Before Guitar Hero and Rock Band was another phenomenon of the music gaming genre: Dance Dance Revolution. Konami's "dancing" game bundled a peripheral and captured the media's attention with its kinetic "exergaming" play. Over the years, the franchise has dwindled in relevance, as gamers got tired of stomping their feet to moving arrows. Each iteration of the series brought new songs, but the gameplay turned stale, and gamers eventually put their peripherals in the closet.
The same might be happening to the current slate of music games. NPD reports (via Gamasutra) that revenue for the Guitar Hero franchise have dropped 34% year over year. Even worse, the Rock Band franchise has dropped 67%. (Although, it should be noted that the Rock Band series has not had a major console release this year.)
Jesse Divnich of EEDAR argues that "the music and rhythm genre is being monetized more closely in terms of a pop-culture fad," which explains the increasing number of releases we see from the Guitar Hero franchise. He argues that the window of opportunity for making money is limited and that both Activision and MTV Games are "[striking] when the iron is hot." The upcoming The Beatles: Rock Band and Guitar Hero 5 may make a big splash this holiday season, but it might not be long until gamers put away the plastic instruments and look for the next big thing.
Source - Analysis: Guitar Hero / Rock Band retail sales down by half
Source - The Divnich Debrief: Roadblocks in the Music Genre