To convince more people to buy its video games, Activision Blizzard Inc. is relying on plastic guitars, disc jockey turntables and motion-sensing skateboards.
These are the new generation of video game controllers on current and upcoming Activision titles, and they've been turning people who wouldn't normally buy video games into players and reliable customers.
The Santa Monica-based publisher's "Guitar Hero" franchise, for instance, has been a chart-topper because players seem to love its guitar-shaped controller that's easy and natural to use. Traditional controllers, in contrast, are more intimidating and have a complex set of buttons.
This year, the company will roll out two new games with special controllers: "DJ Hero," which features a turntable controller that players use in rhythm with dance and hip-hop music, and "Tony Hawk: Ride," a skateboard game played by balancing on a motion-sensing controller shaped like a skateboard.
The new titles will put Activision at the forefront of a movement by video game makers to introduce custom game controllers "peripherals" in industry speak to make their products appealing to a wider market.
"It's about how we create the ultimately entertaining experience that's going to engage mass consumers," Mike Griffith, chief executive of the Activision division of Activision Blizzard, told the Business Journal.
Swing their arms
Activision is not alone in finding success with specialized controllers. Nintendo Co.'s Wii console, which is played using a motion-sensing controller, has become a top seller because gamers swing their arms to play the games whether they're playing virtual tennis or swinging a virtual sword instead of just pounding buttons.
Other game publishers and console manufacturers are jumping on the motion-sensing bandwagon. At the recent Electronic Entertainment Expo in Los Angeles, Microsoft Corp. and Sony Corp. unveiled motion-sensing devices and special controllers for their Xbox 360 and PlayStation 3 consoles, respectively. A walk along the E3 floor found many custom-built controllers, ranging from golf clubs to steering wheels.
More casual consumers are drawn by games with custom controllers because they are intuitive to use. Conventional controllers for the Xbox 360 and PlayStation 3 consoles have over a dozen buttons, switches and triggers, and a player has to figure out what they do and all of them can do different things in different games. A guitar controller, on the other hand, is familiar and consistent.
The trend toward specialized controllers has helped power the video game industry to explosive growth. From 2006 to 2008, the industry grew more than 60 percent to $21 billion in the United States. About 40 percent of that growth came from casual gamers, including women and senior citizens in other words, people who otherwise might not buy a video game and would be more likely to try a game controlled by a steering wheel than a bundle of assorted switches and buttons.
"These markets are intimidated by complex controllers," said Jesse Divnich, an analyst with Electronic Entertainment Design and Research in San Diego. "But when you use peripherals, which essentially imitate the real-life motion of guitar or skateboard, people understand how the game works."
The appeal of custom controllers is profound: It makes the game more exciting by better integrating the player into the action.
"'Guitar Hero' lets you feel like a rock star even if you really can't play the guitar," Griffith said. "'Tony Hawk: Ride' lets you feel like you're doing all the tricks a professional skateboarder can do, even if you can't in real life. It's total immersion."
Activision stands apart from most other companies scrambling to get into the controller market thanks to the "Guitar Hero' franchise, which has sold 37 million copies to date worldwide and generated more than $1 billion in sales. The introduction of "DJ Hero" and "Tony Hawk: Ride" this year will mark a significant expansion of the company's controller innovation.
The financial rewards of custom-built controllers can be significant because games with special controllers often sell at a premium. The Xbox version of "Guitar Hero World Tour," which includes two guitar controllers, a drumlike controller and a microphone, sells for around $160. The typical Xbox game costs $60.
The manufacturing of custom controllers adds expenses for the publisher. But once consumers buy the controller, they're more inclined to buy future versions of the game. Those future sales should offset the upfront costs.
Activision hasn't disclosed how much it costs to manufacture "Guitar Hero" controllers. But Bobby Kotick, chief executive of Activision Blizzard, told the Business Journal in February that "Guitar Hero" has been "very profitable."
"It's the same way a company like Gillette operates," said Mike Hickey, a video game analyst at Janco Partners Inc. in Denver. "Sell them the razor, but make your profit by selling them the blades."
But building a special controller for a game doesn't guarantee success. The controller must be easy to use, well integrated and relevant to the game, or consumers will stay away.
What's more, getting into the hardware manufacturing side of the business can be tricky for companies that have historically specialized in software. Activision ran into delays last year trying to get enough of its "Guitar Hero" controllers to market from the factory in China where they're manufactured.
That led to shortages of the game during the crucial holiday sales period. Griffith said the company has since smoothed out the logistics.
The success of controller-based games hasn't been lost on publishers who don't yet have one on the market but want to broaden their audience. Agoura Hills-based THQ Inc. is working on its first controller-based game for release in 2010, Chief Executive Brian Farrell told the Business Journal at E3.
"We have something that we think is different from anything else out there and will give us a competitive advantage," Farrell said. "Beyond that, we can't say much."
But as more game companies toy with making their own controllers, it increases the danger of consumer overload.
"Obviously there's only so much room in the living room for these kinds of things," Kotick said. "We don't want to clutter things up."
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