Tuesday, October 02, 2007

Microsoft to sell Bungie?

Microsoft may be selling ´Halo´ developer Bungie Studios, according to an anonymous source. Jacob Metcalf, a multimedia designer, broke the story on his blog, rather unfortunately citing the anonymous source as "a friend of mine who has someone close to them that works at Bungie."

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.

However, both Jacob´s and his source´s writing skills and particularly their grammar are so poor that it draws the entire story into question. Also, one aspect does not add up.

Microsoft was supposed to release the press release today but if they wait till the 10/6 the impact wont effect the quarterly results.

The reason for delaying the announcement is apparently the quarterly earnings call. Now, this seems very unlikely. The earnings call is pencilled in for the 25th of October. How delaying the announcement until the 6th would prevent the news from having an impact on the call is beyond me. There would still be 19 days between the news announcement and the earnings call. This makes no sense whatsoever. Which is unfortunate, since Microsoft selling Bungie is not out of the question.

The promise to shareholders

Microsoft has committed itself to a positive result within this financial year for the Home and Entertainment division after nothing but substantial, multi-billion losses so far. Shane Kim, head of Microsoft Game Studios, told the BBC: "If we can't make a profit in the year Halo 3 comes out, then when will we?"

And considering that last financial year the division cost Microsoft more than two billion dollars while the lowest losses ever incurred were still half a billion in 2005, it seems unlikely that even a ´Halo 3´ would be enough to get them out of the reds. $170 million on its first day is a phenomenal result, but those numbers are sure to drop sharply on the days to come.

Also, that figure is revenue. Operating profits would be substantially lower, given the development costs and the larger-than-life marketing budget (estimated at more than 10 million dollars) would have to be deducted. So this one game will not be enough for Microsoft to make good on their promise. Also, if they ever wanted to sell the company, now would be the time, after the most successful launch in entertainment history. In fact, selling Bungie might be the only way for Microsoft´s troubled games division to slide into the blacks this year.

Bungie worth a billion dollars?

Just how much could Bungie sell for? Rare cost Microsoft 375 million dollars and Microsoft only bought 51%. So all of Bungie might rake in the better part of a billion, if not more so. And seeing that selling an internal studio has no costs involved, that money would be operating profit, not just revenue.

Microsoft would retain the Halo franchise, which is what counts. The investors would be happy about the division being in the blacks. And Bungie would be happy to prove that they are more than a one-trick-pony. It seems that such a move would make perfect sense for everyone involved.

Who could be buying?

One question remains, though. Who would buy the studio? Of course, theoretically, Bungie could buy itself. In fact, the rumourmonger speaks of the studio becoming independent. But I question whether they have that amount of money available and would be willing to take this risk.

On his own site, Metcalf has posted a number of comments in support of his story. One raises the possibility of a retention agreement ending soon, effectively allowing Bungie top brass to leave the company without penalty.

This theory (if such agreements do legally exist) would be incompatible with Bungie becoming independent, though. Why buy the studio name when all of the staff are free to leave anyway? A studio name is not worth that much.

It really would have to be a company of the likes of Electronic Arts, Ubisoft or, indeed, Nintendo and Sony. If Bungie has any say in this, they might favour a third-party publisher. After all, they must be tired of exclusivity.


The source is as unreliable as it gets: someone (and no, Metcalf is not a journalist, as some would have you believe) quoting a friend who quotes a friend. And they all sent one another mails, riddled with spelling mistakes and containing rumours of April Fool´s joke proportions.

However, it is all too easy to dismiss the possibility of Microsoft looking to sell Bungie. After all, as many have pointed out already, Microsoft recently failed to snap up one of the Xbox360´s most important third party studios, Bizarre Creations (´Project Gotham Racing´, ´Geometry Wars´), before Activision bought it. And the ´Shadowrun´ developer FASA closed shop. Those two incidents prove that Microsoft is no longer throwing money at the Xbox problem. Instead, they are resolute on earning some for a change.

EDIT TeamXbox have joined the fun and appear to be validating at least part of the rumour. Under an intriguing sub-heading ("You know we don't report crazy rumors here unless..."), they write:

We can't provide further info now (we'd put our sources in trouble) but we're going to tell you that it is more complex than simply Bungie leaving Microsoft or Microsoft letting Bungie go.

There will be an official announcement this week, definitely before October 12th.

EDIT On his blog, IGN Wii editor Matt Casamassina has just released footage of ´Halo DS´. This may be unrelated to the rumours about Microsoft letting go of Bungie, but perhaps not entirely.

While IGN divulges little detail about the game (saying only that it was "created by a real development studio and with a very big publisher"), I can add some info to that myself. At the recent European ´Halo 3´ launch event, I had lunch with Frank O´Connor and asked him about the ´Halo DS´ IGN had reported about. He said that it must have been an unwarranted pitch - essentially a demo used for securing business deals - and they often received them.

So O´Connor confirmed that pitches for ´Halo DS´ were in existence and circulation. But they were neither developed by Bungie, nor sanctioned or endorsed by Microsoft, he said. How IGN got hold of one remains a mystery, as pitches are never really shown to the press. But it certainly paid off for the undisclosed studio and publisher behind the pitch, with Matt advertising the demo so well.

