Vicarious Visions ceased development on Guitar Hero 7 after Activision publishing exec Eric Hirshberg visited the studio and reviewed the project, according to a new report.
In early 2011, Activision announced it was no longer investing in the Guitar Hero franchise as sales began to fall and analysts suggested the market had saturated.
But new information provided by Kotaku claims that an undisclosed Guitar Hero 7 project was underway at Vicarious Visions since 2010 and up until it was axed in 2011.
A source connected to the matter described development of the game as a "disaster".
It is said that the game was to return to its roots by eschewing microphone and drum-kit support, and instead progress the series by developing a more complex plastic guitar.
"Not a real guitar, or even full six-stringed," said the Kotaku source.
"It had the classic Guitar Hero buttons on the neck with one extra new button, and six strings where the strum bar used to be. The strings were unresponsive and loose, and the guitars cost a fortune to make. No one could figure out a way to make it so your average Joe could buy one."
Activision has not commented on the article, which goes on to explain that problems multiplied as track listings were being decided on.
"When the songs started coming in, a great sense of dread came about everyone with an active brain," the source claimed.
"The game had all of the worst hits from the 1990s. They realized that, with our lack of budget and time, they couldn't get quality music so they bought bargain basement music like 'Closing time' and 'Sex and Candy.' There were some songs in there that had been used at least three times in the GH franchises before."
Vicarious Visions had lost a number of staff as a result of the cancellation. It is currently working on two or more undisclosed projects.
Though Activision closed down its Guitar Hero business in early 2011, the company has on several occasions hinted that the series could return.