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All eyes in the video game industry are now on Bungie and Activision Blizzard, which announced this morning that they are working together on Bungie’s next major game after the Halo series.

I just interviewed Thomas Tippl, chief operating officer of Activision Publishing (a division of Activision Blizzard) and Harold Ryan, president of Bungie. Here’s the transcript.

VentureBeat: Tell me about the thinking behind the deal.

Tippl: From Activision’s perspective, this is a fantastic opportunity for us. It broadens our portfolio of existing games with a new franchise from a proven team. Bungie is one of the best development teams, one of the most creative out there with a proven track record. We are the leading publisher with presence in all parts of the world. We have a multiplatform strategy and distribution capability. The gaming community will be very excited about the future and play Bungie’s games on all platforms. This is a partnership that is going to be accretive to our operating margins and consistent with our strategy to grow.


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Ryan: For us, we became independent from Microsoft in 2007. We put a lot of thought into it and what we wanted for the future of the company and our products. We had a lot of opportunities to work with different potential partners for our next intellectual property. Activision allowed us to meet all of the goals we had for remaining an independent company. We wanted independence. We wanted to create new original properties we wanted to control. And we wanted to get our stories out to consumers worldwide on multiple platforms.

VB: Why was it so important to go off into a new game universe, considering you had done so well with Halo?

Ryan: Microsoft still has full ownership of Halo itself. We tried to coordinate on a new, well executed franchise plan over the next 10 years. That required control of the messaging, timing and content. There are a lot of things that went really well for us with Halo, and there were things we would do differently. Now we have an opportunity to plan 10 years out. We can address all of the things we didn’t do quite right last time with a partner we trust.

VB: Thomas, how do you do this in a way that makes business sense? Bungie is probably not a cheap partner.

Tippl: It depends how you want to look at it. The way you generate financial returns in the industry is focus on really big opportunities, make sure you have best development talent, best marketing talent, best sales talent, best online talent, and make games that appeal to the right audiences. There are very few developers with this kind of track record. Over the last couple of years, we have done that with Blizzard, the No. 1 online game developer. We attracted Bizarre Creations, the No. 1 independent racing game developer that will do a new intellectual property for us. We have attracted great teams, such as a new studio that is working for us as Sledgehammer Games. They have started work on the Call of Duty franchise. Now Bungie is working on the next big thing in interactive entertainment. Our strategy has clearly paid off. We haven’t just been throwing money around like some of our competitors. That is why in 2009, Activision Publishing delivered operating margins above 20 percent while our competitors posted losses. This is totally working and is very exciting for our long-term prospects.

VB: By the way, what is that Call of Duty game you are announcing tomorrow night?

Tippl: Tomorrow you will see a teaser for this year’s Call of Duty release, which is shaping up to be awesome. The quality is really great. Treyarch is taking the Call of Duty franchise to the next level with their release this holiday.

VB: This deal took place amid what happened at Infinity Ward. How did that affect the discussions here?

Tippl: From our point of view, those are completely unrelated topics. It’s unfortunate. We have been in this business for 20 years. We have never been put in this situation. The timing on this announcement is totally unrelated. We have been in discussions for the last nine months. We signed a term sheet in March. We finished the long form discussion today, and that’s why we are discussing this with you.

VB: And Harold?

Ryan: It really has been unfortunate what is happening at Infinity Ward. From Bungie’s view, we have been talking potential publishers for a couple of years. We have come to completion of the deal. We have lots of other stuff going on with Halo: Reach, which starts a multiplayer beta next week. We are done with the negotiations and are ready to step forward into the partnership.

VB: You have been working on the property, the new game universe, since 2007. Is it pretty far along?

Ryan: Yes, it is pretty far along. It is a natural stage to find a publisher. Our focus has been on Halo: Reach. Most of the studio will move over to the new intellectual property [IP]. Our burn rate will go up compared to what it was. Until now, we have been completely self-funding the development.

VB: There is a lot of talk in the industry about other platforms like the iPhone, iPad, Facebook and MMOs. It seems like you believe very strongly in the core console platform. Is that true?

Ryan: No. We are very focused on fun. We like to create competitive and cooperative fun for gamers. And we focus on connecting people and building communities. We have always done that. We are absolutely looking to take this IP to the broadest consumer group we can get to worldwide on almost every platform.

VB: So you could take this to some of the new platforms I have mentioned?

Ryan: Absolutely.

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