Bizarre Creations, the creator of games like Project Gotham Racing, learned the hard way today what happens when you release a game to even mediocre reception.

In another sign that the video game industry is still somewhat fragile, parent company Activision Blizzard closed the studio after its newest release James Bond 007: Blood Stone garnered only lukewarm reviews from game critics, according to a number of reports.

Activision Blizzard’s move also shows that the video game industry is still very much a hit-driven business. There isn’t much room for a game company like Bizarre Creations to release a game that can’t generate a lot of hype and has only mediocre reception. It’s a problem that many independent developers face, forcing them to look to publishing giants like Electronic Arts and Activision-Blizzard to get attention for their games.

This is still one of Bizarre Creations’ first miscues after a series of big hits. James Bond 007: Blood Stone only has a score of 63 out of 100 after 39 reviews on Metacritic, a site that aggregates multiple reviews into a single score. But the development studio is responsible for games like Project Gotham Racing 4, which garnered a score of 85 out of 100 after 60 reviews, and Geometry Wars, which has a score of 90 out of 100 after 52 reviews.

Blood Stone also had the unfortunate distinction of being released alongside a pretty good remake of the Nintendo 64 game Goldeneye 007 — which received a score of 82 out of 100 after 52 reviews. So it’s no wonder the game did not receive as much attention as the other James Bond game, which is widely considered a cult classic (I still play it to this day.)

Activision Blizzard is well-known for its colossal hits. Its most recent high-profile release, Call of Duty: Black Ops, shattered the previous record for launch-day game sales and brought in $360 million for the publisher. That record was also held by another Activision Blizzard game, Modern Warfare 2. Activision Blizzard is also releasing the next expansion to its critically acclaimed online role-playing game, World of Warcraft. Cataclysm, the third expansion pack, will likely sell at least another 12 million copies — based on the number of people currently paying to play the online game.

The largest game publisher in the world is setting a pretty clear precedent by letting go the studio’s 200-man team — there is still no room for error in the video game industry, even if a development studio has an excellent track record.

[Photo: nedrichards]