Rock-and-Roll Fantasy

It's a warm Tuesday night at the Olde Fort Pub in Ft. Thomas, Ky., just across the river from Cincinnati, and the regulars are rolling in with the early spring breeze. The Reds game is on the big screen, but no one is watching. Kid Rock wails from the jukebox, but no one is listening. The pool table is lit, but no one is playing. Instead, the crowd is cheering on Casey Niehues, 23, as she rips off a blazing guitar solo on Guns N' Roses' "Welcome to the Jungle." But Niehues isn't really playing guitar; she's playing Guitar Hero, the wildly popular videogame.

As a virtual GNR plays on the flat screen behind the bar, the petite blonde supplants Slash by pounding colored buttons on the fretboard and strumming the plastic "string" on her ax, a game controller more akin to Fisher-Price than Les Paul. But don't try telling these revved-up rockers they're playing a game. "It's just totally different," insists Clem Fennell. Barmaid Rachel Wallingford hollers over the din: "It makes you feel like a rock star."

But as the band Boston (a Guitar Hero act) might say, it's more than a feeling. It's a cultural high-tech phenomenon that is changing the way we interact with music. Listening and watching aren't enough anymore. Now we want to play along. Millions of us are doing it, including gray-haired gaming newbies who still think Grand Theft Auto is a felony. Since Guitar Hero debuted in late 2005, nearly 15 million copies have rolled out retailers' doors, according to market researcher NPD Group. An additional 1.83 million copies of Rock Band, a new game involving guitar, bass, drums and vocals, have sold since it launched last Thanksgiving. In each game, you play along by pressing color-coded buttons on your instrument in time to colored dots coming at you on the screen. The more dots you hit, the better the song sounds and the more points you earn to get deeper into the 58-song set list. Together, the two multiplatinum hits represent a $2 billion market, analysts say.

Behind this rock-and-roll fantasy is Harmonix, a Cambridge, Mass., game developer staffed by rock-star wanna-bes and game geeks. The creator of Guitar Hero, and now Rock Band, was founded in 1995 by two quirky artists, who turned their musings as MIT Media Lab partners into a booming business. Today, these old college chums, Alex Rigopulos, 38, and Eran Egozy, 36, oversee a staff of more than 200 in the former offices of Harvard's Russian Studies department, where spike-haired and tattooed employees zip around on Razors among the detritus of musical instruments, both real and simulated. "It looks like we're having band practice," says online community manager Sean Baptiste as he strolls past a giant gong used to call staff meetings to order.

Harmonix's history is the classic "Behind the Music" story of the 10-year "overnight" sensation, complete with career setbacks and band breakups. In fact, Harmonix lost the Guitar Hero franchise when game giant Activision bought it, along with the game's plastic guitar maker, two years ago. So Guitar Hero III, the latest version, is now playing for a different company. But Rigopulos and Egozy hooked up with MTV, which acquired Harmonix in November 2006 for $175 million and bankrolled Rock Band. MTV, part of media giant Viacom, gave Rock Band the star treatment, with promotions at the Video Music Awards and even its own "Behind the Music" episode.

Having created a monster market in musical pantomime, the challenge for the gaming glimmer twins is topping themselves. But Rigopulos and Egozy don't seem daunted. Lounging on couches inside the "Star Chamber," a soundproof room where Rock Band plays on a continuous loop on a massive TV, CEO Rigopulos (a rock drummer) looks goth in his black hoodie, while chief technical officer Egozy (a classical clarinetist) looks preppy in his chinos and button-down shirt.

Ask them what's next and they'll calmly tell you they intend to foment a revolution in the music business. Just as MTV made people want to see, as well as hear, a new song, Rigopulos and Egozy aim to have consumers want to "play" a new song on their game. "People talk about music games as a new category of games," says Rigopulos, "but for me, music games are a new category of musical entertainment." Already the struggling music industry is benefiting. Forgotten heavy-metal hits like "Rock and Roll Hoochie Koo" are being embraced by a new generation of gamers.

After Rock Band began offering new songs online for $2 in December, it sold 6 million downloads in four months. Coming next: an entire album by the Who. (Pete Townshend's teenage son, a gamer, persuaded Dad to get with the times, says Rigopulos.) This month, Mötley Crüe became the first band to debut a single on Rock Band. Sure, they're 20 years past their prime, but it's a start. "Artists have approached us and said, 'I want to put out a Rock Band version of my new record the same day I drop it globally'," says MTV Networks president Van Toffler.

