Microsoft revealed few details Tuesday when it announced the agreement, which will give the software giant rights to Digital Anvil's space-combat game "FreeLancer" and another, unnamed product being developed for Xbox.
Chris Roberts, Digital Anvil's founder and chief executive, plans to depart to pursue other interests, according to Microsoft. Neither company would say whether this was a result of the acquisition. Roberts will continue working with Austin, Texas-based Digital Anvil through the completion of "FreeLancer."
"Under the Microsoft umbrella, 'FreeLancer' and other games will be supported by a strong infrastructure and realized in the spirit in which they were conceived," Roberts said in a statement.
The acquisition of Digital Anvil is one of several recent gaming moves by the software powerhouse. In June, Microsoft picked up Bungie Software Products as well as FASA Interactive and Access Software. Bungie is best known for gaming titles "Myth" and "Marathon." In August, Microsoft invested in Big Huge Games, a start-up PC games developer.
Microsoft has been working to ensure that Xbox, which is slated for release late next year, will have some competitive advantage against established gaming consoles from Nintendo, Sega and Sony. One strategy is to hit the ground running with a large selection of games.
"The acquisition of Digital Anvil will strengthen our commitment to producing top-quality PC and Xbox titles," Ed Fries, vice president of games publishing at Microsoft, said in a statement.
Microsoft, of Redmond, Wash., has committed $500 million to market and sell Xbox.
On Monday, Microsoft cut a deal with Micron Technology to use double data rate (DDR) memory in Xbox. Rival PlayStation 2 from Sony uses Rambus memory.