Fascinating. This really does prove a bad management iceberg can sink even a Titanic like Rock Band, at least in fiscal terms.
I agree also that returns are going to decrease from here on out most likely. Many/most people who are interested already have instruments, and that means much less sales of those if they keep new games backward-compatible with the old instruments. They may decide to ditch compatibility and make new/better instruments. But that presents the dilemma of (1) extra development costs for new instruments; and more importantly, (2) that people will feel ripped off/betrayed when new games don't work with the expensive pieces of plastic they've already sunk hundreds of dollars into, and won't buy the new software as a result. So bottom line is there really is less profit potential in the future, especially since with two major franchises and at best a static customer base this is now a crowded niche.
In Memoriam RVW Jr.
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