NPD Group officially announced today that MTV/Harmonix's Rock Band franchise has made $1 billion at retail in North America alone.
Surprisingly it took the title only 15 months to hit the billion dollar mark, no doubt thanks to the big popularity of music rhythm games during the 2008 holiday season. The number includes not only software and peripheral sales, but downloaded songs as well. Harmonix has reported "... over 40 million individual paid song downloads from its 600 strong catalogue of tracks."
A little basic math will reveal that at the average price of $1.99 per song, that's $79.6 million in DLC sales into Harmonix's pocket. While a large portion of that surely goes into paying off the royalties to the record companies for use of the songs, it's still no small sum. MTV also stated that across all genres, Rock Band was number one game in 2008 based on sales revenue.
Looking at what goes into making a Rock Band or Guitar Hero song, it seems the overhead costs of each song would be fairly low. All the songs essentially use the same background videos and avatars, and each song just requires an accurate note chart for the instruments, or modifying the voice recognition software for the vocal track.
With record companies still scrambling to get people to actually pay for music, perhaps we'll be seeing more crossovers between retail albums with music games, like a free mp3 download of a track purchased for Rock Band, or a code to download Rock Band songs in the retail CD. Though given the miserly nature of the record companies, I doubt we'll be seeing the word "free" anywhere in the near future.