Pachter: Activision right to buy Red Octane instead of Harmonix

Posted by Alexander Sliwinski
April 13, 2007

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In the wake of Red Octane's controversial Guitar Hero II launch on the Xbox 360 and MTV's purchase of Harmonix --- the original developers of Guitar Hero -- there's one big pink elephant question floating around the industry: Did Activision make a mistake when they purchased publisher, peripheral manufacturer, Guitar Hero rights holder Red Octane instead of developer Harmonix?

Michael Pachter, managing director at Wedbush Morgan Securities, thinks Activision made the right decision, "Would you pay $150 million dollars for someone who ripped off [Konami's] Guitar Freaks? The game is fun, I totally respect Harmonix, I'm sure Red Octane turned to them [with Guitar Hero] and said let's figure out a way to rip off Guitar Freaks and help sell our peripherals ... I think at the end of the day, the MTV/Harmonix game [Rock Band] will be a good game, it will cannibalize market share. I think it's good for consumers and it'll make Activision and Neversoft work harder [on Guitar Hero III]."

The entire situation between Red Octane and its former developer Harmonix has become very complex. With Activision's purchase of Red Octane and MTV's purchase of Harmonix the two companies are on very separate paths. Red Octane has retained Neversoft to develop the next Guitar Hero. Red Octane retained all rights to Guitar Hero, including the look and -- most importantly -- the guitar.

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