Earlier this week, reports from around the web stated that Bungie Studios, developers of top Xbox franchise Halo, would be splitting off from its owner Microsoft. Today, the news was officially confirmed as Microsoft issued a press release announcing a plan for Bungie Studios to embark on a path to become an independent company.

As expected, Microsoft confirmed its ownership of Halo intellectual property, ensuring multiple new chapters in the series, with or without Bungie’s involvement. Microsoft has already started farming out new Halo games to other developers. The appropriately themed real-time strategy game Halo Wars is currently in development by Ensemble Studios, the creators of the Age of Empires series and also a Microsoft-owned developer.

"Our collaboration with Bungie has resulted in 'Halo' becoming an enduring mainstream hit," said Shane Kim, corporate vice president of Microsoft Game Studios. "While we are supporting Bungie's desire to return to its independent roots, we will continue to invest in our 'Halo' entertainment property with Bungie and other partners, such as Peter Jackson, on a new interactive series set in the 'Halo' universe. We look forward to great success with Bungie as our long-term relationship continues to evolve through 'Halo'-related titles and new IP created by Bungie."

Microsoft will retain an unstated equity interest in Bungie, and will continue a publishing agreement between the developer and Microsoft Game Studios for Halo intellectual property as well as other future properties developed by Bungie – corroborating reports that Microsoft will hold the “first right of refusal” for an unknown number of titles.

"This exciting evolution of our relationship with Microsoft will enable us to expand both creatively and organizationally in our mission to create world-class games," said Harold Ryan, studio head for Bungie. "We will continue to develop with our primary focus on Microsoft platforms; we greatly value our mutually prosperous relationship with our publisher, Microsoft Game Studios; and we look forward to continuing that affiliation through 'Halo' and beyond."

The separation between Microsoft and Bungie came just a week after the release of Halo 3. The third chapter in the Halo series was met with incredible success, with first day sales over $170 million, thanks in part pre-orders in the seven-digit range, with first week sales amounting to more than $300 million.

Despite the market success and critical acclaim from Halo 3 and the two games that preceded it, Bungie was reportedly unhappy with its relationship as a Microsoft-owned developer. According to anonymous sources, Microsoft expected Bungie to continue working on further installments of the Halo series, while the developer may have wanted to explore other themes and genres. Prior to Halo, Bungie developed third-person action game Oni and real-time strategy game Myth. Sources also believe that Bungie was unhappy with its lack of control over the marketing of its games.

Bungie Studios was acquired by Microsoft on June 19, 2000 following the developer’s impressive Halo for PC and Mac demonstrations.

Throughout Bungie’s years as a Microsoft property, certain key personnel have left the studio to form new, independent game companies. New companies spawned from former Bungie staff include Wideload Games, Certain Affinity, Double Aught and Giant Bite.

The now-independent Bungie Studios will remain in its current location in Kirkland, Wash.