I haven't quoted the whole article as it's quite long, but here's some choice excerpts:
We were literally setting out to be the richest, most lucrative rights deal in history in Hollywood,” says Shapiro. “You have to remember that no property, not even Harry Potter, was getting [what we were asking for].” Microsoft, a global software giant used to getting its own way, wasn’t about to kowtow to Hollywood. It knew Halo was the jewel of videogame movies, the one that could be a true blockbuster hit. According to Variety, Microsoft wanted $10 million against 15% of the box office gross, in addition to a $75 million “below-the-line” budget and fast-tracked production.
According to the New York Times, Microsoft were demanding creative approval over director and cast, plus 60 first-class plane tickets for Microsoft personnel and their guests to attend the premiere. It wouldn’t be putting any money into the production itself beyond the fee paid to Garland, nor was it willing to sign over the merchandising rights. To add insult to injury, Microsoft wanted the winning studio to pay to fly one of its representatives from Seattle to LA. They would watch every cut of the movie during post-production. Clearly, Microsoft was entering into negotiations brandishing a very big stick.
We told them: ‘You need to have all your decision makers in a room because we’re going to deliver the script for you to read together with a terms sheet. But there’s a fuse on it. You’ll only have a certain amount of time to make a deal.’
For a few hours on June 6, 2005, Hollywood became Halowood. Everyone was buzzing about the Master Chiefs spotted walking through the studio lots and — more importantly — about the richness of the deal Microsoft was demanding. No one had ever seen anything like it before. Microsoft, the global corporation whose products sat on every desktop, had come to Hollywood and wasn’t afraid of throwing its weight around. “If showmanship and arrogance and Hollywood don’t go together, I don’t know what does,” says Moore who was Microsoft’s go-between with Universal during the negotiations.
In the end, though, it wasn’t the Master Chiefs’ fault that the deal stumbled. Nor was it CAA’s. The failure of the Halo movie remains a potent illustration of the gulf that still lies between Hollywood and the videogame business. It should have been the tent-pole movie to die for, instead it became the one that got away. Millions of Halo fans around the world wanted a movie, yet it failed to launch. Partly, it stemmed from the on-going inability of both sides of the deal to understand each other’s culture, needs and language.
“My instinct was that if I crawled into that hornet’s nest it would be not good, and it was a clusterfuck from day one,” he admits. “There’s no question that there was a clash of worlds, for sure. The two sides weren’t seeing eye-to-eye.” - Neill Blomkamp
“The suits weren’t happy with the direction I was going. Thing was, though, I’d played Halo and I play videogames. I’m that generation more than they are and I know that my version of Halo would have been insanely cool. It was more fresh and potentially could have made more money than just a generic, boring film — something like G.I. Joe or some crap like that, that Hollywood produces.”
"I’ll never ever work with Fox ever again because of what happened to Halo"
An incredible story, and really demonstrates how difficult it would be for us to ever see a Halo movie. It seems like Microsoft didn't appreciate the benefit a Halo movie could have given both the franchise and the Xbox platform. If Microsoft made no money from the deal directly they'd still have benefited from the millions of extra people it would have introduced to the Halo universe. At that point the franchise was absolutely ripe for a movie as there were so many questions to answer, so many parts of the story to cover, I'm not sure a Halo movie could have the same impact today. A high-budget TV series on the other hand...
What ultimately killed the Halo movie was money. “Microsoft’s unwillingness to reduce their deal killed the deal,” says Shapiro. “Their unwillingness to reduce their gross in the deal meant it got too top-heavy. That movie could have been Avatar.”
- Cowboy Out.