Egozy and Rigopulos didn't set out to save the music business. They just had a thing for rock and roll—and technology—and wanted to share it with nonmusicians. They met in a music-theory class as undergrads at MIT in the early 1990s, but didn't bond until studying computer music in graduate school, where their professor put them in an office together. "They had complementary skills," recalls Media Lab chief Tod Machover. "Eran is very social and brilliant at [computer] coding; Alex is a leader who is extremely calm and good at analyzing situations." The way they remember it, though, is that Egozy constantly tinkered with music programs, while Rigopulos whiled away hours playing Flight Simulator. Then one day, Rigopulos looked over and said, "Hey, Eran, we should hook this joystick onto your music program." The result: the Axe, a joystick music-improvisation game that became Harmonix's first product.

Like many Harmonix early efforts, the Axe was critically acclaimed but shunned by shoppers. In those lean first years, staff meetings were held in Rigopulos's bedroom at his parent's house, and he took power breakfasts at Cinnabon (where they still break bons together every May 10 to celebrate Harmonix's anniversary). Next came two rhythmic music games, Frequency and Amplitude, that presaged Guitar Hero by rewarding players with points for staying on the beat. Again reviewers raved, but buyers stayed away. Harmonix was in danger of becoming the Velvet Underground of the game business, critical darlings who couldn't pay their bills.

Then they got the call. Red Octane, a small company that made the dance mats for a hot new game called Dance Dance Revolution, had a proposition: would Harmonix create a guitar game if Red Octane supplied the plastic ax? Rigopulos and Egozy found the idea ridiculous. For starters, the silly toy guitar would drive up the price to $70—nearly twice the going rate for videogames. And a game that emulated dinosaur rockers seemed out of step with the times. "I remember thinking, 'Who even plays guitar anymore? Shouldn't we make a game with hip-hop?' " says Egozy. But given Harmonix's prospects, they decided to roll the dice. "It could only happen with these two small no-name companies," says Egozy. When the game first appeared in late 2005, it wasn't a hit. Then bars began replacing karaoke nights with Guitar Hero nights. Guitar teachers saw an increase in business. Old songs by Foghat and Blue Oyster Cult began moving on iTunes. Guitar World magazine started flying off newsstands.

After that came the cultural clincher: Detroit Tigers pitcher Joel Zumaya was sidelined during the 2006 American League playoffs with a sore wrist from playing too much Guitar Hero. "That's when we knew we had something," says Egozy. Harmonix included a tribute to its accidental endorser in the credits on its hit follow-up, Guitar Hero II: "No pitchers were harmed in the making of this game. Except for one. Joel Zumaya."

But Harmonix's joy was tempered. In the summer of 2006, game giant Activision acquired Red Octane and the Guitar Hero name for $100 million. Suddenly, Rigopulos and Egozy found themselves in competition with their old pals. "Activision sort of swallowed Red Octane whole," says Egozy, "and we lost touch with those guys." As with many breakups, bitterness ensued. Harmonix sued Activision this past March over unpaid royalties for Guitar Hero III, but then quickly withdrew the lawsuit to negotiate. Neither company would comment on the talks.

With MTV's backing, Harmonix could finally make the game of its dreams: a full-on rock show. To make it look authentic, the company hired real musicians to prance around a New York soundstage wearing electronic bodysuits that would capture their movements so they could be replicated by the game's avatar rockers. "It was terrifying, dancing around in a spandex suit with silver balls taped all over me," says Bryn Bennett, lead guitarist for Bang Camaro, who acted out the part of AC/DC ax man Angus Young.

The result, though, is a game that analysts say is the most realistic rock-star simulation yet. "Rock Band is a huge evolutionary step from Guitar Hero," says game analyst Billy Pidgeon of IDC Market Research. It was also a huge leap in price—$170. At that rate—and lacking a well-known brand—Rock Band has been outsold nearly four-to-one by Activision's Guitar Hero III, which launched in October for $100. But by February, Rock Band was hauling in more revenue than Guitar Hero III, according to NPD.

All that rock-and-roll gold is attracting competition. Coming in time for the holidays: Guitar Rising and Guitar Wizard, two games that loosely follow Harmonix's fretboard format, but connect it to real guitars. Disney has Ultimate Band this fall. And Activision is said to be developing three new versions of Guitar Hero, including one that features a microphone like Rock Band. (Activision didn't respond to a request for comment.)

The most buzz, though, is about what Harmonix will do next. Add a keyboard? A turntable to scratch out hip-hop tunes? An iPod version of Rock Band? (Harmonix already has an iPod game called Phase.) Rigopulos and Egozy won't reveal their next act, other than to admit they're trying to land songs from bands like the Beatles, U2 and Springsteen. But something's up. Harmonix is looking to hire 70 more employees. The biggest hint comes from Greg LaPiccolo, Harmonix's product-development chief and former bass player for the indie band Tribe. "Now it's like karaoke," he says. "The long-term ambition is to give players more creative freedom." That means you'll eventually be able to create your own guitar leads and wailing vocal fills. It's unclear, of course, whether that presumed artistry will help you gain or lose points in the game.