking advantage of consoles from Microsoft Corporation (NASDAQ: MSFT), Sony Corporation (NYSE: SNE), and Nintendo Co. Ltd. (OTC: NTDOY). Titles such as Call of Duty 4, Guitar Hero, and Transformers drove the results -- like I always say, it's always about the quality of the slate. On an adjusted basis, earnings beat expectations by a whopping $0.12, according to Briefing.com.
I bet EA is really wishing its deal went through for Take-Two Interactive Software, Inc. (NASDAQ: TTWO) right about now! I believe Activision will continue to do well the rest of the year, and I love its fundamentals, but what about the stock? As of this writing, it's up about 3%. If you are looking to trade Activision, I'd probably wait until all the earnings excitement is over and be patient for pullbacks as the market may perceive that everything is priced in at the moment now that the news is out.
Disclosure: I own shares in Activision; positions can change at any time.
Viacom (NYSE: VIA) issued its Q1 earnings results on Friday. The conglomerate seems to be doing all right with its strategy of leveraging content to drive growth. Revenues were up 15%, and adjusted diluted earnings per share jumped 29% to $0.44. But it can be seen that there's a dichotomy going on if you look into the performance of the two main operating segments: media networks saw its operating income rock up 15% while filmed entertainment tallied up an operating loss for the quarter. Even though that loss was narrowed by over 40%, I always get disappointed when I see a studio in the red -- it reminds me that the movie business is a risky, oftentimes low-return one.
But, should you be down on Viacom's movie business right now? Maybe not, since Paramount is currently distributing Marvel's (NYSE: MVL) Iron Man -- seeSheldon Liber's recent article about the film. That should hopefully improve things going forward, as might Indiana Jones and the Kingdom of the Crystal Skull. Viacom also will be distributing Kung Fu Panda for DreamWorks Animation (NYSE: DWA). Sumner Redstone is certainly counting on these projects to be huge. And speaking of huge, the company's Rock Band continues to fuel the media networks segment -- it's sold by Electronic Arts (NASDAQ: ERTS), and it is apparently holding its own against Activision's (NASDAQ: ATVI) Guitar Hero. The synergies between MTV and the music system are obviously pushing this one. Maybe the studio should get in on the video-game action by greenlighting a movie based on Rock Band -- maybe Jack Black could star in it!
Overall, I think Viacom is performing as it should, and I hope the movie division can bring in some profits during the coming months (I think it will). As for the stock, I'd ideally like to see it a bit lower before I'd consider buying it.
Disclosure: I own shares of Activision and Marvel; positions can change at any time.
Remember Motley Crue? They were a popular hair band in the 1980s, and they're still around today. In fact, in an effort to remain cool, the Crue will be releasing its new single on the Rock Band video game platform. Rock Band comes courtesy of Electronic Arts Inc. (NASDAQ: ERTS) and Viacom, Inc. (NYSE: VIA), the latter being the owner of developer Harmonix. It is also the competing music game to Activision, Inc. (NASDAQ: ATVI)'s Guitar Hero franchise.
I'm an Activision shareholder, and I'm always watching for signs that the Guitar Hero phenomenon might be on its way out. No, I haven't seen any convincing ones yet, but since Reuters made a mention of this Crue deal, it caught my attention. As one might imagine, I would have preferred to have seen Crue release the song through Guitar Hero, but whatever, guys, have a blast with the competition! (Yeah, I'm not bitter or anything). The Crue will also be promoting Rock Band while it's on tour, according to this press release.
So, users will be able to download the song, called Saints of Los Angeles, via the online stores of Sony Corporation (NYSE: SNE) and Microsoft Corporation (NASDAQ: MSFT). I wish Motley Crue luck with its EA-Viacom hookup, but I prefer playing the current music-video-game trends via Guitar Hero through my Activision shares, which are currently trading well above my cost basis. The shares haven't done much lately, but I'm not ready to sell just yet... rock on, Activision!
Disclosure: I own shares in Activision; positions can change at any time.
If I had a dime for every time a person asked me "Is Rock Band evercoming out for the Nintendo (OTC: NTDOY) Wii?" I'd have more money than Electronic Arts (NASDAQ: ERTS) and Viacom (NYSE: VIA) combined. Seriously. Now, though, Wii fans can see the light at the end of the tunnel because Rock Band debuts on the popular platform on June 22 of this year. I don't think any gamer on the planet expected the title to not come out for the Wii.
Not only is this great news for Wii users, but it's also excellent information for shareholders of EA and Viacom. As Richard Driver pointed out, the game is a valuable asset for Viacom. EA benefits because Rock Band is the publisher's answer to Activision (NASDAQ: ATVI)'s Guitar Hero franchise. In fact, Nintendo really stands to benefit this summer from both Guitar Hero and Rock Band because a version of the former will be coming out for the Nintendo DS handheld. There's definitely going to be a rock rumble happening when the dog days are upon us, although I'd expect that Rock Band for the Wii will have a much bigger impact. That doesn't seem too hard to predict considering that music games of these types work better on consoles, in my opinion.
