Bungie goes indie, BioWare gets bought

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.

Bungie jumps

Last month we talked about how Halo 3's launch dominated the gaming news cycle leading up to its late September launch. That was expected, as were the early October victory laps about how the game racked up $300 million in sales in its first week, or how film executives blamed their sluggish box office numbers on Bungie's blockbuster. (Resident Evil Extinction was the top movie in the US the week Halo 3 came out, so perhaps execs had gaming on the brain as it was.)

What was unexpected were the rumors that Halo developer Bungie, a studio Microsoft acquired in 2000, was somehow going to split off from its parent company and return to independent game development. Similarly unexpected was the source of the rumors, a reader blog on the website of the Seattle Post-Intelligence claiming that the author heard the buzz second-hand from a friend with ties to someone at Bungie. Absolutely unbelievable was the confirmation that came just days later in a press release headlined, "Microsoft and Bungie Studios to evolve relationship."

Under the terms of the split, Microsoft would retain some ownership in the studio and of course the Halo intellectual property. Microsoft was also under the impression that the two companies would continue working together on new Halo titles (which they did) and new IP created by Bungie (which they did not). Bungie studio head Harold Ryan even said the studio would "continue to develop with our primary focus on Microsoft platforms," although that only remained true through 2009's Halo 3: ODST and 2010's Halo: Reach.

Whether Microsoft thought it was just moving to a relationship along the lines of what Sony and Insomniac enjoyed for so many years, it's clear Bungie was keeping its options open from the start. The day the split was announced, Bungie community and franchise director Brian Jarrard told GamesIndustry.biz, "We are still going to be working with them on Halo and potentially some future projects..." [emphasis added]

Electronic Arts buys BioWare-Pandemic

This one was less surprising, but still huge. BioWare and Pandemic had merged two years earlier in a $300 million deal that saw the two independent developers become a "super studio" under private equity firm Elevation Partners, which was headed at the time by former Electronic Arts president John Riccitiello. Selling to an established publisher was always a possibility, especially one that had deficiencies in the RPG and action genres BioWare and Pandemic were built around and a pre-existing relationship with Riccitiello. When Riccitiello later returned to EA to be its new CEO, some no doubt saw the possibility of an acquisition tick over into the realm of probability.

That said, when EA did pull the trigger on a BioWare-Pandemic purchase, the price of the acquisition was still a bit shocking. Electronic Arts was paying up to $860 million for the studios, nearly three times the amount they commanded just two years earlier. In the intervening years, BioWare had not released a title, while Pandemic had released two sequels, Destory All Humans 2 and Full Spectrum Warrior: Ten Hammers, so some skepticism about the inflation in price was understandable. Conflict of interest concerns aside, EA CEO John Riccitiello was going out on a limb, making Elevation Partners managing director John Riccitiello look like a genius in the process.

However, that's not to say the acquisition was absurd on its face. Both studios looked to be on the way up, as hopes were high for BioWare's Mass Effect, which would launch in November of 2007, and Pandemic's Mercenaries 2: World in Flames, which had been expected that holiday season but would hit in fall of 2008 after multiple delays. At the time, Wedbush analyst Michael Pachter was cautiously optimistic about the deal, saying it was a tremendous amount of money EA paid, but adding it should pay off, provided the studios kept up the quality of their output.

We touched base with Pachter last week to see how he felt things turned out, and he stopped short of endorsing the whole deal. Between Mass Effect, Dragon Age, and the upcoming Anthem, BioWare has provided lasting value to the company and that part of it paid off, he said. As for the other half of the deal, Pachter noted "There are no meaningful Pandemic franchises that have lasting value."

Pandemic wound up releasing three projects for EA, and was shut down by the publisher in 2009, just over two years after its acquisition. BioWare, on the other hand, seemed to thrive, announcing a deal with LucasArts for what would become the Star Wars: The Old Republic MMO the same month as the acquisition, then launching into the successful Mass Effect and Dragon Age franchises.

Given all that has happened, it's perhaps a bit ironic that BioWare's flagship franchise Mass Effect has been shelved for the time being, while Electronic Arts is centering its holiday lineup on the latest version of Pandemic's signature series, Star Wars: Battlefront II.

Notable and quotable

• "In the next five years, we're all going to have to deal with this. In China, they're giving games away for free. People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt." - John Riccitiello again, this time articulating a shift that would (eventually) lead EA to its current success.
• "Gaming for me is a religion and Haze is the shit! I had to come up with a track that can hit up that kind of rush I get from the game and I think we really rocked it!!"- Korn lead singer Jonathan Davis, in a press release announcing that Korn recorded a song inspired by Ubisoft's upcoming first-person shooter Haze.
• "It is a testament to the synergy possibilities between music and video games, which often share the same audience." - Ubisoft VP of worldwide licensing Christian Salomon later on in the same press release, eliminating any stray shreds of authenticity that had somehow survived Davis' quote.
• "In our collaboration through this innovative game, we can provide education on the issues surrounding climate change, its association with carbon emissions and the ability to take early positive action through low-carbon power choices." - BP executive Carol Battershell, on the company's partnership with EA to add informational climate change elements into SimCity Societies, from that oh-so-naïve time when it seemed the whole climate change debate must have been settled if even the oil companies were acknowledging it.
• "I don't know about the future but we will see more of the darker side of reality on the Earth. I'm not trying to be the next Al Gore but I'm not sure if we could afford to have videogames in ten or twenty year's time." - Katamari Damacy creator Keita Takahashi's worst-case scenario hasn't come to pass quite yet, but there's still a decade to go and this feels very week-to-week. See you next month, maybe!