Rock Band abandoning hardware, Guitar Hero focusing on new audiences

A screenshot from The Beatles: Rock Band. Credit: MTV Games.

The music video game genre has been in a profound slump this year, with sales down 46% so far, according to the NPD Group.

Part of that is due to the recession, of course, but part of it may be waning consumer interest in Guitar Hero and Rock Band. The games' publishers, Activision Blizzard and MTV Networks (owned by Viacom) have seen the impact on their bottom lines and are taking big steps to shake up their businesses as a result.

As a story in today's Times explains, the biggest change comes in the form of The Beatles: Rock Band, a risky bet worth tens of millions of dollars in royalties alone.

But as MTV launches the game with its distribution partner, it's also implementing a new strategy: Flee the hardware business. Sure, there's a limited-edition, $250 hardware package, but quantities are limited. And there's a $160 "value bundle" featuring original Rock Band hardware that MTV is eager to get rid of.

If you're new to music video games and want controllers for The Beatles: Rock Band, MTV has a preferred solution: Buy Guitar Hero.

“The opportunities around hardware are really limited,” said Scott Guthrie, general manager of MTV Games. “We are getting into a focus on software and [downloadable song] revenue streams.”

MTV Games senior vice president of electronic games and music Paul DeGooyer puts it even more abruptly: “Let others take on the burden of getting those super-tight margin instruments out there."

The "others," of course, is really one company, Activision Blizzard. And its CEO Bobby Kotick admits it's time for a change as well.

Activision and Double Fine settle lawsuit over Brutal Legend game [Updated]

Activision and Double Fine have buried the hatchet over Brutal Legend. Credit: Double Fine

Activision Blizzard this afternoon confirmed it had settled with Bay Area game developer Double Fine over the release of a highly anticipated heavy-metal music title, Brutal Legend, featuring actor Jack Black.

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FOR THE RECORD:
Video game settlement: An earlier version of this blog post and an Aug. 7 article in the Business section about Activision Blizzard Inc. reaching a Superior Court settlement with Double Fine Productions Inc. over Electronic Arts Inc.’s planned release of Double Fine’s video game Brutal Legend said that Activision probably received little or no compensation and may have settled to avoid losing in open court. The Times had no knowledge of the settlement terms and should not have speculated on the amount paid or the motivation for settling.

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"We have settled the lawsuit," said Activision spokeswoman Maryanne Lataif. "However, the terms are confidential."

The two companies have been embroiled in litigation since June, when Activision filed a lawsuit to prevent Double Fine from releasing the game in October. The title had originally been part of the games portfolio of Vivendi Games, which last year merged with Activision.

Believing that as part of the deal Activision had declined to publish Brutal Legend, Double Fine partnered with Electronic Arts to complete and publish the game. Activision's lawsuit threw a monkey wrench in those plans with the contention that Activision still had the publishing rights to the game. An EA spokesman likened the situation to "a husband abandoning his family and then suing after his wife meets a better-looking guy."

But tensions seemed to subside when a court hearing, set for this morning in Santa Monica, was canceled. Now it appears the Brutal Legend show will go on as scheduled.

[Updated at 6:30 p.m.: A person familiar with the settlement, who requested not to be identified because the details are being kept confidential, confirmed that Brutal Legend would be released in October, as Electronic Arts had previously planned. The settlement ends all litigation involving Double Fine, EA and Activision over the game.]

-- Alex Pham and Ben Fritz

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

Electronic Arts' Visceral studio loses leaders; unit is making Jack the Ripper game

Mitre Square, London, where one of Jack the Ripper's victims was found. Credit: Whistling in the Dark via Flickr.

The two top game creators at Electronics Arts Inc.'s studio in Redwood Shores, Calif., which was recently named Visceral Games, have bolted to competitor Activision Blizzard Inc.

Glen Schofield, the head of Visceral who also served as creative director on last fall's Dead Space, and Michael Condry, the studio's chief operating officer, will head up a new Northern California studio that Activision is opening in San Mateo, Calif.

An EA spokeswoman confirmed the departure, which was first reported on GameSpot. She added that the team at Visceral, which specializes in third-person action-adventure games, will continue work on upcoming titles Dante's Inferno and Dead Space: Extraction, as well as new unannounced titles.

Although she declined to elaborate, two sources close to EA told The Times that Visceral's next game would be Jack the Ripper, based on the 19th century British serial killer. It's not clear what the game would involve, but it's a natural follow-up of sorts to Dante's Inferno, which is also based on copyright-free historical material.

Dante's Inferno is scheduled to come out in the winter, meaning Jack the Ripper probably won't be released until late 2010 or 2011.

EA needn't worry about the departing developers ripping off Jack the Ripper. An Activision representative told GameSpot that its new studio would be working on a game based on one of the publisher's existing franchises.

