I just sat down with Activision Blizzard CEO Bobby Kotick on the heels of the company's earnings. The stock took a massive hit after hours yesterday and this morning traded off dramatically . The company's decision not to continue its Guitar Hero franchise also raised some eyebrows.
Kotick explained to me why it made sense to kill the Guitar Hero brand in which the company has invested millions and millions. Demand has dwindled — no question — and Kotick says he partially blames the company for not innovating more. If he company had really revolutionized the genre with each successive game maybe families wouldn't have switched over to play Nintendo's Wii tennis or bowling .
In addition to that admission, Kotick added that the music game genre has enormous built in costs. Activision Blizzard entered the business of selling music — songs for the various games. The company was shelling out 100,000 to convert songs to its game format, then sharing the revenue with the range of rights-holders.
The return just wasn't worth it.