1 Chapter Case Study:
Harmonix
Embrace Your Inner Rock Star
Little more than three years ago, you had probably
never heard of Harmonix. In 2005, the video game design studio released Guitar Hero, which subsequently
became the fastest video game in history to top $1 billion in North American sales. The game concept focuses
around a plastic guitar-shaped controller. Players press
colored buttons along the guitar neck to match a series of dots that scroll down the TV in time with music from a famous rock tune, such as the Ramones I
Wanna Be Sedated and Deep Purples Smoke on the
Water. Players score points based on their accuracy. In
November 2007, Harmonix released Rock Band, adding
drums, vocals, and bass guitar options to the game. Rock
Band has sold over 3.5 million units with a $169 price
tag (most video games retail at $50 to $60). In 2006,
Harmonixs founders sold the company to Viacom for
$175 million, maintaining their operational autonomy
while providing them greater budgets for product development and licensing music for their games. Harmonixs
success, however, did not come overnight.
The company was originally founded by Alex
Rigopulos and Eran Egozy in 1995, focused around
some demo software they had created in grad school and
a company vision of providing a way for people without much musical training or talent to experience the
joy of playing and creating music. The founders believed
that if people had the opportunity to create their own
music, they would jump at the chance. Their software,
which they eventually dubbed The Axe, provided basic
music composition tutorials and allowed participants to
use a joystick to improvise solos along to popular music
tracks. They attempted to market their creation through
an interface with Japanese karaoke machines, a demo
package deal with Intel, and even in an exhibition at
Disneys Epcot. And while the software always proved
technically impressive, people generally expressed little
initial interest in trying it out, or else it just didnt seem
like they were having much fun.
In 2000, Rigopulos and Egozy hit on a concept
that would engage consumers, and Harmonix became
a video game company. Where The Axe software provided an improvisation program with no set goal, most
video games were designed with a purpose and offered
competition, which helped engage, direct, and motivate
players. At the time, the market for music-based games
had not fully developed, but especially in Japan, rhythmbased games, in which players would tap different combinations of buttons in time with a beat or a tune, were
becoming increasingly more popular. Harmonix created
two games, Frequency and Amplitude, in which players hit buttons along with a beat, unlocking tracks for
different layers of instruments in a song. Neither of the
games proved especially successful, however, as both
were very complex and the expense of generating proved initial
interest too high for their publisher, Sony, to continue funding them.
Harmonix finally found some measure of success in
its 2004 release of Karaoki Revolution, in which players
would use a microphone or headset peripheral to score
points singing along to pop songs. In a way, it allowed
gamers to play the role and be a part of the music. In
2005, when Red Octane, a company that had found success making peripheral video game controllers, contacted
Harmonix about creating Guitar Hero, their philosophy
for attracting gamers was based off a similar concept.
Guitar Hero put players in the role of the lead guitarist
in a rock band, climbing its way to stardom. The game
soundtrack, filled with remixes of classic American rock
n roll hits, would appeal to a broader musical audience,
and the guitar controller put the iconic instrument of
American rock n roll directly in the players hands. The
game was released in November 2005, and when retailers set up in-store demo kiosks, game sales went through
the roof. After the success of the first game, even real
rock stars began to pick it up, demonstrating its broad
appeal. Music labels started to jump on the bandwagon,
CASE STUDIES
1
allowing the licensing of actual songs rather than just
composition rights. Rock Band 2, which came out in
September 2008, includes songs by AC/DC and Bob
Dylan. Gamers can also download additional songs,
like The Whos greatest hits, onto their Xbox 360s
and Playstation 3s at $1.99 per song, only a dollar
more than purchasing a song from Apples iTunes
music store. Licenses for Rock Band have even been
secured for songs by the Beatles, which have yet to be
licensed to iTunes or other electronic media stores. As
the market for music video games has matured, sales
are now expanding beyond the traditional gamers to
first-time gamers and even families. The Rock Band
franchise has sold over 5 million units since its release
in 2007, and with the release of Rock Band 2, the hits
just keep on coming.
2. As a firm, how do you think Harmonix would describe its business?
3. To whom was Harmonixs product directed, and
how did they create a product that would appeal
to that audience?
Questions
1. What marketing management philosophy did
Harmonix use at first, and how did their philosophy change?
2
CASE STUDIES
SOURCES: Don Steinberg, Just Play, Inc. Magazine, October 2008, 124134;
Ethan Smith, Yutari Iwatani Kane, Sam Schechner, Beatles Tunes Join Rock Band
Game, The Wall Street Journal, October 30, 2008. Available at http://online.wsj.
com/article/SB122531701276881747.html (accessed January 5, 2009);
Dan Gallagher, Is Guitar Hero Hitting Its Peak? MarketWatch, December 12,
2008. Available at http://www.marketwatch.com/news/story/guitar-hero-rockband-games/story.aspx?guid=%7B5CC35A95%2DB667%2D4E97%2DACB7%2
D3BA37BACA0FC%7D&dist=TQP_Mod_mktwN (accessed January 5, 2009).