-- Ben Fritz

Microsoft, Ubisoft creating short films based on Halo and Assassin's Creed

Who needs Hollywood? At Comic-Con today, video game companies are scheduled to reveal in two separate panels extensive details on their plans to produce short films based on their top franchises -- with no help from big shot movie studios.

As a story in today's Times explains, this portends a significant shift in the relationship between video game publishers and movie studios, which until now has primarily involved game companies licensing movie franchises from Hollywood studios.

On the Company Town blog, there's more details on just what these projects are. Microsoft, for example, is producing seven anime shorts set in the universe of Halo, its massively popular science-fiction shooter game. And Ubisoft is making three live action films that serve as prequels to its upcoming Assassin's Creed II game.

--Ben Fritz

Photo: On the set of "Assassin's Creed II: Lineage." Credit: Ubisoft.

Ghostbusters game sales ahead of Transformers and Up

Screen shot of Ghostbusters game, featuring the Stay Puft Marshmallow Man. Credit: Atari.

Ghostbusters, the game, has outpaced its blockbuster-movie-cum-game rivals. The title sold 440,000 copies in June, the month it released, according to a post in The Times' Company Town. Transformers: Revenge of the Fallen sold 296,000 copies, and THQ's Up, based on the Pixar Animation Studios film, sold 270,000.

Here's what Times entertainment writer Ben Fritz said:

Given that all those games were helped by tens of millions of dollars in marketing for their companion movies, whereas "Ghostbusters" hasn't had a theatrical presence since 1989, that's a notable accomplishment. It's also a much-needed boost for struggling publisher Atari and should benefit Sony Pictures, which licensed the rights.

There's some irony in the fact that Activision, publisher of the Transformers game, dropped Ghostbusters when it merged with the game's original publisher, Vivendi Games. 

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

ZeniMax raised $105 million to pay for id Software [UPDATED]

Credit: id Software.

ZeniMax Media raised $105 million to acquire id Software, according to a document filed today with the Securities and Exchange Commission.

Id Software, which created the Doom and Quake game franchises, stunned the game industry two weeks ago when it announced its acquisition by ZeniMax, which publishes the Elder Scrolls series of role-playing games developed by its Bethesda Softworks studio. The sale surprised many because id Software, based in Mesquite, Texas, had rebuffed numerous buyout offers over the years, preferring to maintain its independence.

Because both companies were privately held, neither was obligated to divulge the price.

The filing with the SEC suggests that the price may have been $105 million. That's what ZeniMax issued in the form of a "convertible note," so called because the holder of that bond can convert it into either cash or shares in the issuing company. It's unclear from the filing if ZeniMax used the entire amount to pay for id or whether the deal called for additional payment.

ZeniMax and id Software declined to comment on the filing.

ZeniMax, based in Rockville, Md., has deep pockets backing the company. In 2007 it snagged a $300-million investment from Providence Equity Partners, and its board of directors include retired baseball player Cal Ripken Jr., CBS Corp. President Leslie Moonves and Hollywood producer Jerry Bruckheimer, who in May announced his entry into the video game business.

Updated 6:42 pm to reflect the companies' denial for comment.

-- Alex Pham and Ben Fritz

Follow or random thoughts on games, entertainment and technology on Twitter @AlexPham and @BenFritz.

Warner Bros. emerges as sole bidder for Midway Games

All over but the shoutin' for Midway sale? Credit: Togoodtobe4gotton via Flckr.

Times up! The deadline for submitting bids to buy Midway Games passed Wednesday afternoon with just one offer -- a $33-million deal from Warner Bros. to purchase most of the bankrupt Chicago company's assets.

After Warner Bros. lobbed its offer in May, Midway had hoped to spark a bidding war that would jack up the price. A Chicago investment group and several game publishers had been kicking the tires at Midway, according to a source familiar with the discussions. But none pulled the trigger on a deal.

"No other bids came in, so there's not going to be an auction," confirmed Midway's spokesman, Geoff Mogilner. 

Before the deal goes through, the Delaware court overseeing Midway's bankruptcy will have to resolve complaints by several creditors about the acquisition process. One of those is producer Larry Kasanoff's Threshold Entertainment, which produced two previous "Mortal Kombat" films and claims it has exclusive big-screen and TV rights to the series. Also objecting to the sales process is Tigon Studios, a production company controlled by Vin Diesel, which claims it is owed $200,000 for the star's work on the recently released game "Wheelman."

The next court hearing to address those and other issues will be July 1. As soon as they are resolved and the bankruptcy court officially approves Warner Bros.' bid, the acquisition will close 10 days later, Mogilner said.

Warner Bros. declined to comment. An acquisition would buttress Warner's growing game portfolio, according to a report today in the Times.

The offer includes most, though not all, of Midway's assets, including the company's Mortal Kombat, Spy Hunter, Joust and Wheelman franchises. It also includes two of Midway's four development studios -- one in Chicago and another in Seattle. It remains unclear what will happen to the company's studio in Newcastle, U.K., which makes the Wheelman games, and its studio in San Diego, which is developing a wrestling game based on a license with TNA Entertainment. Those assets could potentially be sold to another buyer.

