Bungie Studios celebrated its 20 th birthday Sunday. Most people likely dont
recognize the name, but odds are good theyve heard of Halo , the science fiction
video game series that made Bungie the much-sought-after talent pool they are
today. Bungie is more than just the house behind Halo . The studio now is a
crucial component in the potential future success of two giants in the video
game industry namely Microsoft (NASDAQ: MSFT ) and Activision Blizzard (NASDAQ:
ATVI ). 2011 will be the first year since 2007 that Bungie hasnt released a new
game. Why is Bungie so crucial to gamings biggest game machine maker and its
biggest publisher? First, a little history: Halo 3 for the Xbox 360 was Bungies
crowning business achievement a game that sold nearly 2.5 million copies in its
first 24 hours on shelves in 2007. It was, at the time, the most profitable
media debut in history, including film. Subsequent releases in the series have
broken that record, like last Septembers Halo: Reach , which sold 3.3 million
copies in its first day. Reach , however, represented the last game in the
series that Bungie itself would make, and the last game it would make as a
subsidiary of Microsoft itself. Between Halo 3 and Halo: Reach , another series
became the best-selling game of all time. Activisions Call of Duty series
trounced Halo s records, first in 2009 with the release of Call of Duty: Modern
Warfare 2 and again in 2010 with Call of Duty: Black Ops , the game that holds
the current first-day sales record of 5.6 million copies. It was just before the
release of Reach and Black Ops that Bungies role in this tug-of-war for
blockbuster supremacy changed. Shortly after gaining its independence from
Microsoft, Bungie announced it had signed a 10-year contract with Activision to
produce a new series exclusively for the publisher. This new game, rumored to be
a massively-multiplayer shooting game that would capture the gun-obsessed fans
of Call of Duty , as well as the online community players obsessed with
Activisions other hit World of Warcraft , was expected to debut this year , but
Bungie remains mum on the subject. What does Bungie mean for both companies
going forward? For Microsoft, a loss of exclusive access to Bungie might mean
the end of the companys place of prominence amongst diehard game enthusiasts.
This fall will see the release of a 10th anniversary remake of the original Halo
, and fall 2012 will see the release of Halo 4 , the first entry of a proposed
new trilogy. Without Bungie creating these games, however, Microsoft risks
alienating a core fan base or diluting the quality of its biggest mainstream
franchise. The franchise already has ceded mindshare to Call of Duty, and
without Bungie as its stewards, it might continue to yield diminishing returns.
For Activision, Bungies new game is crucial to its continued success. The
company is not careful with its properties, and the Call of Duty series might be
reaching a saturation point with consumers. If those games cease selling in the
millions at retail, Activision will be relying on Bungies new game to pick up
the extra slack. With no sign of it on the horizon, though, Activision might
face lean times before it can make the transition to a new successful IP. Thats
assuming consumers respond to the Bungie game in the way they responded to Halo
and Call of Duty . As of this writing, Anthony John Agnello did not own a
position in any of the stocks named here. Follow him on Twitter at
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