BURBANK, Calif. (AP) -- The Walt Disney Co. has agreed to change a sombrero-wearing character in the "Toy Story 2" video game because it offended some Hispanics.

The decision was announced Thursday after a peaceful demonstration outside the Santa Monica headquarters of Activision, which produced the game with Disney based on characters from the animated film.One level of the game features a villain with a mustache, bullet bandolier and a sombrero, which Hispanic activists said was a Mexican stereotype.

Players must shoot the symbol to advance to the next level of the game, said Oscar de la Torre, a counselor at Santa Monica High School.

"We feel it's degrading, it's dehumanizing. It stereotypes Mexicans as villains," he said. "It's a virtual game of genocide, the way we see it, because they're being ethno-specific."

The character does not appear in the "Toy Story 2" movie.

"We regret that a portion of the game was offensive," said Claudia Peters, a Disney spokeswoman. "Unfortunately, there was a mistake made in its creation. We plan to change the character."

She did not indicate what the changes would involve.

It is not the first time that Disney has changed its product after such complaints. In 1993, Disney altered some lyrics to a song in the animated musical "Aladdin" after Arab-American activists labeled them racist.