Why the makers of Halo are splitting from Microsoft

October 5, 2007, 4:09 PM UTC

The studio that created the popular Halo video game franchise is leaving Microsoft (MSFT) to gain creative freedom, potentially delivering a blow to the software giant’s image among gamers.

Halo is the most popular software franchise for Microsoft’s Xbox 360 console, and it achieved $300 million in sales in the week after Halo 3 was released on September 25. Because the game is exclusive to the Xbox platform, it helped boost hardware sales for Microsoft; the Xbox 360 also beat the Nintendo Wii in sales last week for the first time this year.

Microsoft confirmed the split
in a press release this morning

Rumors of a split between Microsoft and game studio Bungie had been circulating on gaming enthusiast sites for several days, after 8BitJoystick broke the story
on a Seattle Post Intelligencer blog
. The blog writer said he got this e-mail tip:

So heres my big secret. You should google Bungie + Microsoft + separation this week.

You know that big ol BILLION dollar franchise Bungie has created for Microsoft, to show their appreciate Microsoft is letting Bungie leave. Of course Microsoft gets to keep all rights to the Halo franchise, but as today Bungie no longer part of Microsoft. Ask anyone who works there to search the global address book, they’re no longer in there. Microsoft was supposed to release the press release today but if they wait till the 10/6 the impact wont effect the quarterly results. However today is the actual official date and the day the NDAs expire, however you still didn’t hear this from me.

Apparently MS just wants Bungie to make Halo for the rest of their natural days, and Bungie doesn’t like how MS is constantly trying to “handle” everything they do; the way they market their games, the way they interact with their fans (basically the fact that they do appreciate their fans), and how stingie they are with the profits (comparable to the rest of the industry). So as of today they are their own independent entity. They’ll probably make Halo 4 for Microsoft, however hey are also free to create new intellectual properties for whatever system they want. (Even though they prefer the xbox platform)

What a way to say thank you.

In one example that might illustrate the reason for tension between Microsoft and Bungie, screen shots
surfaced on the Internet this week
showing what appears to be an unreleased version of Halo developed for Nintendo’s popular DS handheld gaming system.

Some in the gaming community have speculated that Microsoft was unwilling to release the game and risk giving ammunition to a rival’s gaming platform.

With Bungie as a separate entity, it would have more power to decide how its future games are marketed and on what platforms, including those from Nintendo and Sony (SNE). Bungie was an independent studio until Microsoft bought it seven years ago for about $40 million. Before it was acquired by Microsoft, Bungie was known for creating games for several platforms; its Marathon game, a precursor to Halo, was popular on Apple’s Macintosh computers. For more details on the Bungie/Microsoft split,
see this Kotaku interview

The release from Microsoft:

REDMOND, Wash. — Oct. 5, 2007 — Microsoft Corp. today announced a plan for Bungie Studios, the developers of the “Halo®” franchise, to embark on a path to become an independent company. Microsoft will retain an equity interest in Bungie, at the same time continuing its long-standing publishing agreement between Microsoft Game Studios and Bungie for the Microsoft-owned “Halo” intellectual property as well as other future properties developed by Bungie.

The critically acclaimed Xbox 360®-exclusive “Halo 3” achieved $300 million in global sales in its first week. Released on Tuesday, Sept. 25, “Halo 3” is the fastest-selling video game ever and already one of the most successful entertainment properties in history.

“Our collaboration with Bungie has resulted in ‘Halo’ becoming an enduring mainstream hit,” said Shane Kim, corporate vice president of Microsoft Game Studios. “While we are supporting Bungie’s desire to return to its independent roots, 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. 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.”

“This exciting evolution of our relationship with Microsoft will enable us to expand both creatively and organizationally in our mission to create world-class games,” said Harold Ryan, studio head for Bungie. “We will continue to develop with our primary focus on Microsoft® platforms; we greatly value our mutually prosperous relationship with our publisher, Microsoft Game Studios; and we look forward to continuing that affiliation through ‘Halo’ and beyond.”

Bungie Studios will remain in its current location in Kirkland, Wash.