The Day the Music Died: “Guitar Hero” Disbanded

It used to be about the music, man.

These days, guns are more popular than guitars, at least when it comes to video games. The company behind "Guitar Hero" said Wednesday that it is pulling the plug on one of the most influential video titles of the new century.

"...due to continued declines in the music genre, the company will disband Activision Publishing's Guitar Hero business unit and discontinue development on its Guitar Hero game for 2011," said company officials in a recent financial statement.

Activision Blizzard Inc., which also produces the "Call of Duty" series, ended the rock franchise after a run of nearly six years.

The move follows Viacom Inc.'s decision in November to sell its money-losing unit behind the "Rock Band" video games. Harmonix was sold to an investment firm for an undisclosed sum. Harmonix, incidentally, was behind the first "Guitar Hero" game.

Game industry analysts have long lamented the "weakness in the music genre," as they call it -- that is, the inability of the games' makers to drum up demand for the products after a surge in popularity in the mid-2000s. Music games are often more expensive than your typical shoot-em up game because they require guitars, microphones and other musical instruments. While extra songs can be purchased for download, this isn't enough to keep the games profitable.

Activision's shares tumbled after the announcement, but investors were more concerned with the disappointing financial forecast from the company than the demise of "Guitar Hero." As far as investors go, discontinuing an unprofitable product isn't the end of the world, even if "Guitar Hero" fans disagree.

The company did better than expected in the fourth quarter, which ended in December, but that was already expected. After all, it launched "Call of Duty: Black Ops" in November.

That game, which is mostly set during the Vietnam War, made $1 billion in just six weeks in stores.

Activision said Wednesday it lost $233 million, or 20 cents per share in the latest quarter, compared with a loss of $286 million, or 23 cents per share, in the same period a year earlier.

Net revenue fell to $1.43 billion from $1.56 billion.

Its adjusted earnings of 53 cents per share beat analysts' expectations of 51 cents, according to FactSet.

Revenue that's been adjusted to account for games with online components was $2.55 billion, up slightly from $2.50 billion a year earlier. Analysts had forecast $2.25 billion.

For the current quarter, which ends in March, Activision forecast adjusted earnings of 7 cents per share, and revenue of $640 million. Analysts are looking for earnings of 10 cents per share on higher revenue of $771 million. The company's forecast includes restructuring costs of 2 cents to 3 cents per share.

Shares of Activision, which is based in Santa Monica, Calif., tumbled 94 cents, or 8 percent, to $10.75 in after-hours trading. The stock had closed down 19 cents at $11.69.

Copyright AP - Associated Press
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