Even though they were new to the console market, Microsoft understood that console sales depended on the quality of games they could offer, and that strong launch titles would be critical to the new system’s success, particularly when they were going up against far more entrenched competition from Sony and Nintendo. So, while the hardware team was building the console and the software team was creating the OS, Ed Fries was on the hunt for some first-party launch titles, and not just any launch titles, but games that would rock the world. He knew that his current first-party portfolio, which consisted of Flight Simulator, Age of Empires, the Links golf games from Access Software, and a few more small titles would not do the trick. Moreover, none of Microsoft’s current studios had console development experience. They needed something big.
One of the first big steps Fries took was to contact Lorne Lanning at Odd-world Inhabitants. Oddworld’s Abe’s Oddysee had been a PlayStation hit, and Fries hoped to get him over to Xbox. “We had an opportunity to work with Lorne Lanning and we really saw that as a key deal because he had worked on PlayStation in the previous generation, and so to be able to take a developer away from Sony and have him working on our platform was good.” Fries also approached Liverpool-based Bizarre Creations to adapt their Dreamcast title, Metropolis Street Racer for the Xbox, which became the launch title Project Gotham Racing. NFL Fever was another launch title developed by Microsoft Game Studios.
Oddworld
Oddworld was formed by two industry veterans, only their backgrounds were not in the game industry. Lorne Lanning was a technical artist who had worked in special effects and high-end animations, most recently at the prestigious Rhythm and Hues. (If you remember the famous Coca Cola bear commercial, that was from Rhythm and Hues.) Sherry McKenna was a Hollywood veteran producer who had worked with some of the top animation and special effects people in the business, and at the time the two met, was working for Disney on theme park attractions.
Lanning had a grand vision for a five-game series (a quintology) based in a capitalistic nightmare world, initially featuring a truly odd character named Abe. He sold McKenna on the idea and together they started Oddworld Inhabitants. Their first game, Abe’s Oddysee, was a big success on both PC and PlayStation.
While Oddworld’s games were truly unique, so were their production values at the time, based on 1997 standards. They modeled and rendered every aspect of their games in cinematic quality 3D and then dropped them down to PC and console resolutions, and for the first two games, went from 3D to a 2D sidescroller. The second game in the quintology was Abe’s Exoddus, which was released in 1998.
Although Oddworld was originally funded through investment from a private trust administered by the heirs to a billion dollar estate, they later made a deal with GT Interactive for a 49% stake in the company along with publishing rights. Although the relationship with GT went well enough for the first release, problems with the second release caused Lanning and McKenna to start thinking about getting out of the relationship. Initially, when McKenna told GT that they were seeking a buyout partner, they were given the go-ahead. So in late 1998 McKenna began having secret meetings with Steve Schreck, who was a product planner for Microsoft. Although they were also speaking with another publisher, the meetings with Schreck were going very well, so well in fact, that they came to a verbal agreement that Microsoft would buy out GT’s share and enter into a first-party publishing deal.
Sherry McKenna and Lorne Lanning
In the meantime, GT was experiencing its own problems and had decided to sherry McKenna and Lome Lanning seek a buyer for their company. So when McKenna told them that she had found someone to buy out their shares, she was told no. GT was for sale, and they needed Oddworld as part of their portfolio. They would not approve of a buyout deal, and because GT was their publisher, Lanning and McKenna couldn’t complete the deal with Microsoft. “Considering the playing field of business in Silicon Valley,” says Lanning, ‘who’s going to buy a company that has a lawsuit going on with its current partner? And we were still a developer relying on a publishing deal, so we can stay fed month to month.”
Consummate professional that she was, McKenna was mortified. “I pretty much told Steve that we were going to do a deal with him. And I didn’t check with GT. I didn’t think I had to… I had to call Steve, and it was really embarrassing. I had to say, ‘Steve, I know you have every right not to forgive me, but GT won’t let us go. And I’m so sorry, and you can’t buy us.’ And I felt like an idiot. I didn’t think that GT needed us that badly to sell… whatever. And I blew it.” According to McKenna, Schreck and the other Microsoft people, while they weren’t happy, “they weren’t mean about it.”
But then Infogrames stepped in and purchased GT Interactive.
Life under Infogrames—their new 49% partners—wasn’t any rosier than it had been under the original GT management. Ironically, it was McKenna’s suggestion to GT that led to the Infogrames acquisition. After meeting a couple of Infogrames’ people, she had gotten a very good impression of the company and made the suggestion that GT approach them. “I really liked them. I really believed them. And I thought it was a good idea. And then after I signed like a moron; I met Bruno [Bonnell]* and went, ‘What have I done?’”
*Bruno Bonnell was one of the founders of Infogrames (later Atari after acquiring the name) and served as the company’s CEO and chief creative officer from 1983 to 2007.
One main source of their concern with Infogrames in charge centered on a policy that Lanning heard about through the grapevine: That Infogrames was going to cut any of their titles with budgets above $3 million, a policy that would leave Oddworld out in the cold. They were working on Munch’s Oddysee, but could not show any of it publicly because the PlayStation 2 developer contracts legally prevented them from showing any game footage that hadn’t been approved by Sony. Lanning knew that Munch would be axed if he didn’t do something.
Lanning performed what he called “a jujitsu.” From his days working in the aerospace industry, he remembered that they often created “visualizations” of future products. So what Lanning did is have his crew pre-render game scenes from Munch. Because these scenes were not rendered in the PS2 devkit, but were simply “visualizations” of their product, it was perfectly legal for them to share them, which they did. They made about a hundred CDs with these game visualizations and sent them to major media contacts. They said, ‘Hey, look at what we’re working on. Here’s the movie clips. Here’s screenshots. Here’s the story about Munch’s Oddysee.” And it worked. Pretty soon there was all kinds of buzz about Munch’s Oddysee. “Infogrames is a public company,” says Lanning. “And we just got blown up in the press as one of the early people that you should be watching for the PS2. Big Sony story, right? That got us into Forbes. That got us splashed all over because no one else had PS2 footage to show.”
