Outspoken games analyst Michael Pachter has predicted that Activision could live without Warner Music’s library and price haggling.
Earlier this month, Warner Music Chief Executive Officer Edgar Bronfman told the game industry, “The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small.”
Activision boss Bobby Kotick, whose company publishes Guitar Hero, rationalized the role music games play in boosting song sales.”We’re introducing a whole new group of artists to new audiences that is resulting in their iTunes downloads being exponentially higher than they would otherwise be, [as well as] new album sales and new merchandising opportunities,” he said.
Wedbush Morgan Securities analyst Michael Pachter told Gamasutra that in the potential price negotiations for higher royalties for Warner Music, Activision has the advantage and “doesn’t ‘need’ Warner Music at all.”
Pachter explained, “There are over one million songs out there – probably two million – and Activision is going to turn fewer than a thousand of them into Guitar Hero songs every year… and they don’t need to deal with a label that represents less than 20 percent of artists.”
Compared to the size of the music market, game companies translate very few songs into games every year. When they do, the sales of those songs are “multiplied” according to Pachter.
“Warner is wrong when it says you buy Guitar Hero for the song,” says Pachter. “You buy Guitar Hero for the game, and the song creates the challenge. It’s quite different from an iTunes download, where the only purpose is to listen to the music.”