Bungie Studios Independence Discussion Thread

[Deepak]

It's a win compared to the worst case scenario, i.e. Bungie employees quitting en masse because they're sick of workin on Halo, and MS being left with a skeleton company.

But still I am really shocked that something like this could ever happen. Are there any other such examples in videogame history?

 

[Dave Baumann]

I wonder what the salary and maintainance costs of Bungie are. People are looking at this from the perspective of Bungie wanting out, but this could also be seen as helping MS's gaming division return to profitability.

If Bungie is to become a separate entity again, with MS owning a large share then effectively MS are spinning them out - it also means that Bungie has to stand on its own two feet. Presumably some of the proceeds for the IPO sale will go back to MS to fund their stake in Bungie, but I would assume some would go back into sustaining Bungie while it is working on new IP, but not reaping any profit from it.

From MS's point of view, they are quids in - they reap the rewards of Halo's release, and will continue to do so, from this and future releases; in the meantime they don't have to pay for the upkeep of a studio that want to explore new IP, that has no guarantee of being successful.

 

[Carl B]

Again, it's not an IPO - just a straight sale. But it doesn't even matter because the result for MS is the same; whatever Bungie was internally valued at, Microsoft has monetized the percentage it's divested itself of at that value.

 

[Dave Baumann]

Effectively its the same net result to MS.

 

[dobwal]

Effectively its the same net result to MS.

Agreed, the only thing different is Bungie gets to call itself independent and shareholders of Bungie gets a slice of the Halo pie.

A rather large chunk (even though not as large as before) of the profits will go to MS as it will get the licensing fees, publisher's cut as well as literally half of Bungie's cut.

Its a rather odd relationship. MS has the control of the board as well as financial control. Kind of seems like MS retains an extreme advantage when it is the publishers as well as the controlling entity within the dev.

 

[dobwal]

I wonder what the salary and maintainance costs of Bungie are. People are looking at this from the perspective of Bungie wanting out, but this could also be seen as helping MS's gaming division return to profitability.

If Bungie is to become a separate entity again, with MS owning a large share then effectively MS are spinning them out - it also means that Bungie has to stand on its own two feet. Presumably some of the proceeds for the IPO sale will go back to MS to fund their stake in Bungie, but I would assume some would go back into sustaining Bungie while it is working on new IP, but not reaping any profit from it.

From MS's point of view, they are quids in - they reap the rewards of Halo's release, and will continue to do so, from this and future releases; in the meantime they don't have to pay for the upkeep of a studio that want to explore new IP, that has no guarantee of being successful.

Its probably a given that Bungie's cost to MS compares nothing to the profit generated through the Halo franchise. Bungie would be the worst possible candidate for spinning out a dev to save cost as the future Halo profits that goes to Bungie would overshadow its operation cost by a huge amount.

MS's stake in Bungie cost MS nothing as MS was paid to give 55% of ownership of Bungie to someone else. Given that Bungie will still dev Halo, MS's publishing arm will be funding the operation cost of Bungie unless there is a period of time that no deving of Halo4 will take place. Thus, it would probably fall on the other owners as well as MS to fund Bungie's operating cost.

 

[Zaphod]

Effectively its the same net result to MS.

Not really. An IPO would put some (many) constraints on what could be achieved with regards to the bylaws of the new corporate entity and it's responsibilities to MS. There's (much) more flexibility with spinning it off as a private business deal negotiated between the parties.

 

[Kanyamagufa]

Although clearly different situations, I can't help but think that Bungie splitting from Microsoft has the same sort of feeling as when Pixar went its separate way from Disney...

 

[PiNkY]

Well the idea is probably to keep the team together by granting everyone important a share in the company. Might be a good way to avoid a blizzard style talent drain.

 

[one]

I wonder what the salary and maintainance costs of Bungie are. People are looking at this from the perspective of Bungie wanting out, but this could also be seen as helping MS's gaming division return to profitability.

I think it's what's happening as the continuation of my post in the older thread.
http://forum.beyond3d.com/showpost.php?p=1073602&postcount=136

As for Bungie and MS, we don't know what the internal goal of the Home & Entertainment division of MS was like, it's likely they are under pressure by the HQ to deliver a profit soon now that all strategic cards of Xbox 360 have been put on the table.

There was another case such as MGS Japan and Feelplus
http://www.gamasutra.com/features/20070507/sheffield_02.shtml
http://www.gamasutra.com/features/20070507/sheffield_03.shtml

Gamasutra: Did you start Feelplus?

RN: No...well Microsoft and Hayao Nakayama, who founded AQ Interactive (also ex Sega boss), discussed it. Lost Odyssey was once an internal (Microsoft) project that was done by my staff anyway, but it wasn't going well. One of the reasons it wasn't going well was because it was an internal project, and Microsoft’s culture and systems made it harder – we couldn’t go smoothly.

That's when we decided to make our team an independent studio, and I asked Mr. Nakayama to found the company. I then moved in several Microsoft people into that studio, and also hired a good number of people into that studio. Mr. Nakayama and I, on behalf of Microsoft Japan, discussed starting up a company, but it was originally managed by one of Mr. Nakayama's people. I joined that company a little later, after I finished Ninety-Nine Nights.

Gamasutra: You mentioned that Microsoft has a difficult structure for Japanese developers. Why is that?

RN: One thing is the cost. Man-month cost is very high. Not salaries, but being a Microsoft employee is expensive. We have a fixed amount of budget, and with Microsoft's man-month cost, we can only do so much. But if we move the company (external), per-person, per-month cost goes down, so we can do more. So that’s one thing.

