Activision CEO Bobby Kotick has confirmed that Guitar Hero will expand with more instruments in future versions. The news is hardly a surprise, since Rock Band, which also features drums and vocals, has been doing quite well.

“We’ll include a lot of other instruments, vocals. It will help us expand internationally. It’s the first game we’ve had in which we can use local content and local bands.”

Activision hasn’t confirmed when they’ll be making this introduction, but a new Guitar Hero is scheduled for release at the end of 2008.

Industry analyst Billy Pidgeon, of IDC fame, is predicting a shift in the way video game systems will be developed, and priced.

The huge losses that Microsoft and Sony have suffered in getting their consoles into the hands of gamers at a (sort of) affordable price are a sharp contrast to Nintendo’s huge success and profitability with the Wii. While the high-end consoles came at a high cost for both the system developers and consumers alike, Nintendo was able to out-sell the competition with a cheaper, albeit less powerful system.

“I think the results of this cycle will have a strong influence on the next cycle, in that cheaper consoles will be expected,” Pidgeon explains. The massive popularity of casual gaming on Nintendo’s console, as well as with simple games like Guitar Hero is already changing the way game developers approach the industry.

Pidgeon goes on to suppose that the entire industry may shift from hardware-focused consoles to lighter appliances that depend on the Internet. “The platforms of the next cycle may not be a console at all, but software distributed by network to convergent devices like PCs, set top boxes and smart phones,” he explains.

Pidgeon goes as far as to suppose that the Sony PlayStation 3 may be the last console to incorporate “cutting edge” hardware. It may be possible that the video game console will create a greater divide between casual gaming platforms and dedicated, technically superior platforms. If not, hardcore gamers may need to rely on their PC hardware to deliver more powerful games.

Guitar Hero has reached a milestone: In the 26 months since the first Guitar Hero title was released for the PlayStation 2, the rock-and-roll franchise has hit the $1 billion U.S. mark in its North American sales.

Activision, the game’s publisher, was quick to point out that Guitar Hero III broke sales records by both unit volume and dollar value for a single calendar year. Michael Griffith, Activision’s president and CEO, commented on the event:

“Guitar Hero is one of the biggest brands and one of the most powerful distribution platforms in all of entertainment today. Guitar Hero’s popularity with broad audiences is a confirmation that video games have become a true mass medium.”

The first Guitar Hero title hit the PlayStation 2 console in November 2005, and since then has spawned three sequels. The collective total sales is in the neighbourhood of 14 million units.

A big help to Activision in the dollar count is that each Guitar Hero title is sold both as a stand-alone disc and in a bundle with the guitar peripheral that allows gamers to rock-out in style rather than play with a standard game pad. Most Guitar Hero players have at least one guitar, while others purchased the new peripheral with each release, driving up the average dollar value of each sale.

Activision also said that in the weeks since Guitar Hero III was released, over five million add-on songs have been downloaded for the game.