In Game of X v.2 (page 118) there’s a story about Alex St. John doing something similar, and as St. John described it, what Lanning did was to “tar baby” Munch to Infogrames. This not only saved Munch and Oddworld, but ultimately led to them regaining their shares, getting total control over their IP, and a new round of talks with Microsoft.
Once again McKenna and Schreck began discussions, this time to include Munch’s Oddysee as a launch title for Xbox. From Oddworld’s perspective, they wanted a publishing partner to help them complete the quintology. One embarrassing moment occurred at E3 when Bruno Bonnell walked into the room where McKenna was demonstrating Munch’s Oddysee to Schreck. “It was a moment of embarrassment, but we pulled it off,” says McKenna.
Eventually, they began speaking directly with Ed Fries who told them that he was very interested in working with them on a multigame deal. As McKenna remembers the conversations, “He said ‘If we have Oddworld, we’ll be able to attract a lot of other publishers.’ And I said, ‘Fair enough.’ And he said ‘We want to do casual games. And I’m sure you’ve heard this a million times, too.’ And so… OK. Munch would be perfect. Munch is a casual game. That’s exactly what we wanted to do.”
The decision to go with Microsoft hinged primarily on the answer to one important, and currently unresolved, question. Were Bill Gates and Steve Ballmer going to greenlight Xbox? Even though they were hoping to go with Microsoft, there was at least one other company interested in them. The dilemma was that final meetings with Schreck and Fries took place in December of 1999, and Xbox had yet to be fully approved. Did they wait for Gates to make a decision, or take a deal that might not be available later?
When they learned that Gates was going to speak at the upcoming GDC, they were hoping that he would announce the console officially, but they weren’t positive. “So we didn’t know at the time and I think it was that Ballmer was hesitating or something, and we didn’t know what the final decision was, and we had to wait until Bill got on the stage,” says McKenna. “And I remember we were all sitting there terrified. Are they going to announce it or are they not going to announce it? Because if they don’t announce it, that means we’re not going with Microsoft, and that was a really scary moment. And they, thank god, did announce it.”
An Artful Deal
Oddworld negotiated a very good deal for themselves. On the Microsoft side was the law firm owned by Bill Gates’ father. On the Oddworld side was precedent. “Precedent is a big part of deal making,” says Lanning. “So you can make demands. You can say, ‘Well, these are our terms,’ And then they’d say, ‘Well, no one has terms like that.’ And you can say, ‘Well we do.’” And then they trotted out Exhibit A and Exhibit B: Two previous contracts that showed their previous deals. Precedent. The final deal didn’t include any advances, but Microsoft took over development costs and treated the game as a first-party title at launch. Of course there were royalties, but that’s another story.
The Traitors
When news got out that Oddworld was going to develop exclusively for Xbox, a lot of people freaked out. Sony wasn’t happy, but they didn’t have an exclusive deal, so there wasn’t anything they could do about it. But the fans… Many of Oddworld’s fans went a little crazy. There were even death threats aimed at Lanning. “Oh yeah. It was not funny,” says McKenna. “‘How could you do this?’ ‘How could you be a turncoat?’ ‘Abe would never do that.’ ‘How could you go with Microsoft? You’re a traitor.’ And I wanted to say, ‘Wait guys. Sony is a Japanese company. Microsoft is an American company. What do you mean? Yeah we all have problems with some of the things that Microsoft does, but this is insane.’”
What the fans didn’t know at the time was that work had begun on a PS2 version of Munch, and they were encountering problems. They weren’t sure that the PS2 would be able to handle what they were attempting, and what they had seen of Xbox convinced them that it was more robust in certain important areas, and that they wouldn’t have to compromise if they went with Microsoft.
Technical Issues
One of the reasons Oddworld had gone with Microsoft was because they didn’t think they could do Munch on the PS2 without making compromises. “We were on a middleware engine,” says Lanning. “It was complicating things, and our engineering was basically saying, ‘Look, if we get on the Xbox devkit, all of these performance problems go away.’ And then we get onto the Xbox and we were running at the same performance. So we had a big problem.”
McKenna was no stranger to technology. Lanning notes that her experience working with Academy Award winning effects guys in Hollywood meant that she recognized a problem when she saw it, and wasn’t going to let them miss their deadlines. “I don’t play games,” says McKenna, “and I have a reputation in Hollywood and a reputation everywhere of speaking my mind, and I don’t like cover-ups.” At one point Lanning recalls that she spoke directly with Seamus Blackley and told him to come down and review the code himself, or send Mike Abrash. McKenna admits to being thoroughly embarrassed, “but I knew that I had to bite the bullet because we wouldn’t be able to make the launch, and that is something we’d agreed to do.”
She told them she needed someone immediately, “and sure as shit, they sent them down and they helped us.” Blackley sent several people from ATG to help out and identify the problems they were facing, some of which were technical differences based on how Xbox handled graphics. ATG even helped Oddworld interview a new tech lead, who restructured their team and got them all up to speed on the technology Xbox was using. About ATG, McKenna raves. “They were great. They were just wonderful. I couldn’t believe it. They just dove right in. It was really important for us. I mean we never could have gotten there from where we were. I mean, just no way.”
Fixing the Brawl
One of the ATG people sent down to Oddworld was Mikey Wetzel. “Munch’s Oddysee was ready to ship, but it had one lingering problem that was driving the developer crazy. In that game, fights could break out—in fact it was part of the strategy of the game. You could go up and you could slap a character and then start the equivalent of a barroom brawl, and all the enemies would start fighting, and that’s one of the ways you’d solve some of the levels.
