It's official: Bungie branches off from Microsoft

by Christopher Grant on Oct 5th 2007 11:20AM

Just goes to show you, never say never.

Bungie has just announced that they've "reached an unprecedented and exciting agreement" that they'll "branch off" from the Microsoft Game Studios mothership and become Bungie, LLC, an independent company, starting ... today (well, technically October 1, but effective immediately)! Worried about Halo going to another, less competent developer? No need, the studio will retain a long-term publishing agreement with Microsoft Game Studios for Halo titles. Other titles? All they're saying is that they "will continue to develop with [their] primary focus on Microsoft's platforms." With Microsoft holding a minority equity interest in the company, that's not surprising.

Unsurprisingly, Microsoft is also retaining ownership of the Halo property (MGS chief Shane Kim calls it "our Halo entertainment property") as well as reserving first crack at publishing any Bungie-developed IP. We're left wondering if Marathon counts as a Halo property or a Bungie property ...

What are the immediate repercussions of this division? According to Bungie, "Practically speaking, nothing has changed and you guys won't see much, if any difference, for a while ...." We hope it means that somehow they'll be able to bring the same level of skill to a project besides Halo.

Read - Bungie Studios Becomes Privately Held Independent Company (Bungie press release)
Read - Microsoft and Bungie Studios to Evolve Relationship (MS press release)

[Update: GameDaily spoke with Bungie's Frank O'Connor about the "evolution" which, he says, has been in the planning stages for "about a year." He confirms they're not through with Halo yet; they're still working on the Peter Jackson project and DLC for Halo 3. As for Marathon, despite its close ties to the Halo universe, Bungie retains the rights to that property, while MS owns Halo and Take-Two owns Myth and Oni.]

Tags: BreakingNews, Bungie, Halo-3, Halo3, Xbox-360

Reader Comments (138)

Simmer down little guy. Even if I'm wrong you're getting a wee bit too worked up about this. They are an LLC, and MS does have a stake, but that doesn't mean things can't change in the future. And you're guessing about 49% of the stock.

They want freedom of title development & more money from those titles ... yep. But a press release doesn't often contain the entire truth, or even a majority.

At any rate, calm down for f'sake. I didn't propose that the logical recourse for world hunger is to eat Irish babies.

Ummm... being "partially owned" via stock by itself doesn't mean that can't produce games for other platforms. For example, EA owns a chunk of Ubisoft stock, yet Ubisoft can make what they want without EAs say so. You have to own a controlling share to be able to have any real impact. The details of the agreement between MS and Bungie are the facts that really matter at this point.

People need to learn to read or maybe its the nuances of the business world that confuses you guys. Microsoft has the first right of refusal to publish any game that Bungie creates. Therefore they can determine exactly what platforms these will go on. Now I may be wrong on that and maybe my understanding is fucked up but I think that is the gist of it. I don't think Microsoft would have a problem having Halo DS, didn't they also have a Viva Pinata for the DS. Microsoft knows the DS isn't its direct competition and the DS has a crazy install base that would make bags of money appear from the heavens.

This probably won't be too much different from Jaffe's departure from Sony. I imagine Bungie will be making quite a few "exclusives" for some time to come.

If you read the site, it appears that MS will be the exclusive publisher for quite some time. You may see titles for other platforms in about 5 to 8 years but I doubt you will see anything in the near future. If MS is good to Bungie, you might never see any of their games go to another platform, it really depends on the contract they signed to get their company back.

All Bungie's done is issue stock for itself, so now it makes money on its own work.

It sounds to me like they just want to own there work. There's not much incentive in creating new IP's if someone else gets to make all the decisions with them.

Now they are on their own, they get to keep what they make.

I'm just really hoping their new IP doesn't end up being Bungie's form of State of Emergency.

I believe you are right Jonah. It really does read like Bungie not can get a bigger stake of the cash from their work which is probably what they really wanted. If you think about it, it has come down to money. MS still owns enough stock in Bungie to make sure they get paid but now Bungie owns enough stock to direct their course and also get paid. This this is billed as a split on the internet, when you look at it closely, it's not a split at all.

