Activision Dissolves Guitar Hero Business, Refocuses On Digital

The Guitar Hero series is finished, at least for now, with no game forthcoming for 2011 and its business unit to be disbanded, publisher Activision Blizzard announced today -- citing declines in the music genre and a desire to focus on higher-margin opportunities in the online space. Activision's axe didn't stop with the once-thriving Guitar Hero franchise. The company also terminated open world game True Crime: Hong Kong, in development by Vancouver-based United Front Games. "These decisions are based on the desire to focus on the greatest opportunities that the company currently has to create the world's best interactive entertainment experiences," said Activision in a statement alongside its quarterly and annual fiscal 2010 results. Signs of trouble first surfaced for True Crime: Hong Kong when its original fall 2010 release was pushed back at summer's end into the vague "next year" window, due to what the publisher said were quality issues. At the time, it was one of the few core titles on Activision's slate in development by an external studio, a strategy it rarely pursues. Activision says it will "invest its capital and resources in the significant opportunities afforded by online gaming worldwide and will reduce its exposure to low-margin and low-potential businesses," and that the cancellation of the game is part of that plan. This means that in the year to come it will concentrate on Blizzard's online games, the Call of Duty brand -- and plans to build a "best-in-class digital community" around it, as well as Bungie's upcoming project in development. The company says it also plans to reveal an "innovative new universe" at Toy Fair later this week which it claims will "bring the world of toys, video games and the Internet together in an unprecedented way." "These investments should better position Activision Blizzard for long-term growth and enable it to continue expanding its position as the largest digital publisher," the company concludes. Activision has not yet, however, commented on a widely-cited report from Eurogamer that -- while correctly predicting the Guitar Hero cancellation prior to the company's announcement -- originated the layoffs speculation. Neither has the company confirmed widespread rumors of concurrent layoffs at developer Vicarious Visions, which worked on Guitar Hero, nor at DJ Hero house Freestyle Games. [UPDATE: In a SEC filing, Activision announced that, due to a refocusing and "anticipation of a continuing weak environment for casual and music-based games", the plan will result in the layoff of approximately 500 employees, resulting in "a net pre-tax charge in the first two quarters of 2011, which is expected to total between $35 and $50 million, comprised of severance costs, the costs of other separation benefits and other exit costs."] But the writing has been on the wall for some time regarding developers of peripheral-equipped music games and the massively-reduced opportunity the genre now enjoys. Viacom sold band game developer Harmonix as Rock Band revenues contracted, and that studio recently saw layoffs.