“The game boasted that up to 30 people could fight at a time. Well that was actually—I don’t know if people appreciated it—but that was really impressive from a technology point of view, to have that many AIs running and doing different things at the same time. Well, what happened is that, whenever a fight broke out, the frame rate would go from 30 frames a second down to 3 or 4 frames a second. Obviously, they couldn’t ship the game that way. Everything else in the game was ready to go. And I’m kind of a firefighter. I get called in at the very end. Fix this and we’re good to go.
“I looked at the code, and the way the AI worked is that every character would look at all the people near him, and they had a variable called ‘beatability’. Like beatable is that character? And so when they’re in a fight, they’re looking at all the characters around them, and the AI would assess which of the nearby NPCs was the least or greatest threat. Well, 30 characters looking at 30 other characters, that’s 900 AI decisions going on every single frame. A thirtieth of a second later, they would go through all 900 permutations and look at who’s closest to me, who’s the easiest hit, and there were different AI criteria for how these characters would fight. Like a character would prefer to fight somebody who was less strong than him, another AI character would prefer to fight somebody who maybe didn’t have a gun in their hand, who is closest to them… so forth, right? And I was thinking about it, and it was like, ok, if I was in a fight—a barroom fight—I’d probably have to pick a guy and just fight that person. I couldn’t possibly be concerned with all 30 people around me at the same time. And so, my very simple fix was, once you make a decision to fight a guy, let’s commit to that decision to fight the guy for, let’s say, a second… like 30 frames. And rather than reconsidering that decision… it’s not even realistic to think that you could change your mind 30 times a second on who you fight. And the developer took that fix and said, ‘It’s brilliant.’ It was about two lines of code to fix it, and the game shipped. I was another pair of eyes, although I don’t know why one of the other developers didn’t think of the same solution.”
About their experience working with Microsoft during the development phase Lanning says, “It was quite great, and the support was quite great. On the marketing front, leading up to launch, Ed Fries I think really had a lot to do with the vision at the time for software, and on one level you felt the energy of that group and its must-have success orientation and commitment; and those people worked hard. They were working round the clock. All of the people that I knew and was aware of at Microsoft at the time were running themselves really ragged. But they were excited still, so it was a really unique moment, and when they were at the studio, they were only helpful and productive. So that was a wonderful time.”
Spielberg
Steven Spielberg was a gamer and had several times delved into creating games, such as The Dig for LucasArts. At the time that Fries was looking for hit titles, Microsoft was a major investor in Dreamworks, so it was natural that he and Spielberg would come together over an Xbox title based on his upcoming movie, A.I. “We actually had three games in development around this new movie,” says Fries. “The movie was going to come out around the same time as Xbox and because it was from Steven Spielberg it was going to be this huge success and these games were going to ride on his coattails. So part of the launch of Xbox was going to have Steven Spielberg and these games.”
Stuart Moulder was involved in the early planning stages of the A.I. game projects and took a trip down to the Amblin Films lot to meet with producer Kathleen Kennedy and Spielberg. “They led us through the entire story of the movie, because it was still in preproduction, so that we would have some material and know what kinds of thing we might want to build around it. Which was a fantastic experience. We walked out of that going, ‘Wow. This is not ET 2. This is an adult, somewhat disturbing, very dark story. But it’s hard to see how that could really be the lead IP for a new console.’”
Unfortunately for Spielberg and Xbox, A.I. flopped at the box office, and according to Fries, “We had to pull the plug on those games. It was a bit painful, but that’s the game business.” Moulder remembers that, after seeing what the movie was about, “we went a little ways further down the path with that before ultimately quietly paying them some money and walking away from it, and letting them take those rights back.”
Bruce Lee
Jonathan Sposato was one of the first-party leads, and he remembers some of the more obscure titles that were considered. One in particular might have been quite interesting. It was based around Bruce Lee, and according to Sposato, “That was the one that a lot of us were hanging our hats on. We were working with the Bruce Lee estate, with his former wife and daughter, and we got face molds from Universal Studios from when he was a contract player on The Green Hornet.” The game was going to be created by a team of ex-ILM (Industrial Light & Magic) employees who had broken away and created a game startup in the San Francisco Bay Area. Unfortunately, the game never materialized as the team missed deadline after deadline, forcing Microsoft ultimately to cancel the project.
Sposato also remembers working with Larry Holland, who was the developer of several popular games for LucasArts, including the very popular Star Wars: X-Wing and Star Wars: TIE Fighter games. According to Sposato, Holland’s Xbox game, Archipelago, was released after the launch, but there seems to be no record of it.
No, Microsoft didn’t release a dog or cat game at the Xbox launch, but they did include a game that was generally believed to be J Allard’s pet project, but there’s more than one side to this story.
It was called Azurik: Rise of Perathia from Adrenium Games, a company located in nearby Kirkland. According to Moulder, Allard had started the game with Adrenium (before they actually adopted that company name), and he had a pretty strong attachment to it, despite the fact that other people at Microsoft did not like it. And because Allard was involved, it became a first-party title. “They basically were forced to give the game to us. It was terrible. It was terrible because J didn’t want to give it up because it was his personal love and passion. It was terrible for us because we didn’t want it. But we were told we had to take it, because to just kill it would piss J off and he’d quit, basically.” Moulder goes on to explain that he was sympathetic to Allard’s position. He had started it, sponsored it, believed in it. He was forced to hand it over to the first-party team, only to watch them kill it. “So J’s point of view was understandable, but it was just the worst possible situation. We don’t have any love for this thing, but we’re told we have to keep it alive.”
Moulder’s story may represent what many people at Microsoft believed, but Allard contends that the situation was quite different. He says that the game was started by some superstar employees from Rick Thompson’s hardware group. “the goal was for the platform team to have a customer ‘in the building’ to test everything we produced and said to developers.” When Thompson left, Allard took over the team. He admits that they weren’t “game guys,” but says that the two leads, Matt Stipes and Russ Sanchez, were perfect for the task. As far as it being his presence on the project that more or less forced first-party to adopt it, Allard says, “1st party insisted on taking it over and managing it like all other titles they were working on. I really had nothing to do with it other than being someone interested in learning what we could from them, advising and helping how i could and then sticking up for them when rick left.”
