'Halo' creator Bungie splits from Microsoft

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

Microsoft bought then Chicago-based Bungie back 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.

While financial details weren't disclosed, both sides said Bungie's decision to leave the Microsoft nest was amicable, with Microsoft Game Studios VP Shane Kim, noting in a statement, "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."

Kim also stressed that the "Halo" license is staying with Microsoft, adding, "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."

One source familiar with the situation said the success of "Halo" obviously played a role in Bungie's desire to once again be out on its own, but said Bungie's 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," he said, adding that when Bungie saw the prices Microsoft had paid in recent years for other developers, they wanted to step out and see if they could cultivate similar valuations.

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

Microsoft is intent on expanding the "Halo" franchise, including the work with Jackson, though the details of that remain very sketchy. There's also remains the possibility of "Halo: The Movie," which the source stressed 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 big hit.

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