Will Rock Band Shut Off Guitar Hero's Mic?

Activision (Nasdaq: ATVI  ) is doing gangbuster business, in large part because of the spirit of rock 'n roll. You know what I'm talking about -- the Guitar Hero franchise is super hot, and it's giving air guitarists from all over the opportunity to play something other than the air.

Electronic Arts (Nasdaq: ERTS  ) , Activision's ace competitor, wants in on this axe action, and is looking to Viacom's (NYSE: VIA  ) MTV for a little help. Both sides share part of the winning formula: Last year, MTV acquired Harmonix, the developer behind the Guitar Hero software, while Activision acquired Red Octane, the publisher behind the series. The end result puts Harmonix competing against its former wunderkind application. But their strategy is simple -- up the ante. Instead of just one or two guitarists, why not go for a whole band? Thus, Rock Band was born.

Rock Band will feature guitar, bass, drums, and vocals. In addition, players will be able to download whole albums. First up will be a classic from The Who -- any of you out there remember Who's Next? I bet a lot of you do. It features the legendary tune "Baba O'Riley", which is the accurate name for the song that everyone insists on calling "Teenage Wasteland."

So, should Activision shareholders worry while EA investors celebrate?

First, let me say that EA is doing the right thing. Not only is it proper strategy to establish a bit of real estate in this hands-on, musical genre, but dealing with MTV brings a lot of benefits. You just know that the music channel will leverage its broadcast assets to maximize the promotional value for Rock Band.

Second, I'd say that Activision shareholders maybe should worry -- but only in a small, healthy way. Having a little competition around might not be such a bad thing. The publisher knows it's going to have to pull out all the stops to ensure that its next Guitar Hero game, which is being developed by Neversoft, will still appeal to its hardcore base as well as a whole host of new groupies. Still, when the creator of Guitar Hero takes the playing field to the next level, you know a lot of mindshare will be focused on the competing product.

The real wild card might be the price. There's been some speculation as to how high Rock Band will set you back, including one report that said a $200 price point is possible. EA, however, was quick to deny that such a profligate cost existed, stating that the eventual price tag will be reasonable. A high cost could inhibit success.

Whatever the price turns out to be, there's no doubt that EA is stepping up to the mic and belting out its best imitation of Roger Daltrey's power-scream in Won't Get Fooled Again. Come this fall, when Rock Band is available on Sony's (NYSE: SNE  ) PlayStation 3 and Microsoft's (Nasdaq: MSFT  ) Xbox 360, Activision will need to have all its licks and chops in order. And with both companies reporting earnings this week, they might offer additional insight on these next-hit wonders. Let the battle of the publishers begin ...

More Foolish fun with EA and Activision:

Activision and Electronic Arts are members of the Motley Fool Stock Advisor recommendation list. Sign up for a free 30-day trial of the service with no obligation whatsoever. The Gardner brothers can help you construct a long-term, wealth-building portfolio. Microsoft is a member of the Motley Fool Inside Value portfolio.

Fool contributor Steven Mallas owns shares of Activision. As of this writing, he was ranked 9,803 out of more than 60,000 participants in the Motley Fool CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.


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