Azurik did eventually get published, either at launch or shortly afterward. It didn’t do well and got mediocre reviews, although it may have broken even. But as Ed Fries would say… again, “That’s the game business.”
Bungie
Bungie was one of the top developers of games for Macintosh. They were a small, independent group led by Alex Seropian and Jason Jones, who had met in college at the University of Chicago in 1991 and discovered a mutual fascination with video games. Their original offices were in the not-so-classy South Side of Chicago, which was described by various team members as smelling like a frat house after a long weekend or “something out of Silent Hill.” (Silent Hill was a sinister and dark game from Konami).
Bungie released several games over the next few years, including Pathways into Darkness and their first shooter and hit game, Marathon. Their next significant offering was a departure, a strategy game called Myth: The Fallen Lords, which was released in 1997 on the Mac, and for the first time, also on Windows 95. Life as an independent game developer and self-publisher was not easy, and it became even harder when they released Myth II: Soulblighter with an install bug that completely nuked people’s systems. Bailing themselves out by recalling 500,000 copies of the game and reissuing it was, in the words of Bungie’s music composer Marty O’Donnell, “A million dollar mistake.”
The Soulblighter debacle put Bungie in a hole, but they had an ace up their sleeve. It was a new and ambitious first-person shooter game in development. To raise some operating cash, they approached Take Two Interactive and showed them the new project. Take Two was impressed and ending up funding Bungie in exchange for 19.9% of the company, promising to distribute the new game as well as another Bungie project, an animated game called Oni, which was being started in a satellite studio in San Jose, California. They had some operating capital, but it wasn’t enough to keep going for long, and they were still in the market for a better offer.
That’s when Microsoft showed up. Peter Tamte, who was an executive vice president and Bungie’s head of business development, recalls a meeting at Take Two’s New York offices that was attended by Rockstar Games’ founders, Dan Hauser and Terry Donovan, Bungie’s Tamte and Alex Seropian, and some Microsoft people, including Kevin Bachus and possibly Brett Schnepf. Bachus remembers that this meeting was part of a technical briefing tour that took them to San Francisco, Los Angeles, New York and London during January and February of 2000. Tamte later observed, “In this one meeting in New York were sitting the guys who end up defining the future of the PlayStation 2 with Grand Theft Auto 3, and Bungie who went off and defined the future of the Xbox with Halo.” Of course, nobody knew the future at the time, and it was one of many meetings they all had participated in. Ordinarily, it would have been forgotten, but the situation was not ordinary. It sparked a fateful idea.
Following the meeting at Take Two, and a subsequent dinner with the Microsoft team, Tamte and Seropian talked about the implications of working with Microsoft. “They’re going to need a game that can help define this platform, and we were thinking, ‘Wow. Wouldn’t that be amazing if our team—our amazing game—could have that kind of impact on the next console generation?”
They believed in Halo, and they believed it could be the very product that Microsoft was looking for. But they were also looking for a partner, or a buyer. So the next day, Tamte called Ed Fries. Fries had previously met Tamte at an industry event, but other than that, “he was just somebody in my Rolodex.” Bungie, Tamte told him, was in financial trouble. Bungie was looking for a buyer. He said they already had one potential buyer, “but as long as they were going to sell it, would we also be interested in bidding on the company?” Tamte recalls that Fries answered, “You know, Peter? That’s a really interesting idea.”
Fries was already a fan of Bungie’s games, having played several of them. Even if nothing in Bungie’s previous portfolio would necessarily translate to a console, Fries was interested in the team for its creativity and experience as developers. At the time of the call, Fries says he didn’t know about Halo, even though it had been announced at a Macworld event and previewed at E3, but he looked into it. The first video of Halo he saw, he says, “had these little animals that ran across the field and stuff, but it had the core elements of Halo.”
According to some people, Jon Kimmich, who was working for Moulder to help locate potential first-party developers, had visited Bungie and talked with them about developing for Xbox, but according to Tamte, Kimmich did come to meet with the Bungie team, but a couple of weeks after his phone call with Fries. Moulder confirms that there had been some discussion about having Bungie produce first-party content, but not with him, and Fries says that the call from Tamte was his first direct involvement with the company. It’s a little uncertain, based on different reports, who made first contact and when, but there is no confusion about how the deal got started.
Tamte says that they were impressed by the Microsoft contingent that came to visit. “It was clear that the guys that Ed had sent out were hardcore gamers.” The first thing Tamte remembers them doing when they got there was to play a team death match on an early PC version of Halo.
Meanwhile, Fries and Tamte started working on the deal. The first major problem Fries faced was how to deal with Take Two, so he got on the phone with the company’s founder, Ryan Brant, and together they worked it out. Fries was mostly interested in the team, and Halo, although very promising, was far from being a serious product at the time. The deal Fries brokered was that Take Two could have all the back-catalogue rights and that Microsoft would fund the completion of Oni for Take Two to publish. “I would just take all the developers and this new Halo property.”
Making a deal with Take Two was one thing, but it wasn’t the main thing. They still had to convince Bungie to become part of Microsoft. That was going to take some convincing, and one of the people charged with that task was Stuart Moulder. “I flew out to Chicago to basically convince Alex and Jason and the rest of the team that becoming part of Microsoft and moving to Seattle was actually a cool thing instead of a stupid and scary thing to do.” According to Moulder, “Being mostly a Mac shop, they thought Apple were the good guys and we were the bad guys.”
