"They can still try to attract people through segmented offerings," Wilson said. "It's a classic consumer products strategy: Market the same product to different types of consumers."
Viacom's MTV Games business, which sold 2 million copies of its $189.99 Rock Band 2 instrument kits at a loss during the fourth quarter, is looking to make up the difference by selling more song tracks. It makes little or no money on the guitar controllers, drum sets and microphones, but selling music to play on those instruments is lucrative.
"As we move forward in 2009, we will be more focused on the software side of the business for Rock Band, which enjoys significantly better margins," Viacom Chief Financial Officer Thomas Dooley said in February during an earnings call with analysts.
The company said it had sold 37 million song downloads to Microsoft Corp.'s Xbox 360, Sony Corp.'s PlayStation 3 and Nintendo Co.'s Wii game consoles.
MTV also is betting that the Sept. 9 release of its game based on music from the Beatles will help rescue the franchise from a hard day's night battling Guitar Hero for market share. Rock Band continues to trail Guitar Hero, which enjoyed a two-year head start.
Both companies, however, are slogging through a tough economy.
"Consumers just aren't spending as much as they used to," Hwang said.
That's all the more reason for Matt Cloud and Ricky Hayner to continue hosting their free Rock Band parties every Thursday night at Big Wang's, a restaurant in Hollywood.
About 40 people turned out last week, about as many as when Cloud and Hayner started throwing their event 18 months ago.
"With the recession, people are still looking for cheap things to do," said Cloud, a 27-year-old assistant sound editor who lives in Hollywood.
"Nothing's cheaper than having a couple of beers and pretending you're a rock star. People still need to have fun."
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alex.pham@latimes.com
