Wedbush Morgan analyst Michael Pachter has said he thinks Activision’s Guitar Hero franchise will generate roughly $550 million in revenue this fiscal year following news of the company’s improved third quarter and fiscal year financial projections.
Pachter predicted the company will sell six million Guitar Hero III: Legends of Rock bundles this fiscal year, along with 1.5 million disk-only sales. However, he also predicted a decline in sales to approximately 6.3 million units in the following year, as guitar-only packages of Rock Band become available. Currently, Rock Band is only available in a bundle featuring guitar, drums and microphone at a considerably higher cost than the single-controller Guitar Hero III.
“Because we expect to see increased competition from a Rock Band guitar-only bundle next year, we are reluctant to model significant growth from Activision’s Guitar Hero franchise,” Pachter said. “However, expansion into Japan could easily account for one million units of incremental bundle sales, and expansion of the category a la Rock Band could we drive revenues above this year’s level.”
Pachter also stated that investors have shown some doubt about whether Activision can post another year of revenue growth in 2009. In the company’s revised financial forecast, CEO Robert Kotick said fiscal year 2008 would represent the 16th consecutive year in which Activision showed a growth in revenue. Pachter predicted that without taking Guitar Hero into account, Activision should produce $1.74-$1.84 billion in revenue for the year.