“In reality, I didn’t think they were the Evil Empire,” says Seropian, “but I needed a lot of convincing that they were serious.” Because Bungie had already developed for the Windows architecture, and Xbox was planned to be based on that architecture, he thought that they could develop games for the new platform. “Prior to talking specifically about the acquisition, we talked a lot about Xbox together, and how they were going to try to make it a success, what they thought they were good at and what they thought they weren’t good at. And I think those conversations made us realize that they were serious. We were certainly convinced that they didn’t just want to buy the IP, or buy the product… or even just buy the team. They wanted us to play a strategic role in a new platform that they were going to put half a billion dollars into in the first couple of years. That right there is the reason we ultimately went ahead with it. You could say, ‘money talks, bullshit walks.’”
Jordan Weisman, who had joined Microsoft with the FASA acquisition (see Absorbing FASA pg. “Absorbing FASA” on page 6), was another one of the people called in to help convince Bungie. “I think it was Ed, or Ed and Robbie, who said ‘Hey, we’re talking to Bungie about buying them and we want you to sit down with Alex and Jason and tell them how well the integration of FASA Studio has gone.’ And I was like, ‘What planet are you on?’ At that point, I was acting as creative director for the whole org, but I had seen what happened to that poor studio and the challenges it had gone through in trying to maintain its development culture, which frankly, it lost. It went through an absorption process into Microsoft development culture, and the result was that the game we were working on when we were acquired was a year later still not done.”
With Bungie, Weisman was honest, but also persuasive. “I shared some of the reality of what had happened to us and kind of laid out the good and the bad. I told him what I believed to be the truth, which was that these guys had a unique opportunity to show their work on the largest stage they were ever going to have a shot at.” Jones seems to have understood what Weisman said and is quoted as saying, “Microsoft is holding the biggest cannon in the world, and they’re pointing it right at Sony, and we can be a bullet in that cannon.”
Learning from their mistakes and becoming more aware of the idiosyncrasies of game development, Microsoft sought to allow Bungie to keep a more autonomous studio culture. Moulder echoes what Weisman said: “Previously, what Microsoft would do is you’d buy a company—like we bought FASA—and then they would reorganize and just fit in a Microsoft organizational structure. Which it turns out is a stupid thing to do, because you destroy the corporate culture that you acquired and presumably valued. So we said we weren’t going to make that mistake again.”
They told Seropian that it was his studio, and it was his decision how to run it. Among the commitments believed to have been offered was that their compensation would ultimately include royalties, something Microsoft had never offered before to in-house studios. (Ed Fries denies this. “I never offered this. No internal groups got royalties at that time.”) Also very important was that Microsoft recognized another key difference. In Microsoft, people had their own offices, and any other arrangement was inconceivable. “Back then Microsoft had all these perks, incentives to go there as a developer,” says Fries. “You got your own private office and you got free soda pop and stuff like that.”
In fact, the original location they had set up for Bungie was a very nice suite of offices in their own wing of one of the buildings on Union Hill Road. From a Microsoft point of view, it was very generous and prestigious. There was just one problem. Bungie had an open, bullpen approach to game development. So when they saw the offices they said no, and had them all torn out to create a big open space in which they could work. They even had their own separate security doors, and only a few employees were granted access. Fries even joked at one point that they didn’t even allow him in.
According to Moulder, there were people within MGS who resented Bungie’s exclusivity and “special” treatment, but Moulder saw it from another perspective. “I personally thought that if they weren’t treated that way, you don’t get the results that they got. I would say the keyword is passion more than work cheap. A studio that’s comprised of a bunch of really expensive people is an odd studio, but what you really care about is, do they have passion? And do they have a culture—a creative culture, and a gaming culture—that’s unique and that informs how they do things—what they do—and that energizes and inspires everyone in the studio. And you can tell the ones that have it, and you can pretty easily tell the ones that don’t. Bungie had it. Ensemble had it.”
Steve Jobs
In November, 1999, shortly before Microsoft’s acquisition of Bungie, Steve Jobs had personally introduced Jason Jones and the Halo preview on stage at MacWorld. Tamte takes credit for bringing the game to Jobs’ attention. He had previously worked at Apple, as senior director of worldwide consumer marketing and had reported directly to Jobs. Within weeks of joining Bungie, he contacted his former boss. “I called Steve and said it would be really cool if you would introduce this game, because I think you would be interested in it.” And so Jobs invited Jason Jones and Joe Staten to give him a personal demo of Halo. It must have gone quite well because at the next Macworld Expo in New York, there was Jobs on stage introducing Jason Jones and Halo. “That’s a personal endorsement,” says Tamte. “He would never do something like that unless he personally had a very deep interest in the product.”
This was a rare moment for Jobs, who almost never showed much public support for computer games, and never in a keynote. So when Microsoft more or less scooped up Bungie, including of course Jones and Halo, Jobs was not pleased. According to Moulder, he called up Steve Ballmer, furious, and gave him an earful. Ballmer then took the problem to Ed Fries. As Moulder recalls the story, essentially what Ballmer said was, “Look. I just want to make sure this is worth it. I back you. We’re going forward. I’m not going to let Steve Jobs tell me what we’re going to do, but they are an important partner. We sell a billion dollars’ worth of software on their platforms, so I just want to make sure this is worth doing. Worth the pain it’s going to cause us.” Of course, Jobs not being a big “game guy,” a reasonable assumption might be that he was just embarrassed and felt outmaneuvered, but would get over it. “It really just turned into Steve Jobs is mad at us for a little while.”
However, Tamte provides a more nuanced view of Jobs’ interest in games, indicating that Jobs was more receptive to games than most people know. For one thing, when he personally hired Tamte, it was because of his experience running MacSoft, which sold 45% of all Mac games at the time. So why did he have a reputation of disinterest in games? “I think it was just a matter of time. I mean, he’s rebuilding Apple and also running Pixar, so this is a very busy time for him. But the conversations that I had with Steve indicated that even though he may not have spent a lot of time on video games, there was an instinct that he understood about video games and their importance. What was valuable? What was not valuable? How that fit together with Apple.”
