Microsoft has purchased Bungie, the developer of the ground-breaking Marathon and Myth games series.

Microsoft has taken exclusive publishing and distribution rights to select Bungie titles, including the long-awaited "Halo" (see picture). Ed Fries, Microsoft’s vice president of game development, said: "Bungie’s highly-talented team consistently deliver award-winning games, we’re looking forward to supporting their creative spirit here at Microsoft."

Bungie’s development staff will be an independent development team within Microsoft’s Games Division, particularly focused on making games for the Xbox. Microsoft said it expects the Bungie team to play a key role in the development of content for this platform. Alexander Seropian, founder and CEO of Bungie, said: "We are looking forward to helping define the Xbox platform."

The future’s bright A Bungie spokesperson said: "Microsoft is offering us the opportunity to lead the way on a next-generation console system. We will not only be one of the premier developers for the platform, but we'll be working directly with the Xbox team, helping to optimize the hardware and software for each other.

"We'll influence the design of the system; we'll help to ensure that the Xbox is the best platform to code for, and the most impressive console on the block. Such an opportunity does not come often. Bungie has always tried to keep abreast of the industry, if not ahead of it, and next-gen consoles seem like the place to be if you develop games. This deal allows us to get into that market in a big way."

TakeTwo Interactive Software, Bungie’s current distributor, which announced a year-end profit of over three million dollars last Wednesday, also announced its acquisition of the entire rights to "select Bungie game properties". These include the Myth series and the forthcoming action game, Oni. TakeTwo has sold its 19.9 per cent equity interest in Bungie to Microsoft. Ryan Brant, TakeTwo’s CEO, said: "We have a tremendous amount of respect for Bungie’s talents and the contributions it has made to the games industry."

TakeTwo plans to develop its broadband gaming services, aiming to roll them out on September 4, said TakeTwo’s co-chairman Barry Rutcofsky. He said broadband gaming was not "seen as an alternative to the packet software business" but the technologies offered "the revenue streams of the future".

Worried Online gaming fans expressed fears for the future of Bungie’s popular online Myth and Marathon communities. Currenetly, registered users of Myth or Marathon can play games online against other users for free. With TakeTwo’s new focus on developing revenue streams through delivering broadband solutions, they fear the service’s business model may switch to a subscription base. Bungie’s founders have posted some reassurance to their fans in a note on Bungie’s Web site.

Bungie said: "The existing servers will continue to exist for the indefinite future. We are bringing the current head of the admins along to ensure that is maintained to our standards, and he will act as a full member of an online-community team to ensure that future iterations of are designed with the players in mind."

Microsoft has not revealed the financial details of the deal, but yesterday’s Wall Street Journal said some analysts have estimated a cost of between $20-40 million.