This is going to be one hell of a test for Activision, EA, Viacom and the Wii. Will users adopt Rock Band in droves? Will the Guitar Hero franchise be threatened? In theory, the Wii is a console for casual gamers who just like to play some tennis or a few of the extremely fun midway diversions that can be found in the awesome title Carnival Games -- will they go for something more expensive and more involved? My prediction -- Rock Band will be a hit, but it won't sell a ton of units until the holiday shopping season is upon us. Can't wait to see what happens come June. Till then, rock on, my friends!
Disclosure: I own shares of Activision; positions can change at any time.
I don't have to tell you how utterly, unbelievably, unequivocally popular Activision's (NASDAQ: ATVI) Guitar Hero game is. It's currently selling tons of units on the Nintendo (OTC: NTDOY) Wii, the Microsoft (NASDAQ: MSFT) Xbox 360 and the Sony (NYSE: SNE) PlayStation platforms. It's too tough for me to play, but legions of others are having a grand old time living out their rock-and-roll fantasies.
I've been wondering for a while now if the DS would ever get a Guitar Hero game. Let's be honest -- all of us know several kids and/or adults who own one of these handhelds; they're like everywhere (and, yes, I want one too, to be frank, although I hate small game devices). I was thinking that Activision was leaving a lot of money on the table by not programming a version for Nintendo's handheld. But then I thought that a DS version would be like an insult to the image of the franchise -- how could a developer possibly capture the feel of the console iterations on the little DS? Didn't make sense to me, so I figured we'd never see a DS version.
Activision (NASDAQ: ATVI) can rock its shareholders just as hard as a blood-spitting Gene Simmons at a Kiss concert. And we all know why -- the Guitar Hero franchise is, simply put, one of the most popular videogames out there, and it is available for all the major console systems from Sony (NYSE: SNE), Microsoft (NYSE: MSFT) and Nintendo (OTC: NTDOY). It's also a pain in the neck for other publishers such as Electronic Arts (NASDAQ: ERTS), Take-Two (NASDAQ: TTWO) and THQ (NASDAQ: THQI), since they have to put up with the franchise's dominating power. But guess what, the inevitable has come to pass -- Activision is being accused of patent infringement!
Yes, you can't be very popular, you can't rake in millions and millions of dollars in profit for shareholders and expect to get away unscathed. Gibson Guitar, according to this Associated Press piece, believes Guitar Hero infringes on a patent it holds for a rock-concert simulator. The patent apparently goes back to 1999 and it contains a description for a system that uses a 3-D headset in conjunction with a musical playback. Activision decided to file a suit to get a court decision declaring that it is not infringing on any existing patent.
Earlier in the week, CBS Corporation (NYSE: CBS) sent out its earnings broadcast. Now it's time for Viacom, Inc. (NYSE: VIA) to tell investors how things are doing. CBS and Viacom, as I'm sure you know, used to be part of the same media conglomerate, but they went their separate ways to see if being apart would help shareholder value. So it's always fun to compare the two when they release their numbers (check out Brent Archer's coverage of CBS' quarter and his feelings in terms of stock strategy).
For the fourth quarter, Viacom, which competes with companies like The Walt Disney Company (NYSE: DIS), News Corp. (NYSE: NWS), General Electric Company (NYSE: GE)'s media asset NBC Universal, and Time Warner (NYSE: TWX), was expected to earn $0.83 per share. Earnings from continuing operations came in at $0.83 per diluted share. That was quite a nice rise compared to the $0.69 per diluted share from continuing operations booked one year ago. Plus, the revenue increase for the current quarter was a nifty 19%. For the full year, earnings from continuing operations rose a more subdued 10% to $2.41 per diluted stub; this performance was accomplished on a revenue gain of 18%.
Both media networks -- Viacom owns the MTV suite of cable channels -- and filmed entertainment -- Viacom owns Paramount -- posted strong double-digit revenue gains for the quarter and year. Drivers included films by DreamWorks Animation SKG, Inc. (NYSE: DWA), which the company distributes -- those films would be Shrek the Third and Bee Movie. Also, Transformers helped to power results. Another product that tuned up the quarter was Rock Band. It was developed by Harmonix, which Viacom purchased for its MTV unit, and it is distributed by Electronic Arts (Nasdaq: ERTS). It's a rocking competitor to Activision's (Nasdaq: ATVI) Guitar Hero concept.
The Financial Times 
The week in preview: New quarter earnings kick-off
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