Tamte also relates a story about the first iMac, which was going to use a Rage processor, but Tamte and others urged him to go with the Rage Pro* for one reason. “There was nothing else that needed it other than games,” says Tamte. And Jobs listened to them and made the change. He also spent time personally in meetings with a games advisory group, and as Tamte observes, “Steve did not spend time on things that he was not interested in.”
*The original iMac shipped in August 1988 and featured a 266 mhz G3 processor and an ATI Rage Pro Turbo graphics card with 6 megabytes of SGRAM. It also came in five (healthy) colors—tangerine, lime, strawberry, blueberry, and grape.
Maybe Steve Jobs had a little more interest in games that most people think, but there’s no doubt that he was more than a little bent about Microsoft’s essentially stealing Halo after he’d obviously become personally involved with it. But, as Moulder observes, he didn’t stay mad for long, and Ed Fries can explain why. After the acquisition became known, says Fries, Ballmer emailed him. Ballmer’s email essentially said, “Jobs is mad about us buying Bungie. Here’s his phone number. Call him.” And Fries found himself thinking with a combination of awe and dread, “Ok. I’m going to call Steve Jobs now.”
Fortunately, Fries came up with a plan. During the acquisition of Bungie, they realized that they had jobs for everybody except Peter Tamte, the guy who initiated the deal in the first place. “We didn’t really need another biz dev guy,” says Fries. However, Tamte turned out to be the perfect chess piece to play in this situation. Tamte had expressed an interest in starting a company of his own, a company that, among other things, would port Windows games to the Mac. “I think both the Apple people and the Microsoft people trusted me,” says Tamte.
Having formulated a plan, Fries made the call. He began by apologizing for the situation, mentioned that he was personally a Mac fan and had even worked on Mac Office, and then said that he would be happy to see PC games ported to the Mac, including Halo. “So what I would like is to do a deal with you guys and a third party where we help set up a Macintosh publisher to port our games to the Mac,” he told Jobs. “And I know just the guy to do it. His name is Peter Tampte.” Of course, knowing Tamte well, Jobs was mollified and put Fries in contact with people at Apple who would help move the idea forward. And that was it. “I thought it was a real win-win because I got Ballmer and Jobs off my back, and I got a job for Peter Tampte—because without him I don’t think we would have had Halo—and I got Apple to fund it, not me. And we were going to get more licensing revenue because we were going to get money for licensing our games on the Mac. So to me it was a deal that worked out really well.”
Jobs had added only one additional condition: That Fries and Seropian appear on stage with him at an upcoming Macworld in New York to announce the deal.
And so, a few months later, Fries and Seropian flew to New York, arriving the day before the event and expecting to participate in a dress rehearsal. While in a cab on the way to the venue, Fries received a phone call from one of Jobs’ handlers:
“We don’t want you guys to come in.”
“What do you mean? We need to do the rehearsal for this.”
“Well, it’s really not going well. Steve Jobs is not happy. Just go to your hotel and I’ll call you later.”
Later they were told just to show up in the morning, which they did.
Although Fries and Seropian had no clue what was going on, Tamte is able to shed some light on the situation. “When Steve was doing his practices, even the union guys could not be inside the place. There would be two or three people. Steve would always announce something really, really big, and if word of that got out before then, it could affect the stock. Even back then the rumor mill for Apple stuff was out of control crazy. So if Steve was not ready the night before, things would get pushed back. That would be the reason why. And Steve would practice, and they would change things, and there’d be just a small number of people who were allowed to be in the room when that was happening. A very small number of people.”
On the morning of the presentation, Jobs was still too busy to see them. “Finally, it seemed like ten minutes before the show was going to start,” says Fries, “Steve Jobs comes up to me, and he says, ‘Here’s what’s going to happen. At this section of the show I’m going to introduce you two. You guys come up on stage, shake my hand, you guys talk for 30 seconds, shake my hand again, you’re off stage. You’re all done.’ And he was very nice about it. Very matter-of-fact, and Alex and I were just like, ‘OK. That’s what we’ll do.’ And that’s what we did. We went on stage and we did our bit. We announced that Microsoft was going to be bringing a bunch of games to the Macintosh, including Halo, and then we walked off stage. And that was the end of that.”
Fries adds that this was the one and only time he ever met Jobs, but that it was memorable in part because he got a front row seat at the event. “I tell you, he did a great job. I sat there in the front row and watched him do his spiel, and he was really impressive. I mean, his reality distortion field* was in full effect.”
*Steve Jobs was famous for being able to convince anybody of just about anything. He was very persuasive, and people would claim that he had the ability to change reality to fit his needs—a reality distortion field.
And from Tamte’s point of view, “I had the weird deal of having my new company announced publicly for the first time by a vice president of Microsoft during a Steve Jobs Macworld Expo keynote.”
Gaining Trust
As creative director of MGS, Jordan Weisman worked closely with Bungie during the transition. One of the things he did was to help organize the Halo project. “My team came in and worked with them on writing all the original world bibles for the Halo universe.” Weisman’s team also put together contracts for novels and novellas based on the Halo property and even found a novelist for the job, Eric Nylund, who also happened to be a member of the game studio.
Trust did not come immediately, but was built over time. For instance, Fries tells the story of the testing team who were part of that trust building process. Bungie, like many game studios, thought of testers as “a bunch of high school kids to just play the game and beat on it” according to Fries. But at Microsoft, testers were professionals and an integral part of the development process, whether it was games or office products. Based on their preconceptions, however, when Fries told the guys at Bungie that he was assigning them a test team, they said no way. They didn’t want them. “We went back and forth and finally I said fine, if I can’t put them inside, I’m going to put them right outside your door. So I gave them all the offices right outside the doors to Bungie’s area.”