EDIT The big boys have entered the debate. Game Informer is validating the story:

From a source close to Bungie, Game Informer has learned this rumor has some merit. It looks like with Halo 3, Bungie really is finishing the fight.

Our source stated that Bungie is “tired of Making Halo, and didn’t want to do future Halo games.” For an unstated, but significant amount of money, Bungie shareholders bought the studio name back from Microsoft. Our source also revealed that even though Microsoft will retain the rights to Halo, Microsoft also has “the right of first refusal on future games.” This means that Microsoft has the first shot at publishing Bungie’s future titles. How this will come into play if Bungie decides they want future game X to appear on the PlayStation 3 and Wii alongside an Xbox 360 release will make things quite interesting.

This type of agreement might be what TeamXbox meant by the deal being "more complex than simply Bungie leaving Microsoft or Microsoft letting Bungie go." The story certainly appears to be emerging as true.

EDIT I can finally add the fruits of my own investigations to this story. I have not been able to confirm any details, but the general story is true. My contacts told me that they were aware of the story through internal channels. So Microsoft must have circulated memos to some key staff already.

EDIT CNBC lends some more credence to the emerging story:

From the two people I'm talking to inside Bungie, I'm expecting a new kind of partnership between the two and not a wholesale break-up.

Sources: Jacob Metcalf´s blog , TeamXbox, Game Informer
Thanks to: Rumor Reporter, Nintentom, Sangreal, HereticPB, MaxConsole


Anonymous said...

to put things into perspective nintendo sold a company name "RARE" TO MICROSOFT FOR ROUGHLY 250 MILLION UK POUNDS, rare had allready shed its talent so microsoft effiectivly just brout the rare name it cost microsoft a futune and look at rare now PATHETIC....







Anonymous said...

bungy want to make wii games i can feel it in my wii

Falafelkid said...

Look, with everyone and their dog going totally mad over this topic, can I just go even madder?

There is this rumoured Nintendo event on the 10th and, apparently, the announcement about Bungie´s future has been pushed back to that very day.

Reggie´s surprise was announced for the end of September, which would have fitted the October 1st announcement. So, put it all together and what do you get? A load of rubbish, that´s what.

fatnickc said...

Also the source says that '[Bungie will] probably make Halo 4 for Microsoft'. Maybe I'm wrong here, but haven't Bungie said that Halo 3 is the last game of the trilogy, although they'll continue to use the worlds/characters?

Nintentom said...

Well, falafelkid, I don't understand your interpretation of this statement... I read it like

"Bungie doesn't like how MS is constantly trying to "handle" everything they do; the way they (MICROSOFT) market their (Bungie's) games,..."

So what exactly do you complain about? Or is it just me? :-)

Falafelkid said...

Hi Nintentom.

So what exactly do you complain about? Or is it just me? :-)

No, it´s me. Oops. Sorry, I completely misunderstood the statement. Corrected, thanks for the little nudge in the right direction.

superuser said...

IGN released this Halo DS videos today:

Falafelkid said...

Hi Superuser. Had seen it already. Thanks for the info, though. Just updated the post.

Jason Alexander said...

:) - Cough

Anonymous said...

but cube boy look the problem is there are almost no games worth getting for wii other than metroid rightnow

i mean if u are a "harcore" gamer

playstation and micro are simply better suited for those needs

nevertheless im actually gonna buy a wii soon as metroid hits shelves in europe...AND just fore metroid...cuz i wanna play that title with the new controlls so badly...ok then again i m of course lookin forward to such titles as nights and galaxy...and i m curious if factor5 will jump on the ninty bandwagon again with the rebel strike engine...id love to see just how much further they can push the engine that'd be great

Anonymous said...

another rumour seems to be true :



Anonymous said...




Anonymous said...

hey cube boy thats mario mario mario and kiddi final fantasy

maybe u are younger and its still new and exciting stuff for you and thats ok u know i m also looking forward to get my hands on galaxy

but look im talkin about hardcore core gamer titles like GTA4 Bioshock, Lost Planet, heavenly sword silent hill resi 5, fallout 3, haze, real final fantasy, MGS, unreal next, gears of war, too human, sega rally, pgr, turok, lair devil may cry virtual fighter, tekken, wipeout etc etc etc u get the picture

that stuff is all 360 playstation EXCLUSIVE

as it stands Wii is a console with 75% more or less shitty party games with sub par last gen graphics and thats simply sad from the point of view of "hardcore" gamers cube boy

Touch-Gen said...

@ Anonymous...

It really depends on what you think an adult game is? Sure its easy to say that the games you mention are adult titles but then many of these titles contain the same ideas and controls making them basicly the same types of games but with a different art direction and storyline. But do not confuse youself, Nintendo's titles may be aimed at a wider age group but the thing is about them is that people of all ages can play them and get a different experience out of them.

For example: The Simpsons is kiddy looking but any age group can watch it and get something different from it. Like the jokes told, a child would think its funny for a different reason than an adult would?!

Anonymous said...


