EA Ready to Rock Activision's House

Video-game publisher, Activision(ATVI) had better watch out.

With its upcoming game, Rock Band, rival Electronic Arts(ERTS) is making a play for wannabe rockers who until recently flocked to Activision's blockbuster franchise, Guitar Hero.

At the E3 Business & Media Summit last week in Santa Monica, Calif., analysts applauded EA's demos of Rock Band, and the game met with tentative approval from video-game trade publications, setting the stage for its preholiday release.

For nearly two years, Activision has ruled the games business with Guitar Hero, a music-based title that lets users strum a guitar-shaped controller to play along with their favorite artists, such as Ozzy Osbourne, Queen, Jimi Hendrix and Red Hot Chili Peppers.

The company rode the franchise to become a stock market darling.

Since the launch of the first Guitar Hero game in November 2005, Activision's stock has been up 15.5%. EA's has been down nearly 14% during the same period.

Activision has sold more than 1 million units of Guitar Hero I and more than 2.9 million units of Guitar Hero II in North America, according to The NPD Group.

Activision has plans to release Guitar Hero III in fiscal 2008.

But the company's extraordinary success with the franchise could soon be in jeopardy.

Depending on their musical loyalties, users will be able to choose Guitar Hero or go the whole hog with Rock Band, which comes with three different instrument-based peripherals -- a guitar, a drum-shaped peripheral and a microphone for a lead singer.