What happened next was that the test team became a huge asset to Bungie. “They didn’t just beat on the game. They did things like build a system to speed up the rendering of the lighting by a huge amount so that they could turn the builds around really quickly. They also developed lot of data collection systems that Bungie has become famous for, around where people die on maps and how to optimize maps for better multiplayer play and things like that.” After Halo: Combat Evolved shipped, “they knocked down that wall and the test team became an official part of Bungie. They basically moved the wall that had the card key access farther down.” The test team leader was Harold Ryan, who ultimately joined Bungie and became the studio manager.
The Big Push
As Bungie began settling into their new offices, the work of creating Halo restarted with a new goal—creating a kick-ass first-person shooter for a brand-new console system. Previous to Halo, there had only been one successful FPS for consoles—GoldenEye 007. And, although there were plenty of challenges, “It was preordained that it was going to be Halo,” says Weisman.
One main challenge was learning how to develop for a console system and its main input mechanism—the controller. They knew that if they failed to map the gameplay successfully to the buttons and triggers of the controller, the game would suck, and even worse, it would fail. In the end, they not only succeeded, but established a controller model that has since become the basic standard for console systems.
Bungie also looked more deeply into the game, not just from the action and gameplay perspective, but into the story they were telling. They created a classic conflict and backstory, two very memorable characters—Master Chief and Cortana—and equally memorable enemies—Covenant and the Flood. What is quite possibly the single most influential aspect of Halo: Combat Evolved was almost cut at the end, however. More on that later…
Crisis at Gamestock
Jonathan Sposato had spent years in the games industry, and at the time was a manager for Xbox first-party titles. In that capacity, he worked closely with companies like Bungie. As the Gamestock event approached in February 2000, Jason Jones came to Sposato in something of a panic.
Gamestock was an important yearly event created by Senior Marketing Director Beth Featherstone’s division to showcase works in progress, and most Xbox developers attended, along with a press corps contingent. Gamestock always took place in February, says Featherstone, “because that was the optimum time for retailers, and allowed you to build the right amount of buzz for the press going into E3, and it didn’t conflict with GDC in March.”
According to Sposato, Jones came to him and said, “‘Jonathan, February at Gamestock this year ain’t gonna work. I can tell you right now that we’re not going to have anything good to show.” At this point, Sposato had not worked directly with Jones all that much. Perhaps he was just being too much of a perfectionist. “Maybe it’s good. Good enough for Gamestock,” he said. But Jones was adamant. “Nonono Jonathan. You’ve got to get the date changed.”
So Sposato went to Featherstone and lobbied on behalf of Jones. “I worked on Beth for weeks, but she was like, ‘No. You’re effing crazy. These guys are just being whiners. There’s no way. What they’ll have is great. I’m sure what they’ll have will be better than 90 percent of the other games at Gamestock.’” Sposato was persistent, and eventually Featherstone began to take him seriously. Then Jones wrote an email—thoughtful, passionate, sometimes impolite, but persuasive.
Featherstone finally agreed to take the unprecedented step of delaying Gamestock for a month—into March and much closer to GDC. “A lot of times the producers on the different games, or the developers themselves, were very emotional, and they’re not capable of giving you rational business reasons why something has to be different than how it is,” she says. “Jonathan was always the opposite of that. He’s capable of separating the emotions from what the reality is… you know, the facts. He was able to come and convince me that, yeah, this isn’t just them being perfectionists and them being really difficult. They really are saying that we’re not going to have a quality product, and we’re going to embarrass ourselves.”
Of course moving the date for Gamestock was a major headache, to say the least. Gamestock that year would host up to a thousand non-Microsoft attendees. There were a lot of details to change, emails, phone calls… and then there was the press. “When you’re talking to the press you don’t necessarily want to say we’re not ready. Then it looks like you don’t have your act together. I think then, too, at some point you’re just honest and go, ‘Hey look. Our flagship product… we don’t want to drag you all up here to Seattle and not have anything substantial to show you. We’re trying to be respectful of your time. And there are a lot of places you guys could be and things you could cover, and we don’t want to waste your time.’”
For Halo fans: a special treat on these two pages.
Very early screens from Halo, courtesey of Peter Tampte.
Sposato, who has since created several very successful businesses, gives major credit to Featherstone. “To this day I look at it and I think, ‘Wow. How remarkable to see good senior managers who can admit when they’re wrong and come back, and not be passive aggressive about it, but say, ‘You know, Jonathan. I heard you. I’m capable of change. We will move Gamestock this year.’”
Halo at E3
Of course, there was still a lot of work to do and not much time before the launch of Xbox and the game. One of the milestones they had to meet was a preview of the game at the E3 show in May, 2001. Featherstone says that from her point of view, they knew Halo was going to be the franchise. “It was just a matter of getting Bungie to meet the timelines that we needed to have to sync up with the hardware.” Syncing up was easy to say, but not so easy to achieve, and Bungie worked the way Bungie worked.
“When you look at developers on the perfection scale, from 1 to 10, they’re an 11,” says Featherstone. “They can be very difficult to work with, but they are also utter perfectionists in terms of what they’re doing. They’re the type of developer that doesn’t want to show anything before they think it’s perfect and ready and meets all their expectations. But from a business point of view, sometimes you can’t do that because it doesn’t line up with the market cycle.”
There were meetings. According to Featherstone, lots of meetings. E3 was approaching, and they needed something to show, but Jones was complaining that it wasn’t ready and wouldn’t be ready. “I can remember having a lot of conversations with COO Pete Parsons at the time, and just saying, ‘Pete, I don’t care if it’s smoke and mirrors, but you have to come up with something that is going to wow the public at E3.’”
Halo did have its launch preview at E3. Featherstone considered it a success, but Bungie didn’t, and neither did a lot of people who viewed the demo. According to Robbie Bach, “Ironically they showed the networking version of Halo. It was a multiplayer level and the graphics weren’t quite right. Who knows what hardware we were running at that point? It certainly wasn’t real hardware.”
