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‘Guitar Hero’ Unplugged; Activision Ends Video Game Franchise

Publisher will close its music game business and lay off hundreds of workers

The music is over for Guitar Hero.

Activision Blizzard announced on a conference call Wednesday that it plans to shutter its music game business. The move means that roughly 500 employees or 7 percent of the company's workforce will lose their jobs.

The company will also end its lucrative Guitar Hero franchise.

Read also: A Hard Day's Night for Music Videogames

“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,” the company said in a financial statement released Wednesday. 

The gaming industry has suffered several notable setbacks recently. Earlier this month, Viacom closed down MTV Games and last fall Disney Interactive pulled cancelled a planned "Pirates of the Caribbean" game. 

Helped by strong sales for "Call of Duty: Black Ops," Activision's revenues improved for the most recent quarter,  jumping  2 percent to $2.55 billion.

After taking the gaming business by storm, sales of the most recent installment "Guitar Hero: Warriors of Rock" began to dwindle. The latest "Hero" eked out sales of 86,000 copies; a distant cry from the over $1 billion brought in by 2007's "Guitar Hero III."

In addition to anemic sales, Activision cited rising licensing fees as a reason for closing shop.

As part of its cost-cutting, the company said it will discontinue its "True Crime: Hong Kong" game. 

Shares fell 7 percent to $10.81 in after-hours trading.