Combat Evolving

How the Kirkland video game studio behind Halo won its independence from a corporate giant.

Master Chief of Halo 3 | courtesy of Bungie Studios

It's 3:12 a.m. I round a corner and run head-on into a Brute. Light glints off his metallic armor and the vicious barbed mauler he's ready to smash me with. But I'm prepared and direct the butt end of my assault rifle to his head. Two more swift blows and the alien's helmet flies off as he collapses in a heap. (It's been hours now. I really must stop and have four more cups of coffee.) Heads-up: my buddy is pinned down by a team of Jackals with beam rifles. I've got to provide backup before the rapidly closing mess of Grunts gets to him. Must take immediate action. Hesitation is death.

This is Halo, the science fiction video game. Largely responsible for catapulting the Xbox gaming console to phenomenal success in 2001, Halo is now in its third major release. The game is designed and built by Bungie Studios and published and owned by Microsoft Game Studios.

Halo set the standard for console-based first-person shooter games (see glossary, below). It has won a ton of awards, including Time magazine's Game of the Year (Halo 3 in 2007), and made the Guinness Book of World Records for "Highest Grossing Game, One Day": $170 million. "Halo-killer" is gamer speak for any game that's potentially better than Halo, and nothing has beaten it yet.

About one-quarter of Halo fans, over six hundred thousand people, play the game online each day worldwide. More than 90 percent of the fan base is in North America, followed by the U.K., France and Germany. The game itself has been localized into nine different languages, but non-English-speaking players are unable to participate fully in the online forums and other community aspects that now help to define the Halo phenomenon.

The game is centered around Master Chief, a cybernetically altered space marine. He's caught up in an epic struggle against the Covenant, an alliance of powerful alien civilizations determined to obliterate humanity. Halo is part of the environment in which the game is played: an enormous ringlike assembly of inhabited megastructures. The action of the game takes place there and in other worlds, both real and imaginary. It involves complex and sophisticated themes of politics, ethics and philosophy - with plenty of explosions and cool virtual weaponry and vehicles included for fun.

Bungie Software Products Corporation was founded in 1991 in Chicago by Alex Seropian and Jason Jones, undergraduates at the University of Chicago. In 2000 the company was acquired by Microsoft for an estimated twenty to forty million dollars. Last year, in an extraordinary move, Bungie Studios, based in Kirkland, cast off the yoke of its corporate overlords and reclaimed its freedom as an independent game developer.

"The main goal of the creatives and artists here isn't necessarily to make a lot of money," says Harold Ryan, president of Bungie Studios. "Everybody has to pay their bills and most people would pick up a hundred dollar bill on the street, but mostly they want to make a great game. Something they love and something the fans love."

The history of a video game company is told through its titles, the games it releases. Jones and Seropian grew Bungie out of the "two guys, one basement" phase through a series of Macintosh games with graphics and stories that were far better than what anyone else was producing at the time. Marathon, released in 1994, is still considered to be one of the best games ever released for the Mac and in those days was a strong competitor to Doom and Descent, which ran on Windows.

The second version of Marathon was ported over to the PC, expanding the Bungie market considerably. Myth followed and was released simultaneously on both the Mac and Windows platforms. Then came Oni, which was also released for PS2, a third platform. Halo debuted at Macworld Expo '99, enthusias-tically introduced by Steve Jobs. But this was in advance of Bungie receiving an offer from Microsoft that resulted in a radical shift in direction.

The proposed acquisition by Microsoft presented the Bungie team with a unique opportunity to create a game in tandem with the development of the Xbox, an entirely new hardware gaming platform. Bungie jumped at it.

Certainly there was a huge payday for Bungie stakeholders when the company was sold to Microsoft, but the creative doors opened by the move were enormously appealing, too. Working within Microsoft, Bungie was able to tune the Halo engine to work symbiotically with the Xbox architecture. For its part, Microsoft got the game it needed: one that was exciting enough to make people want to buy a new gaming console to play it on.

Team Bungie

The first release of Halo preceded the launch of Xbox Live, so initially the game was not played online. But from the start, Halo had a great deal of local multiplayer networking functionality built into it. An Xbox console could support four players, and each Xbox could be networked to other Xboxes with a simple Ethernet connection. Carting an Xbox around was easy compared to schlepping a computer. The LAN Party became a whole lot more convenient.

"When Halo 2 went onto Xbox Live it introduced a lot of revolutionary elements that have since been widely imitated," says Colin Ferguson, a long-time Bungie fan. "People were afraid that with Halo going online, they'd lose the ability to play with their friends the way they used to in local play. But Halo on Xbox Live introduced a system where you can grab people from a Friends List or even just strangers that you meet online and enjoy playing with. You form into a party and can go from game to game and all stay together."

Some critics view video gaming as an isolating activity, but for a lot of players, gaming is all about community.

Game development does not happen in a vacuum. It requires extensive focus-group testing before a game ever goes on a retail shelf. Long before a new Halo release is published, there are countless playtests with hardcore Halo gamers, with gamers who do not play Halo, with gamers who play other genres of video games entirely.