I believe. Good luck Bungie!! I can't wait to see what they do next.

Having read this, it seems people are correct in that while Microsoft holds a minority interest in the company, they are free to develop for other platforms if they choose.

This isn't so unusual - you should see how many third-party developers are owned partly by Sony and/or Nintendo. Namco Bandai, if I recall correctly, has a major chunk of stock in Nintendo's hands. And yet you don't see SoulCalibur becoming a Wii exclusive.

I know people are going to react like this is some huge news... but all it means is that there's a chance for Bungie properties to appear outside of the Xbox. Just to show people up, watch the first game be Oni 2 for the DS.

if the reasoning is true (MS only wanted bungie to do halo stuff only), good for bungie.

kinda funny how people are using that movie poster to cover this story.

at the risk of being banned or voted down...I think SDF's shop is a bit better than joystiq's.

"Free at last! Free at last! Thank God Almighty, we are free at last!" - Bungie, Oct. 5, 2007

As many have said, this is basically a release of royalty rights and control of product. Now Bungie will own its new IPs, and most likely suffer the greatest "risk" when debuting them; Microsoft, as a minority owner, would only bare little risk, while as publisher with what will probably be very generous agreement, a potential for a huge payoff.

In turn, Bungie would get a greater share of success, and also only has to answer to itself for time tables and product direction.

If I had to guess, I bet this happened for two mutually exclusive or even paired reasons.

1. When Microsoft bought Bungie, they had an agreement for when the original cycle would end that Bungie had a "buy out" right, which they executed. However, as their partnership has been both profitable and successful, they both chose to continue, but Bungie not giving up as much freedom. The cycle could also have been profit based instead of time qualified.

2. Bungie approached Microsoft about this plan, and Microsoft agreed, thinking this could pave the way for other new developers who may want to join Microsoft to be able to without fear, considering Microsoft's "generosity."

I'm shocked even though we knew it was happening. How could Microsoft let this happen, honestly? Bungie was far more valuable to them exclusive. Now Microsoft's gonna have to accept Bungie's terms on future games to avoid them going Sony. Can't let the competitor get any games from the makers of Halo.

******

Michael C. Sherrin
http://www.prodigeek.com/

This is all being done for ONE reason and ONE reason only. Financially, this works best for Microsoft and Bungie AND regarding the oft spoken of movie, Microsoft wanted to remove itself from the process. After Bungie/MS has made record sales this bodes very well for them in reaching that movie deal with the studios.

So now when it comes to talking about percentages, the studios are basically dealing with BUNGIE and their overall net worth, as opposed to the billions that MS is worth. Bungie won't look so greedy when they're saying we want "xxxx" (where x is their demands for profits, percentages, non-exchange of rights, etc.)

I think this WHOLE seperation is/was engineered by MS lawyers because it will put the studios in a position to either meet the demands of Bungie or simply lose out on what could be the biggest movie ever.

And when you think about it, since even Bungie admits that you won't see any change for a while and that MS still has first dibs on ANYTHING going forward... trust me, this is all a very well planned and strategic move by Microsoft!!!

The only thing clear here is Bungie couldn't have been happy under the wing of MS. Or else why would they bother leaving? This is definitely a blow to MS because how many of their first party games really comes through for them like Bungie did with Halo. Rare is horrible, and now you watch a company which made a game that created 300milion dollars in revenue in a week tell them buh BAI, is just insane.

Uhm.. are we reading the same press-release? or did you like... read the headline and make a comment? This is the equivalent of moving into the basement. They are still mostly in the house of Microsoft, they just own more of their company now. If anything the press release shows that they were happy working for Microsoft, and will continue to do so.

kinda like Sonic Team is independent of Sega... but Sega has been publishing their games for the last decade.

I think those rumors of Halo on the DS were true. I know it'll never happen, as MS still holds the Halo franchise. But still, I predict a DS title of some kind from Bungie before the close of 2008.

You will start to see irresponsible sensationalist garbage just like this over at Ars Technica:http://arstechnica.com/journals/thumbs.ars/2007/10/05/bungie-to-become-an-independent-company-leaving-microsoft

Every headline I see is "Omg Bungie splits up with M$!" Ps3 games soon to follow!

