Microsoft Confirms Split From Bungie

By Ed Oswald, BetaNews

October 5, 2007, 11:55 AM

In a surprising turn of events, Microsoft confirmed Friday that it had indeed severed ties with Bungie, the creators of its popular Halo franchise.

The split is shocking due to the fact that Bungie and Microsoft had just finished the most successful entertainment launch with Halo 3, netting some $300 million in the first week of sales.

Microsoft will retain an equity interest in the company, however Bungie will be independent from Microsoft. Bungie will still produce games for Microsoft, but it is unclear whether or not that would now be on an exclusive basis.

Friday's admission also confirms reports by blogger Jacob Metcalf, who first broke the story on Monday. Most of his facts were indeed correct: Microsoft will retain rights to Halo; the split was effective October 1; and the company still will have some control over Bungie's operations.

"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," Microsoft Game Studios chief Shane Kim said.

Other aspects of the split were not publicly disclosed, and its not immediately clear if and when Bungie plans to produce games for other consoles. However, it is clear Microsoft is moving to protect its own interests.

By staking its claim to the Halo franchise, the company is essentially making sure the game does not end up appearing on any other console without its consent. Right now, the title is one of the biggest draws to its Xbox 360 console.

In any case, this was likely a very high-level decision. Sources told BetaNews earlier this week that the first time the Xbox team itself heard of the possible split was through the media. No internal announcement was apparently made either.

But to some within Microsoft the news didn't come as too much of a shock.

"To be honest the relationship always seemed like an odd match culturally," group product manager Sean Alexander wrote. "If nothing else, this should ensure Bungie retains their uniqueness and enable them to continue to push the edge with new content while the Halo universe evolves simultaneously."