CASE STUDY: HARMONIX

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EMBRACE YOUR INNER ROCK STAR
Little more than three years ago you had probably never heard of Harmonix.
In 2005 the videogame design studio released Guitar Hero, which subsequently
became the fastest videogame in history to top $1 billion in North American

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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 Purple’s “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 videogames retail at $50–60). In 2006 Harmonix’s 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. Harmonix’s 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 Disney’s Epcot.
And while the software always proved technically impressive, people generally
expressed little initial interest in trying it out, or else it just didn’t seem like they
were having much fun.
In 2000, Rigopulos and Egozy hit on a concept that would engage consumers,
and Harmonix became a videogame company. Where The Axe software
provided an improvisation program with no set goal, most videogames 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, rhythm-based 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 initial interest proved too high for their publisher, Sony, to continue
funding them.
Harmonix finally found some measure of success in its 2004 release of
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Karaoki Revolution, in which players would use a microphone or headset periph-

eral 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 videogame 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
PART 1

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player’s hands. The game was released in November of that year, and when

CHAPTER 1
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,
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

An Overview of Marketing
Dylan. Gamers can also download additional songs, like The Who’s greatest hits,
onto their Xbox 360s and Playstation 3s at $1.99 per song, only a dollar more
than purchasing a song from Apple’s 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 videogames
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.36
Questions
1. What marketing management philosophy did Harmonix use at first and how
did their philosophy change?
2. As a firm, how do you think Harmonix would describe its business?
3. To whom was Harmonix’s product directed and how did they create a
product that would appeal to that audience?

COMPANY CLIPS

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CENGAGE
METHOD—LIVE CLEAN
Method, the innovative branding concept in household cleaning, was conceived
by roommates Eric Ryan and Adam Lowry during their drive to a ski lodge. Eric
had been thinking of ways to introduce design to the home care industry (i.e.,
cleaning products) and began talking about his vision to Adam. A chemical
engineer from Stanford University with a degree in environmental science, Adam
was the perfect sounding board. He soon realized that he could use his exper-
tise to create naturally derived, biodegradable formulas for the beautiful products
Eric had in mind.
Questions
1. Is method best described as having a market orientation or a societal-
marketing orientation?
2. How does method implement the marketing concept?

The higher your score, the more likely you

are to do business with the company you
thought of and recommend it to others. That
is, you have a commitment to the organiza-
tion and are likely a loyal customer. As you
read in Chapter 1, building relationships is a
central part of the market orientation!