OMGWTFBBQSAUCE!!!

So the next Marathon game is multiplatform?

What you know kotaku was Half-right after all.

by the way, that 360 has great tits

Meh, looks like a b cup to me.

Ok- if they continue to support Halo 3, then this sounds like a great deal. Congrats.

The world will explode if they announce anything for the DS or the Wii, but those would be the quickest cash moneys and fastest development cycles for them if they want to get their first non-Halo game in years out the door quickly. I'm not keeping my fingers crossed, but that would be fucking hilarious.

I would love to kill pfhor using the halo engine.

We still might never get Halo DS, but now maybe we can get Marathon DS and Pimps at Sea.

Yay Halo3 DLC.

What I got from this is that Bungie wants to be able to run themselves and expand outwards from just Halo. But because Halo is so popular and has a huge backstory they don't want to screw fans over with that. So MS let the name go so Bungie can claim it's independant, but it's main platform and publisher is still MS, which holds share in the company.

Bungie on the other hand has freedom to spend money on different development ideas (bigger "playground" team) which is why they were a great developer before Halo. They also earn more from any games they make, which you can't argue with. Also don't worry about the Halo I.P. All MS has is a contract saying that Bungie can't go and publish Halo on any other console unless MS approves, It also works backwards too, Meaning MS can't make another developer work on Halo without Bungie's approval. And fact is that Bungie is still the main developer for it.

Finally Nothing will change for us right now (I could speculate what would happen, but I won't) Bungie will still handle DLC,Playlist, And everything else about Halo 3. In fact the only thing that has changed is how the company operates for employees.

Hopefully bungie still has access to the much better marathon license.

Like MS let's Rare develop for DS, they'll let Bungie develop teh haloz DS

No surprise at all. MS wants a regular cash cow franchise and the development shop is sick of doing it.

I can see how this benefits Bungie, but I'm not sure how this benefits Microsoft, especially since they acquired the company.

So now they have less control (benefit for Bungie) and Bungie can potentially market to other platforms.

I know they're trying to spin this positively, but I'm still filing this under, what is Microsoft thinking?

I'm shocked, but thrilled to see this. I've played Bungie games for a long, long time (Marathon forward) and it's great to see them movie out of being tied solely to MS.

I wonder if they'll surprise us and bring out a new game in the Abuse series? Of course, that genre has been covered by things like F.E.A.R. and Half Life.

Wow... the only thing I never really liked of Bungie's was Oni, so I'm hoping the old magic is still there and we might see something new come from them (or, if not new, really, really good).

It's a golden opportunity!

Now is just the right time to go and make new stuff!

http://lawofthegame.blogspot.com/2007/10/mergers-acquisitions-and-divestments.html

Did you guys even read the effing press release? It's like AM2, or Sonic Team was to Sega. All this is is Bungie does it's own thing, but still with Microsoft's platform. Second Party. Period. You people are just interpreting things in the wrong way because you want it to be that way. But read the press release, re-read it, and you will see what I'm talking about.

On the one hand, I love this announcement. It means that Bungie can't be forced into making Halo 4, or some other sort of cash-in on the franchise. On the other hand, it means that alot of the resources, and the capital that Bungie had under microsoft's wing (such as the game testing center etc) are now gone.

Cutting through all the BS and everything else, it seems as if from Bungie's standpoint, this is an attempt to get the freedom to do something other than Halo (Have to realize that they've been doing Halo for almost an entire decade). From Microsoft's standpoint, they get the rights to milk Halo for all it's worth, using any development studio they want.

From a business perspective, Halo is worth alot more in the long term, than if they were to produce a quick follow up to Halo 3. Even with that said, I still think Microsoft is going to strike while the iron is hot. I can't imagine that any company with half a brain, would allow a property like Halo to fizzle out.

I am crossing my fingers and praying hard for Bungie to convince Take-Two to make a sequel to Oni, one of the best games I have ever played.

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It's official: Bungie branches off from Microsoft

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