Hollywood balks at Microsoft's 'Halo' pitch

Studio execs brush back software maker's aggressive proposal for film version of popular Xbox game.

Hollywood does not like it when outsiders play certain games.

That was the message sent this week to Microsoft and its agents at the Creative Artists Agency by movie studios outraged at the aggressive proposal being shopped for the film version of the popular Xbox video game "Halo."

Even studio executives, known for their lavish spending, winced at Microsoft's demands, including a $10 million upfront fee for rights, approval over the cast and director, and 60 first-class plane tickets for Microsoft representatives and their guests to the movie's premiere.

As a result, the auction Microsoft had hoped for never materialized. Within 24 hours of reading the script, based on the game about an alien universe, five studios dropped out of the bidding, including DreamWorks and Paramount Pictures.

The two that remained, 20th Century Fox and Universal Pictures, balked at the price. But after intense negotiations, the two studios have agreed to a tentative deal. The intense, high-stakes talks that got them there indicate just how big the video game business has grown--and how attuned to its power Hollywood studios have become.

To many in Hollywood, it was a stunning display of hubris on behalf of Creative Artists and its client, Microsoft, which has a reputation for running roughshod over its rivals in the software business.

The "Halo" series is one of the most popular video game franchises; "Halo 2," released last year, sold 6.8 million copies globally. But few video game adaptations have proved popular at the domestic box office. Of the 19 adaptations tracked by Boxofficemojo.com, only one earned more than $100 million in the United States: "Lara Croft: Tomb Raider."

What irritated studio executives most was Microsoft's demands for broad creative control, even though the company was not spending a dime to make the film.

Creative issues remain
Ultimately, Microsoft, Universal and Fox tentatively agreed to a complex arrangement on reduced financial terms, though all parties involved say creative issues could still scuttle the deal. The talks were to continue through Friday.

"If you are going to play the toughest hand of the year, you better have the goods," said Bruce Berman, a former Warner Bros. Pictures executive who now runs Village Roadshow Pictures and was not involved in the bidding. "I think it's great that the studios didn't buy it on the terms first offered. It shows restraint."

Microsoft and its representatives see the matter differently. "No one in Seattle, or me, or anyone else wants a bad movie," said Peter Schlessel, a former Columbia Pictures studio executive who was hired by Microsoft to help manage the project and served as intermediary among the studios, the agents and Microsoft. "If you put a house up for sale, you need to put a price on it."

Added David O'Connor, a partner at Creative Artists who was involved in the negotiations, "Our job is to get the best deal for our client."

Nearly a dozen studio executives, talent agents and representatives of Microsoft who either read the script or were informed of the deal terms agreed to talk about the Halo auction process on the condition of anonymity, citing the sensitive nature of those discussions.

The process began at about 11:30 a.m. on Monday when several actors dressed as the Master Chief, a green-helmeted warrior from "Halo," walked into the lobbies of several Hollywood studios, scripts in hand. Microsoft had taken the unusual step of paying Alex Garland, the writer of the horror film "28 Days Later" and a Creative Artists client, about $1 million to write a script faithful to the "Halo" universe.

Studio executives were asked to read it while the Master Chiefs waited in the lobbies. At Paramount, one studio executive said,

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