Microsoft and Bungie Studios to Evolve Relationship

Companies to forge new long-term relationship.

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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-****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.

About Bungie Studios

Bungie Studios was founded in 1991 with two goals: to develop games that combine brilliant technology, beautiful art, intelligent stories and deep gameplay, and then sell enough of those games to achieve its real goal of total world domination. Over the past 10 years it has produced games such as the "Marathon" trilogy and the first two "Myth" games, hailed as ****cs by critics and gamers around the world. Bungie's "Halo" franchise is an international award-winning action title that has grown into a global entertainment phenomenon, selling more than 14.8 million units worldwide, logging nearly 1 billion hours of multiplayer action on Xbox LIVE®, and spawning action figures, books, a graphic novel, apparel and more. Bungie released "Halo 3" on Sept. 25, 2007 to universal critical acclaim, and first day US sales of over $170 million, making it the biggest opening day in entertainment history. More information on Bungie can be found at http://www.bungie.net.

About Microsoft Game Studios

Microsoft Game Studios is a leading worldwide publisher and developer of games for the Xbox and Xbox 360 video game systems, the Windows® operating system and online platforms. Comprising a network of top developers, Microsoft Game Studios is committed to creating innovative and diverse games for Windows (http://www.microsoft.com/games), including such franchises as "Age of Empires®," "Flight Simulator" and "Zoo Tycoon®"; Xbox and Xbox 360 (http://www.xbox.com), including such games as "Gears of War" and franchises such as "Halo," "Fable®," "Project Gotham Racing®" and "Forza Motorsport®"; and MSN® Games (http://www.games.msn.com), the official games channel for the MSN network and home to such hits as "Bejeweled" and "Hexic®

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft's corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft's Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

Frank O'Connor: We've always been independent minded and spirited. We've even had a separate office space and a remarkably loose dress code. Pants optional. About a year ago, we began negotiations to make all those aspects more official.

BIZ: How much does the financial aspect come into play with this move? I'd imagine that as the creators of Halo and as an independent studio, Bungie would be in a better position to negotiate contracts with Microsoft so that the games' success don't simply bankroll MS stockholders.

FO: It works out great for both parties. We get a slightly better deal, we get to loosen up and make the next big thing and Microsoft gets to publish more hopefully great Bungie stuff on Xbox 360. It sounds cheesy, but it really is a win-win.

BIZ: Has Bungie grown tired of the Halo universe? Will there be a Halo 4 from Bungie?

FO: No. We love the Halo universe and still have projects going on within it, like the Peter Jackson collaboration and dowloadable content. If we ever return to the Halo universe, I'm sure we'd have cool stories to tell. The universe is, after all, infinite.

BIZ: With the Halo trilogy done and Ensemble already doing Halo Wars, was this move back into independence all part of a long term plan?

FO: It's more of an evolution of our independent spirit. Microsoft sees the benefit to itself, us and the 360.

BIZ: Now that Bungie has gone indie, does it retail all the IP it established before the acquisition (Myth, Oni, Marathon, etc)?

FO: We have Marathon. Microsoft owns Halo, and Take2 I believe, owns Myth and Oni. But we're also all about new ideas.

BIZ: Bungie said that it was a mutual decision with MS to allow the company to create outside of the MS system. Given the money around development, marketing and talent, what was hindering the creative development?

FO: Very little other than process. We were a part of MS and that meant adhering to their hiring policies, infrastructure and penchant for Khaki shorts and golf shirts. We still get the benefits of working closely with the platform team, the Xbox Live guys and the amazing talent at the mothership, but that slight loosening of reins will go a long way. Watch us gallop.

BIZ: Does the new Bungie like MMO games (something that MS can't seem to figure out) or is the team looking at creating new games in other genres besides FPS?

FO: We like all sorts of games, from RPGs to Irritating Stick. Look it up.

BIZ: Is it possible that the Halo universe or Bungie's future games could appear on other consoles now?

FO: Right now we're concentrating on the Xbox 360. Which we adore.

BIZ: What are the details of this long-term relationship with MS? Do they get first crack at publishing any new games before you shop around to other publishers? And how many years is "long-term?"

FO: We're not discussing the details of the relationship, suffice to say that it's healthy and ongoing. In reality, very little will change outwardly.

BIZ: Since Bungie used to create Mac games, is there interest in doing that again, or how about games for the iPod/iPhone?

FO:Halo CE came out for Mac as part of a deal with Microsoft. And MS publishes a lot of Mac software. But again, we're focused on the 360 right now.

BIZ: Can you give us any hints on what Bungie's working on next?

FO: Downloadable content, the Peter Jackson project and plenty of skunkworks ideas.

BIZ: Anything you'd like to add?

FO: Honestly, this is going to be great for us, great for 360 and great for gamers.

BIZ: Thanks for your time.

