Even with a $170 price tag...120k copies sold. I consider that a success.
The barrier of entry is HUGE and Guitar Hero 1) Costs less and 2) is a recognized brand name. There have been many examples of games with superior gameplay but get squashed by the big name games.
Also - YES, you need to do local multiplayer to really enjoy Rock Band.
There is no such thing as a console war. This is the first step to game design.