Santa Monica-based interactive game maker Activision, Inc. said that it has entered into an agreement to acquire Sunnyvale-based video game publisher RedOctane, Inc. the publisher of the popular Guitar Hero franchise.

The acquisition is designed to provide Activision with an early leadership position in music-based gaming, which the company expects will be one of the fastest growing genres. Guitar Hero is the fifth highest teen-rated game ever released on the PlayStation 2 computer entertainment system with a 92 rating.

The game challenges players to be a lead guitarist of their own rock and roll band. The game is sold with a guitar-shaped controller that lets consumers simulate playing the guitar for more than 30 popular songs that were made famous by such artists as the Red Hot Chili Peppers, David Bowie, and Ozzy Osbourne. Financial terms of the agreement were not disclosed.

Activision does not expect the acquisition to have a material impact on its fiscal 2007 forecast for earnings of 15 cents a share on $1.03 billion in sales.