Frank O'Connor: We've always been independent minded and spirited. We've even had a separate office space and a remarkably loose dress code. Pants optional. About a year ago, we began negotiations to make all those aspects more official.

BIZ: How much does the financial aspect come into play with this move? I'd imagine that as the creators of Halo and as an independent studio, Bungie would be in a better position to negotiate contracts with Microsoft so that the games' success don't simply bankroll MS stockholders.

FO: It works out great for both parties. We get a slightly better deal, we get to loosen up and make the next big thing and Microsoft gets to publish more hopefully great Bungie stuff on Xbox 360. It sounds cheesy, but it really is a win-win.

BIZ: Has Bungie grown tired of the Halo universe? Will there be a Halo 4 from Bungie?

FO: No. We love the Halo universe and still have projects going on within it, like the Peter Jackson collaboration and dowloadable content. If we ever return to the Halo universe, I'm sure we'd have cool stories to tell. The universe is, after all, infinite.

BIZ: With the Halo trilogy done and Ensemble already doing Halo Wars, was this move back into independence all part of a long term plan?

FO: It's more of an evolution of our independent spirit. Microsoft sees the benefit to itself, us and the 360.

BIZ: Now that Bungie has gone indie, does it retail all the IP it established before the acquisition (Myth, Oni, Marathon, etc)?

FO: We have Marathon. Microsoft owns Halo, and Take2 I believe, owns Myth and Oni. But we're also all about new ideas.

BIZ: Bungie said that it was a mutual decision with MS to allow the company to create outside of the MS system. Given the money around development, marketing and talent, what was hindering the creative development?

FO: Very little other than process. We were a part of MS and that meant adhering to their hiring policies, infrastructure and penchant for Khaki shorts and golf shirts. We still get the benefits of working closely with the platform team, the Xbox Live guys and the amazing talent at the mothership, but that slight loosening of reins will go a long way. Watch us gallop.

BIZ: Does the new Bungie like MMO games (something that MS can't seem to figure out) or is the team looking at creating new games in other genres besides FPS?

FO: We like all sorts of games, from RPGs to Irritating Stick. Look it up.

BIZ: Is it possible that the Halo universe or Bungie's future games could appear on other consoles now?

FO: Right now we're concentrating on the Xbox 360. Which we adore.

BIZ: What are the details of this long-term relationship with MS? Do they get first crack at publishing any new games before you shop around to other publishers? And how many years is "long-term?"

FO: We're not discussing the details of the relationship, suffice to say that it's healthy and ongoing. In reality, very little will change outwardly.

BIZ: Since Bungie used to create Mac games, is there interest in doing that again, or how about games for the iPod/iPhone?

FO:Halo CE came out for Mac as part of a deal with Microsoft. And MS publishes a lot of Mac software. But again, we're focused on the 360 right now.

BIZ: Can you give us any hints on what Bungie's working on next?

FO: Downloadable content, the Peter Jackson project and plenty of skunkworks ideas.

BIZ: Anything you'd like to add?

FO: Honestly, this is going to be great for us, great for 360 and great for gamers.

BIZ: Thanks for your time.

the full story

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.

About Bungie Studios

Bungie Studios was founded in 1991 with two goals: to develop games that combine brilliant technology, beautiful art, intelligent stories and deep gameplay, and then sell enough of those games to achieve its real goal of total world domination. Over the past 10 years it has produced games such as the "Marathon" trilogy and the first two "Myth" games, hailed as classics by critics and gamers around the world. Bungie's "Halo" franchise is an international award-winning action title that has grown into a global entertainment phenomenon, selling more than 14.8 million units worldwide, logging nearly 1 billion hours of multiplayer action on Xbox LIVE®, and spawning action figures, books, a graphic novel, apparel and more. Bungie released "Halo 3" on Sept. 25, 2007 to universal critical acclaim, and first day US sales of over $170 million, making it the biggest opening day in entertainment history. More information on Bungie can be found at http://www.bungie.net.

About Microsoft Game Studios

Microsoft Game Studios is a leading worldwide publisher and developer of games for the Xbox and Xbox 360 video game systems, the Windows® operating system and online platforms. Comprising a network of top developers, Microsoft Game Studios is committed to creating innovative and diverse games for Windows (http://www.microsoft.com/games), including such franchises as "Age of Empires®," "Flight Simulator" and "Zoo Tycoon®"; Xbox and Xbox 360 (http://www.xbox.com), including such games as "Gears of War" and franchises such as "Halo," "Fable®," "Project Gotham Racing®" and "Forza Motorsport®"; and MSN® Games (http://www.games.msn.com), the official games channel for the MSN network and home to such hits as "Bejeweled" and "Hexic®

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft's corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft's Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

http://www.microsoft.com/presspass/press/2007/oct07/10-05BungieEvolvesPR.mspx

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