As “Modern Warfare 2” racked up ungodly amounts of money on its release last month, and Christmas sees more first-person shooter titles and the Avatar juggernaut headed to Best Buy and Walmart, music-based game developers are looking to innovate and re-engage auds who are letting their plastic guitars and drum kits gather dust in the den.

Music games account for 9% of vidgame software sales so far in 2009, but those titles are down 40% compared to the 2008 numbers.

Publishers and developers are looking for ways to evolve and spur growth. MTV Games and Harmonix broke the multi-band model earlier of music games this year with “The Beatles: Rock Band,” letting fans focus solely on the catalog of the Fab Four. Activison, meanwhile, has spun its successful “Guitar Hero” franchise into the pop music and hip-hop worlds with “Band Hero” and “DJ Hero,” respectively.

And while sales results have been mixed — “The Beatles: Rock Band” had strong early sales in September, but the numbers plunged more than 80% the following month — “DJ Hero” could be an indicator of where publishers plan to take music games, with its focus on hip-hop.

“We looked at what we’ve done in the past and we saw we’re only addressing half of the genres in SoundScan,” says Will Kassoy, senior vice president of Publishing for Activision’s Guitar Hero franchise. “Guitar Hero was hitting classic rock and modern rock and some of the crossover artists, but we didn’t have too much presence in Top 40, R&B and hip hop. So, (we realized) there’s a whole audience out there that’s interested in music but hasn’t bought Guitar Hero yet.”

The move away from peripheral-driven packages, in which consumers buy a game/peripheral bundle that can cost as much as $200 (they can reuse the instruments for game sequels that cost around $60), carries some advantages, too. Developers will no longer need to have a mega-hit with each release — and that could allow them to explore artist-specific titles from groups or singers that may not have Beatles-like popularity, but still have avidly loyal fan bases.

“You don’t have to swing for the fences with every artist-specific game,” says Alex Rigopulos, CEO of Harmonix Music Systems, makers of the “Rock Band” franchise. “Look at the film industry. A lot of films today cost $100 million or more to make — but you can make some incredible films for $10 million … that will make a segment of the audience happy and that also make a profit.”

Downloadable content helps the bottom line. Players have been able to buy additional songs from the beginning, keeping the games fresh for just a few extra dollars. “Rock Band,” for instance, has sold more than 60 million downloadable songs in the past two years.

While music games have achieved widespread success on consoles like the Xbox 360 and Wii, their presence on emerging gaming platforms has been minimal so far. “Rock Band” has an iPhone app, but for the most part, music games on that device have been the domain of smaller developers (such as Tapulous’ “Tap Tap Revenge”).

And so far no company has explored the possibility of music games on social networks.

Kassoy says Activision is currently evaluating both outlets. Guitar Hero, he notes, currently has 1.1 million fans on Facebook, which puts the odds of a game for that service pretty high.

The pending launch of motion-control sensors from both Microsoft and Sony could also help the genre evolve further. Imagine, for instance, a dance game that monitors movements and scores on technique.

Ultimately, innovation in music games may not from the game makers, but from musicians.

The music industry uses videogames as a viable marketing tool. Activision says artists who appear in Guitar Hero games experience an average sales hike of 50%.

And those musicians are starting to take control of their own destiny in the videogame space.

“We’re at the point where musicians are thinking of these games as another form of artistic expression,” says Rigopulos. “Artists are embracing this platform … and I think that bodes well for the long term of these games.”