Bungie cuts its Microsoft cord

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Just a week after the spectacular launch of "Halo 3," the developer of the game, Bungie Studios, said that it is splitting from Microsoft to become an independent company again.

Microsoft bought then- Chicago-based Bungie in 2000, and the original "Halo" game was one of the launch titles for Microsoft's Xbox, its first foray into the console gaming world. Since then, the "Halo" franchise has sold nearly 15 million games, with "Halo 3" reaching $300 million in global sales in its first week on the market.

Financial details weren't disclosed, but both sides said Bungie's decision to leave the Microsoft nest was amicable.

"We look forward to great success with Bungie as our long-term relationship continues to evolve through "Halo"-related titles and new IP created by Bungie," Microsoft Game Studios vp Shane Kim said.

Kim added that the "Halo" license is staying with Microsoft. "We will continue to invest in our 'Halo' entertainment property with Bungie and other partners, such as Peter Jackson, on a new interactive series set in the 'Halo' universe," he said.

A source said the success of "Halo" played a role in Bungie's desire to again be out on its own but added that the move was a win-win for both sides.

"Bungie was bought by Microsoft when they were very, very small and for a really good price," the source said, adding that when Bungie saw the prices Microsoft had paid in recent years for other developers, it wanted to step out and see if it could cultivate similar valuations.

The source said that not only does Microsoft retain the "Halo" intellectual property, but it also gets the right of first refusal on all new Bungie properties. Because Bungie is now based right next to Microsoft in Kirkland, Wash., there's always going to be good communications between the two, he said.

Microsoft is intent on expanding the "Halo" franchise, including the work with Jackson, though details remain sketchy. There also remains the possibility of "Halo: The Movie," which the source stressed that Microsoft would love to do.

But with Microsoft in full control of the license, studios right now are a bit gun-shy about committing to a big-budget "Halo" feature because they won't be able to realize merchandising or other ancillary revenue if the movie is a hit.

Keith Boesky, president of Boesky & Co., which specializes in the migration of intellectual property to and from the game business, added it wasn't a case of whether a studio could afford to commit to the big budget that the "Halo" movie would require.

"It's a case of whether or not it's justified," he said. "Studios have to mitigate risk, and you're talking about a big, big budget and a relatively small known audience."
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