Fries answers Bach’s question about what hardware was being used, and perhaps offers a reasonable explanation for Halo’s less-than stellar performance at E3. “The dev kit Xboxes we had at E3 used a much slower graphics card in them, and so the framerate was about half at E3 what it was going to be.”
Whatever the reason, many people were disappointed with Halo’s debut at E3. Fries points out that it got mediocre reviews, while Bach said it confirmed the skeptical view that “shooters can’t be successful on a console.” And so, according to Bach, “After that event and the feedback we got, Ed basically told people we could no longer show Halo. Until it’s done, nobody gets to see it.” The decision to cloister Halo wasn’t out of lack of confidence in the product, however. “I think Ed was confident from the start, but that’s just because Ed’s Ed.”
Bach, on the other hand, was not Ed, and he did have his reservations. “I mean, here you have a game which was clearly started as a game on the Mac, then went to the PC. It’s clearly a first-person shooting game that should have great online gameplay. And we’re going to launch it on a game console with no online support. You know, it’s not the easiest bet to see.”
The Death March
After the E3 preview, it was clear that there was work still to do, and anxiety was building among some people at Microsoft. But at Bungie, it was more of a nose-to-the grindstone attitude, or, as many people called it, a “death march” to completion. Andrew Walker, who helped with bug testing says, “Everyone was panicking because Halo had to do a complete rejigging of all of their graphics, like four months before launch.”
Featherstone describes the anxiety many people were feeling: “They worked 24 hours a day, I think, to get it done. It was insane. On the marketing side, it’s sort of like jumping off a cliff, like tandem jumping, and you just kind of close your eyes and hope you land when you’re supposed to. That’s just kind of the nature of that business. I could go through too many examples in the gaming business where these developers come out and puff out their chests and tell you how great everything going to be, and three years later they still haven’t shipped their game. So you hope you put your eggs in the right basket. They knew what the deadlines were, and to their credit they got it done.”
Bungie did get it done, more or less by the skin of their proverbial teeth. They had a lot of trials, technical and graphical glitches, and features to consider—drop it?/keep it?—but they did complete the project on time. Part of their eventual success might be attributable to Jason Jones’ remarkable creativity and ability to swoop in and solve problems. Highly creative and individualistic, Jones could hold the game’s vision and articulate it clearly. According to Jon Grande, “Jones is kind of a savant who can touch all the parts of the organization and every piece that he dives into just somewhat miraculously begins to work. That happened with Halo.”
One of the features, the one I mentioned before that was critical to Halo’s success—and almost didn’t happen—was the multiplayer capability of the game. As time was running out, some people were in favor of dropping multiplayer. It wasn’t working right and they weren’t sure they could fix it. Some people were questioning its feasibility, since it required people to lug their consoles and TVs to a central place to play together. But, as Pete Parsons says, “some people” were not Bungie. “Everybody was pushing to keep multiplayer in, but none of us knew just what it would mean.”
“Marketing’s job at that point is to manage expectations and stuff and get the buzz out,” says Featherstone. “That was obviously before Twitter and Facebook and all that stuff, so we had little fan groups and that we were cultivating to try to get the hardcore to carry the buzz. So by the time we got to launch, it was actually not that hard. And the game really did sell itself in a lot of ways.”
Despite coming out a year before the launch of Xbox Live, Halo’s multiplayer was hugely important, and various LAN parties sprang up all over so that players could play together on their Xboxes, even though they had to haul them from place to place, with all the necessary equipment. But even though Microsoft was a year away from launching a real networking solution, they did what they could to support Halo’s multiplayer capabilities. Boyd Multerer, who later would lead development of Xbox Live says, “We went to great lengths to make sure Halo worked with System Link*, which in a way was the precursor to Live. We wanted people to be comfortable playing online with consoles and to prepare them for it.”
*System Link was a direct, console to console linking system that worked over Ethernet cables on local area networks (LANs). In Halo: Combat Evolved, up to 16 players could connect and play together on four different Xboxes, which were displaying the action on split screens.
By all definitions, Halo: Combat Evolved was a mega-success, and it became the flagship title for Xbox, launching not just the console, but a franchise that has continued to this day. Bungie left Microsoft in October 2007 and became an independent developer again. Microsoft has continued to develop new games in the Halo franchise while Bungie turned its attention to developing a huge new project—their massive multiplayer title, Destiny.
What Happened to Munch?
The emergence of Halo as the showpiece game for Xbox appeared to change the marketing focus. Whether Munch’s Oddysee was ever the best showpiece product is doubtful, and even though it was a quality game from a quality developer, it was dramatically overshadowed by Halo. “Halo totally deserved its success,” says Lanning, and McKenna adds, “Halo is a once-in-a-lifetime fabulous game…” She remembers going to Gamestock, where all the developers were showing their products. “I’m thinking, ‘Our game is good. It’s good,’ and then they show Halo and I’m going ‘Holy shit! That’s not what we had been talking about. That’s not a casual game.’”
At that point McKenna started talking to Pete Parsons from Microsoft marketing (who later became Bungie’s COO). She told him they weren’t ready to compete with that, and that they needed more time. Perhaps it should be released after the launch. But Parsons and the other people at Microsoft were still encouraging her. “No, no. We love your game. We’re behind it.”
McKenna understood what Halo meant to the console player demographic. “Now I’m a girl, and so I don’t look at games the way that most guys do. Because you say to a guy—to a gamer—you go, ‘Ok guys, so what you need to do is, you need to shoot everything up, and then you need to blow everything up. You’ve got to kill everything, and that’s how you win.’ And the guy goes, ‘Awesome!’ You say that to a girl and she goes, ‘Why?’ And I knew Munch is not the kind of game that was going to go over the way a Halo would. And Halo kicked our ass.”