Focus-group testing ensures a consistent experience among a wide variety of players. It's quite a trick to satisfy long-time players and also bring new players into the Halo universe, but Bungie has done so with a great deal of success. The PhDs on Microsoft's user research team played a large role in this, clipboards in hand, analyzing what irks or frustrates players and what makes them want to play more.

But even before the release of Halo 2 in 2003, Bungie began exploring the possibility of breaking free from Microsoft. Bungie's creative team and engineers were reasonably content operating as a division within the Microsoft empire, but there were elements of the corporate structure that made recruitment and retention of the right people difficult.

Bungie developers wanted more freedom and, perhaps, a bigger piece of the pie: Microsoft retained some 80 percent of the huge revenues the Bungie division was generating with Halo. Bungie's rich creative culture was slowly eroding, and there were legal and other restrictions interfering with management of the Bungie team by its leadership. "It was just the culmination of a bunch of little things that got us to the point where there was a path to fixing them inside of Microsoft and a path to fixing them as an independent company," Ryan says. "There was no doubt that it just seemed faster and better to take the company independent and address our own culture."

Of course the breakup wasn't all roses and pleasantries. It took four years of pretty intense negotiations with Microsoft Corporate Development. While ultimately Microsoft agreed that the move was mutually beneficial, there were plenty of executives in Redmond who wanted to keep Bungie on a tight leash. When Bungie announced last October that it would split with Microsoft and once again become a privately held, independent company, it had 121 employees. Of these, 118 decided to leave Microsoft and continue working for Bungie. While Alex Seropian has moved back to Chicago and is involved with a different gaming venture, Jason Jones is still with Bungie as director of design and a member of the board. Bungie currently has 140 full-time employees and recruits new staff according to the Bungie Creed, which holds, as the last of its amusing "Seven Steps to World Domination," "Take over world. Shoot enemies into sun with giant slingshot."

In the old days, a new computer game could be developed for hundreds of thousands of dollars; the production costs for a game now run into the tens of millions. But Bungie's basic approach has remained unchanged: create a really dynamic user experience for the platform best suited to the game. A huge part of the success of any game is the look and the design of the gaming universe; it's not just the motion, the action and the explosions. There has to be very compelling imagery or nobody's going to want to play. Even in the early days Bungie paid a lot of attention to creating the best graphics with the technology available at the time. "It's about wrapping that fun experience in something that's interesting and enveloping and that occupies your thoughts and time," according to Ryan.

The Halo imagery is quite striking. Master Chief, the central character in the Halo stories, is an imposing figure. You want to explore the world from behind that space marine's reflective gold visor. Last year it was practically impossible to avoid images of him heralding the release of Halo 3. Bungie has also devoted a great deal of attention to user-created content, another area of innovation in gaming. By definition this is any game content created by end users rather than the developers at the company. Bungie first explored this idea in Marathon and has more fully exploited it in Halo. Users have the capability to build their own maps and otherwise customize the game.

And Bungie has made talking about, capturing and sharing the individual gaming experiences easy. Screenshots and video captures are easy to create and simple to share. User forums allow for an endless dialogue among gamers about the gaming experience. Traffic on bungie.net is huge, considerably higher than YouTube's. People are playing Halo, but they're also writing about playing Halo and uploading and downloading content at an extraordinary rate.

"Over time people are getting acclimated to the game," Ryan observes. "It's the perfect scenario. As the game gets older you hope the community itself would own the game. And that the experience is then defined by the players, for the players."

Bungie team members have an intimate sense of the Halo community. They are not just creating the game, they are living in it as Halo players and forum participants. In addition, the Bungie team provides weekly news posts on the bungie.net Web site. The company tends to play its cards close to the vest regarding upcoming releases, but fans discover enticing tidbits of information each and every week.

"We're monitoring it and feeding it," Ryan says of the online Halo community, "trying to really encourage the people that are good members of the fan community. That doesn't mean they have to like Bungie, but they should be good to the people they're out there playing with. We put quite a bit of resources into that and it's worthwhile. It keeps people happy. It keeps them playing."

A year after exiting Microsoft, Bungie Studios is thriving, with the money and personnel to remain an important player in the video game industry for a long time to come.

There are three distinct teams hard at work right now, with games in stages of development ranging from prototyping to completion. There will be life - and other dynamic Bungie games - after Halo.

And there's still plenty of creative and commercial steam left in Halo - as a franchise, a universe, a fertile field of stories remaining to be told. A major stand-alone expansion to the game was announced last month and will be released next fall. And there's been a major update to the Web site. Bungie's artists and engineers continue to see the Xbox platform as viable for the type of gaming experience they want to produce.

Microsoft, as publisher, retains intellectual property rights to the Halo universe and has its marquee game to drive Xbox sales. Bungie is free of corporate politics, marketing, distribution and delivery chain hassles. By all accounts, it's a classic win-win.

"My approach was to identify what Microsoft really wanted over the next few years and to set up the relationship in a way that we can deliver with more assurance and better quality," says Ryan. "I really think that we delivered a better-quality Halo 3 because of the motivation that came with becoming independent. My top priority is to retain this team and drive the team to be happy and to do great work. In the end, we're not here to be famous, just to make good games that people love."