-- Ben Fritz and Alex Pham

E3: Activision files lawsuit claiming it owns one of EA's biggest games, Brutal Legend

Brutal Legend is on display as an Electronic Arts offering at the E3 this week. Credit: Jonathan Alcorn / Bloomberg News

On the show floor at E3 today, Electronic Arts' Brutal Legend is one of the hottest and most heavily promoted games.

Behind the scenes, it's also the source of the day's biggest drama as Activision Blizzard, the country's biggest video-game publisher, has filed a $15-million lawsuit against developer Double Fine Productions and is attempting to prevent competitor Electronic Arts from releasing the game this fall.

Brutal Legend, which stars Jack Black as a heavy metal roadie fighting against mystical demons, was originally set to be released by Vivendi Games. Last year, that company merged with Activision, whose executives took charge of the new entity known as Activision Blizzard.

It appeared at the time that Brutal Legend was one of numerous games previously in production at Vivendi that Activision Blizzard was dropping when it wasn't on a short list of titles the new company announced it was picking up.

As a result, few were surprised at reports that developer Double Fine was negotiating with other publishers, or when Electronic Arts announced last December that it would release the game this fall.

But in its lawsuit, filed Wednesday in California Superior Court in Santa Monica, Activision claims it was caught unaware. The complaint states that the two companies had been in negotiations over the future of Brutal Legend after Double Fine claimed in February 2008 that it would need an additional $7.6 million on top of the original $15.4-million production budget to complete the game. After learning of the deal with EA, Activision sent Double Fine a cease-and-desist letter.

The complaint claims that under Vivendi's deal with Double Fine, which stayed in effect after the merger, the developer was not allowed to seek a new publisher unless the original agreement was terminated by Activision Blizzard. It also claims that neither Double Fine nor EA have paid back Activision Blizzard any of the game's original production budget.

"Double Fine intends to unilaterally transfer Activision's $15-million investment to one of Activision's chief competitors, without anyone paying Activision a nickel in return," the lawsuit states.

Reports that Activision didn't recognize EA's right to release the game first surfaced in February.

Executives at Double Fine have yet to provide their own interpretation of the events of the last year. However, it appears that the developer, which has been represented in its negotiations with EA by the Creative Artists Agency, believes Activision Blizzard gave up its rights to Brutal Legend after the merger closed last summer and it didn't affirmatively decide to publish the game.

Tim Schafer, chief executive of Double Fine and creative director of Brutal Legend, released a brief sardonic statement today: "Hey, if Activision liked it, they should have put a ring on it. Oh great, now Beyonce is going to sue me too."

-- Ben Fritz

E3: Dante's Inferno protest [UPDATED]

About 13 people gathered outside the Convention Center in what appears to be a marketing stunt. Credit: Tony Pierce / Los Angeles Times

Update June 9, 3:14 pm: Electronic Arts Spokeswoman Tammy Schachter has confirmed that the "protest" was a publicity stunt. But that hasn't stopped some journalists, including ourselves, from thinking it was real. After the recent ruckus over EA's Godfather 2 gag, the score appears to be rogue viral marketing 2, game journalists 0.

It now appears that the protest against the Electronic Arts game "Dante's Inferno" that we posted about Wednesday was actually a publicity stunt arranged by EA itself. A brochure handed out by the protesters -- or is that actors? -- points to a website, wearesavedgroup.org, which appears designed to promote "Dante's Inferno" as much as bash it. There's a video full of game footage, a link to the trailer, and a link to the official Dante's site.

The site was registered on Monday, June 1, through Domains By Proxy, a company that lets people set up websites without disclosing their identity.

-- Ben Fritz

E3: Protesters target Dante's Inferno game [Updated]

[Updated June 4, 12:15 p.m.: It turns out the protest wasn't a protest, but actually a publicity stunt. Read more about it here.]

It isn't all playing games and doing business at E3 this year.

A small group of 13 protesters had attendees gawking by one of the entrances to the Los Angeles Convention Center. The object of their ire? Electronic Arts' upcoming video game based on the literary classic "Dante's Inferno," which is on display at the show.

The protesters, who came from a church in Ventura County, held signs with slogans such as "trade in your playstation for a praystation" and "EA = anti-Christ" as they marched and handed out a homemade brochure that warns, "a video game hero does not have the authority to save and damn... ONLY GOD CAN JUDGE. and he will not judge the sinners who play this game kindly."

Matthew Francis, one of the protesters, said he and his fellow church members were particularly upset that Dante's Inferno features a character who fights his way out of Hell and uses a cross as a weapon against demons.

"We think this game should never come out," he said, before asking a reporter to convey his message to executives at Electronic Arts inside the show, where non-industry professionals are not allowed.

-- Ben Fritz

Photo: Tony Pierce / Los Angeles Times

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