Halo Creator Blasts Free From Microsoft

By Mike Musgrove
Washington Post Staff Writer
Saturday, October 6, 2007

It's been a big year for Master Chief, the animated killing-machine star of the Halo video game franchise. First, he saved the universe by blasting aliens with a plasma rifle. In the process, he boosted sales of Microsoft's Xbox 360 game console. Now, the helmeted hero has helped Halo's creator secure its independence.

Halo developer Bungie Studios and parent Microsoft, announced yesterday that the two companies have gone their separate ways. The details were not made public, but Microsoft will retain an equity interest in the game studio.

Microsoft bought Bungie in 2000, when it wanted to lock up a surefire hit to bring attention to its first Xbox console. Since then, the Halo franchise has become one of the game industry's biggest successes: The recently released Halo 3 recorded $300 million in sales during its first week. Some analysts estimate that half a million gamers will buy Xbox 360s this holiday season specifically to play the game, an action sci-fi "shooter" title unavailable on other game platforms.

Don't expect the spinoff to mean that Halo will be available for Sony's PlayStation 3 or Nintendo's Wii consoles anytime soon. Microsoft, as the company noted in a statement, owns the intellectual property for the game. The company said it supported "Bungie's desire to return to its independent roots."

Game industry analyst Michael Pachter of securities firm Wedbush Morgan said he interpreted the split as a sign that Bungie's star programmers want to develop games for other consoles. As long as Microsoft owned Bungie, it was unlikely that they would be permitted to take on such projects.

By retaining a stake in Bungie, Pachter said, Microsoft has probably retained rights to secure exclusive titles for the Xbox 360 console.

"I think Microsoft recognized it wasn't possible to keep these employees happy so long as these employees were limited to Xbox 360 projects," he said. Pachter called the spinoff a "brilliant" move by Microsoft.

Analyst Matt Rosoff of the research firm Directions on Microsoft had a similar take -- that it was better to keep Bungie intact as an independent company if the only other option was to watch key employees leave.

"When you're a software company, the only assets you have are your employees," Rosoff said.

In a written statement, Bungie said that "practically speaking, nothing has changed" as a result of the separation. "Bungie has long been built on creativity, originality and the freedom to pursue ideas," the statement said. "Microsoft agreed, and rather than stifle our imagination, they decided it was in both our best interests to unleash it."

Bungie was founded in 1991. Until its acquisition by Microsoft, the studio was mainly known for developing games for Apple's Macintosh computer.

Apple news and rumor Web sites were quick to frame the Bungie announcement yesterday as potential good news for Mac users, speculating that Bungie may again design games for the Mac. "I'm in heaven," wrote one reader at the Unofficial Apple Weblog. "God I love all things Bungie."

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