Just kidding. If Microsoft were to sell Bungie for some odd reason I'm sure they would buy or keep the rights to Halo (I don't know too much about copyrights), and possible whore the franchise out as much as they could. They wouldn't let a top seller leave.

About selling Bungie, I don't see any logical purposes, but then again I don't work there so I have no clue what's going on..

Anonymous said...

all these 360 and ps3 games.. i dont know but somehow they look all the same....the surfaces look so similiar...gears of war looks kinda plastic with normal mapping...i dont know what the problem is maybe its just me...metroid on the other hand ...it looks more natural without those techniques..'m pretty sure Retro could have easily included bump mapping but they choose not to soon as they figured that it wouldnt work any wonders for the overall look...it would have looked like any other bump mapped shooter thats out..those bump mapped pc shooters are a dime a dozen nowadays it has become a standard to use it..they use it on allmost every surface..i dont know why maybe i have seen too much of it but bump mapping just doesnt make me say wow anymore like it used to in the first games that took advantage of it...oftentimes it seems to serve more or less as a quick practical nobrain solution for lack of real creative and inspirational texture work that you can see in such titles as metroid or resi 4...of course,its efficient, it adds a certain depth that a simple texture lacks and which is too lavish to recreate with polys ..and you can spare polys and whatnot for other things but still im tired of it...i dont like how many of these games look so similiar.

Falafelkid said...

Hey Anonymous.

'm pretty sure Retro could have easily included bump mapping but they choose not to soon as they figured that it wouldnt work any wonders for the overall look.

I just thought I should clear up some confusion: ´Metroid Prime 3´ does use bump mapping.

Grandmaster B said...

If PS3 can be modified I will be out to buy one when it comes down in price. It has games Wii does not get, ones I also want to play.

I have a modified Wii and I tell you, I have around 8 games and 6 of those are Nintendo games. These are things I dont even need to pay for, it is quite a dismal library in my opinion and so far no better than GC.

I am one of the biggest Nintendo fans out there, but it really needs to improve. I am not talking market leader wise, but

Grandmaster B said...

I didnt get to finish what I was typing. Got side-tracked.

But I want more than just Nintendo games to play. So far the Wii controls for some games have been an improvement but I dont wage over it too much over traditional controls. Of course I am only a minority.

3rd parties really need to step up, I want my Wii more than just to play Nintendo games. SNES had plenty, I just hope with more 3rd party adoption that they start rolling out good titles soon.

Anyway I am just whinging here.

superuser said...

@Grandmaster B
What 3rd party developers do for the Wii is a shame. Maybe it's even worse, bc if it's the same after the next 6-10 months then the Wii will die for most people that need more than those casual crap... and i think that most people buy a console (even a Wii) bc of the "real" games. I can't stand to see all those cheap developed family friendly crap, when i check my local videogames store. And to make it worse, there are piles of absolute useless plastic shells allover the place, making the Wii look like some brainless attention whore from one of those Popstars/Star search shows on TV.
OMG Nintendo Wii, what do those greedy people do to you... i hope you free yourself of them fast!

Anonymous said...

retro could've used bumpmaps (not necessarily normal maps but embm - no fuss) had they wanted to. a plausible explanation why they did not is that they wanted to use the space that bumpmaps would've taken in ram for their state-of-the-art diffuse- and light maps instead. moreover that bumpmaps could not be compressed with the compession schemes employed by flipper, and likely, by hollywood. and also, all bumpmapped surfaces would've needed a reflection map that goes with the bumpmap (for embm), although the reflection map does not need be unique and can be reused across many things in a scene [ed] actually, come to think of it, plenty of surfaces in the game already have their reflection maps, so that latter wouldn't have imposed much, if any, hit. but bumpmapping would have definitely reduced their magnificent diffuse mapping work, which ended up nothing short of admirable.

basically corruption as it is, is all about genius geometry work and equally-good diffuse (and specular too) texture work. and the necessery icing in the form of exquisite particle fx and the proverbial bloom. all that comes to show once again that a genius artist needs just a charcoal.

Falafelkid said...

Just to be absolutely clear, I´ll repeat this: ´Metroid Prime 3´ does use bump mapping. 1up´s James Mielke should know his stuff.

Anonymous said...

Damn people,

I wish Bukem/Blame of Good Looking Records fame had handled the soundtrack to Metroid 3.

It would have been the perfect combo..mmmhh...no question...It really would be the perfect match.

I cannot think of any music that could possibly better convey/transfer and underscore the virtuosity of Retros style and the ambiance of the metroid world in general...you know..that alone in space feeling that u get from playing..that passive aggressiveness. The uk gang is top notch.

>> http://youtube.com/watch?


>> http://youtube.com/watch?v=-



Anonymous said...

Um no falafelkid I'm afraid he just mistakes bump mapping for the diffuse and light mapped and multi layered nature that might give the impression of bump mapping when in reality its not there

I mean its hard to tell sometimes
but I have yet to spot any classic type of bump mapping thats used in pc 360 fps for example


Anonymous said...

What was only a rumour is now news. Sony IS planning to lower the price of his PS3 and introduce a new 40GB model by christmas this year:



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Anonymous said...

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