Recruiting was another problem. We had to recruit a lot of people, and Microsoft as a company has a very high bar to hire people in. The person has to be generally superior in all areas, but game specialists, in general, are often great in one area and not so great in others. It was very hard to meet all of the hiring criteria that Microsoft had, so it was hard to hire people. Stuff like that.

 

[cthellis42]

Yeah sure..

They've already stated that their company vision is world domination (which will ultimately require the subduing of MS) on both their web site and on the credits of Halo 3..

Well if Pixar could do it to Disney... It's not inconceivable!

 

[Rangers]

So, Bungie is still on Halo4? Bummer. That's all I got to say. It also probably means a long delay and more inferior graphics for Halo.

I was hoping MS had already started Halo 4 with another team that was actually eager to do the work.

Also, so this means, will MS in effect make less money off of each hypothetical, future Halo 4 disc sold now? Or am I getting it wrong?

If MS is publishing, do they get all the profits like an internal developed game? How does that work? I guess, their is an agreement with the dev house to get paid X?

I guess I'm asking, take MS's deal with Epic for Gears of War 1. Did MS get to keep as much of the profits of that game as they do with a true first party game?

 

[AzBat]

I must have missed the source for the 45% Microsoft ownership figure. I also saw a 40% figure touted. Anybody got a link for that? Also, how does having 40-45% interest in a company correspond with controlling the board room? Isn't that a minority stake?

As for game platforms, everything I read seems to point to Microsoft game platforms only with Microsoft Game Studios as their only publisher. Where you guys reading that they'll be able to go multi-platform? I'd like to see some hard quotes from Bungie or Microsoft employees.

Lastly, I'm sure a lot of you missed this part of the Bungie press release:

Bungie’s management retained the services of Don Leeds, senior managing director of B-Hive Global, LLC, to assist in the structuring of the deal and negotiating on their behalf.

Looks to me B-Hive helped Bungie buy back their company. I don't see any evidence that this means IPO, but I can buy the reasoning that this was done to make Microsoft's Entertainment division profitable.

Tommy McClain

 

[AzBat]

So, Bungie is still on Halo4? Bummer. That's all I got to say. It also probably means a long delay and more inferior graphics for Halo.

I think you and anybody else that think Halo 4 is coming anytime soon are nuts. Ensemble's Halo Wars and Peter Jackson's Halo project are the next Halo games up and _if_ Microsoft ever decide to do another Halo sequel I'm sure that it won't be out till 2010 at the earliest. With that said I'm thinking Bungie will not be the ones doing that title if there ever is one. A lot of the comments in the press releases and other articles suggest that Microsoft will have some other developer working on future Halo titles.

Anyway, lets don't get ahead of ourselves. Lets wait to hear about Peter Jackson's Halo project before ever start talking more about a hypothetical Halo 4.

Tommy McClain

 

[Rangers]

here's a interview with bungie's frank o'conner about the split.

http://biz.gamedaily.com/industry/feature/?id=17682

More interviews:

http://www.gamesindustry.biz/content_page.php?aid=29329

http://kotaku.com/gaming/feature/bungie-owns-bungie-the-qa-307656.php

http://multiplayerblog.mtv.com/2007...soft-we-are-not-playing-with-any-new-devkits/

Now I'm confused as to the staus of Halo 4, and who is doing the game..

 

[Geo]

Also, how does having 40-45% interest in a company correspond with controlling the board room? Isn't that a minority stake?

Ask the Ford family!

Seriously, there are ways to accomplish that by having different classes of stock, not all of which has voting rights. So while my eyebrow went up fractionally on that part of the report, I didn't "wtf!?" at all. That doesn't make that part of the report right/wrong, it just didn't automatically fail my giggle test.

 

[one]

here's a interview with bungie's frank o'conner about the split.

http://biz.gamedaily.com/industry/feature/?id=17682

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

It contradicts the first post in this thread. It's great if Marathon appears on Mac again.

 

[AzBat]

here's a interview with bungie's frank o'conner about the split.

http://biz.gamedaily.com/industry/feature/?id=17682

More interviews:

http://www.gamesindustry.biz/content_page.php?aid=29329

http://kotaku.com/gaming/feature/bungie-owns-bungie-the-qa-307656.php

http://multiplayerblog.mtv.com/2007...soft-we-are-not-playing-with-any-new-devkits/

Now I'm confused as to the staus of Halo 4, and who is doing the game..

Thanks for the links. Here's a few more...

http://www.next-gen.biz/index.php?option=com_content&task=view&id=7416&Itemid=2

http://www.1up.com/do/newsStory?cId=3163440

Looks like Bungie still owns Pimps At Sea.

Tommy McClain

 

[Carl B]

Looks to me B-Hive helped Bungie buy back their company. I don't see any evidence that this means IPO, but I can buy the reasoning that this was done to make Microsoft's Entertainment division profitable.

B-Hive was the firm they retained for M&A advice/advocacy in this case; it's simply the norm to bring consultants like this on to make sure that corporate interests (and the interests of the principals) are looked after in the creation of a new entity.

It contradicts the first post in this thread. It's great if Marathon appears on Mac again.

Well, the first post was abandoned as factual early into the thread; it just remains there for a de facto framework until the situation clarifies a bit more.

 

[RobertR1]

Now I'm confused as to the staus of Halo 4, and who is doing the game..

Ultimately, MS decides who does Halo4. From today till Halo4, many things could and likely will change so I'm not sure how valid today's plans would be. Hell, they could even bid it out to a number of studios. Bungie, Epic guys who did Bioshock and others are plenty capable.