Rumor of a Bungie acquisition circulating on fan sites and game publications last week is rumor no more - it is now official fact. Microsoft has acquired Bungie Software, the maker of the Myth games, Oni, and the upcoming sci-fi action game Halo. Up until the acquisition, Bungie had only been listed as one of many developers for Microsoft's Xbox game console. However, in light of Microsoft's attempts to garner support for Xbox, this acquisition is a logical strategic move to acquire new game technologies and ensure the development of top games for the console's launch lineup. In addition, Microsoft gains exclusive publishing and distribution rights to select future Bungie-developed titles.

Microsoft and the small, independent developer/publisher, which has been seen as an iconoclast in the games industry, would appear to make an unlikely pair like David and Goliath. However, the acquisition is a positive venture for both companies. Bungie will focus its resources and staff on creating games, including content for Xbox, while Microsoft handles publishing and distribution affairs.

Bungie's development staff, which includes three separate teams (two are located at its Chicago headquarters; the Bungie West Coast Studio is based in San Jose, California), will become an independent development studio in the Microsoft Game Division. Bungie West is currently finishing the anime-inspired sci-fi action-adventure game Oni for PC and Mac, and will join the main group after Oni's completion some time this fall. According to Bungie CEO Alexander Seropian, who founded the company in 1991, "We are also looking forward to helping define the Xbox platform, which may soon be the world's premier game console."

Also as part of the deal Microsoft has bought Take-Two Interactive's 19.9 percent equity interest in Bungie. In August 1999, Take-Two Interactive took a stake in Bungie and secured exclusive North American distribution rights to four Bungie titles, including Halo, Oni, and two undisclosed projects. In addition, Take-Two's Rockstar Games had obtained rights to publish video game versions of these games.

Take-Two now has acquired all rights to Bungie's Myth, Myth II, and Oni. Oni for the PC and Mac will be published by Gathering of Developers, and Oni for PlayStation 2 by Rockstar. Take-Two has also received the right to royalty-free use of Halo's engine for two games. The Myth series of real-time tactically oriented games is said to have sold over 1 million copies, and Gathering of Developers plans to publish additional games in the series.

Bungie and Microsoft continue to hold the rights for Marathon, the series of sci-fi shooters that established Bungie as a mainstay in Mac gaming and allowed the company to make its first venture for the PC. The worlds of Marathon and Halo have long been rumored to be connected in mysterious ways.

The Xbox won't be Bungie's first console venture, as Oni for PlayStation 2 is an expected launch title for the PlayStation 2; the game was prominently displayed at E3. The Xbox's appeal was immediate to Bungie when Microsoft began approaching developers about the new console at the beginning of the year, and Bill Gates' Xbox announcement at last March's Game Developers Conference notably displayed Bungie as a developer for the platform.

For more perspective, be sure to read our exclusive interview with Bungie CEO Alexander Seropian.