The New Halo Game Is a Hit — So What’s the Status of the Halo Movie?

The halting, years-long effort to turn Microsoft’s $2 billion Halo video-game franchise into a movie is again moving forward: Insiders tell Vulture that DreamWorks Pictures is renewing its efforts to obtain the rights and revive the project, which has been in a state of suspended animation since late 2006. It’s obvious why this property seems even more valuable now. Halo: Reach grossed $200 million on its very first day in release last month, making it 2010’s best-selling game. But after Fox and Universal already dumped millions of dollars into developing the project only to come up with nothing, why does DreamWorks seem so intent on trying, and how will they steal away with this franchise without getting sucked into the other two studios’ money pit?

Despite Spielberg’s status as Hollywood’s top producer and his ability to attract the best original scripts, DreamWorks has been focusing on using novelizations of the video game — the literary equivalent of Purina PuppyChow. It seems strange for Hollywood’s most successful filmmaker to rely on such lowbrow source material, but it’s actually a shrewd way to dodge the knotty legal issues and bitter recriminations surrounding Halo’s development at Universal and Fox.

Let’s back up for a complete Halo history lesson: Five years ago, when former Columbia Pictures president Peter Schlessel first championed the project, he deliberately began working outside the studio system, hoping to avoid the development psychodrama that ruins and stalls so many adaptations. He got Microsoft to pay screenwriter Alex Garland (28 Days Later) a million dollars to fashion an original Halo script before even a single Hollywood studio had signed on to finance or distribute the movie.

In a theatrical flourish, Creative Artists Agency, representing the project, dispatched messengers dressed as Halo protagonist Master Chief — yes, wearing space helmets — with copies of Garland’s script to all six major studios. Their asking price: A whopping $10 million against 15 percent of the grosses. For Microsoft, it was all upside and virtually no risk. But then again, the franchise had already sold $600 million worth of video games.

Citing Microsoft’s disproportionate reward for a nearly total lack of risk, most studios (including DreamWorks at the time) passed. Both Fox and Universal were interested, but decided that rather than bidding against each other, they’d partner on the film.

In what was the largest intellectual property deal in the history of the movie business, the two rival studios finally agreed to pay $5 million to option Halo and pay Microsoft 10 percent of its eventual theatrical gross — Universal would oversee production and distribute the movie in the States, and Fox would release the film overseas, but both studios would share revenues 50/50. Sadly, as with so many Hollywood marriages, their partnership would barely last a year.

The trouble began with the hire of director Peter Jackson as a producer. Under Universal Pictures chairman Stacey Snider’s tenure, Jackson had earned the highest salary ever paid to a film director in advance of production, $20 million against 20 percent of the theatrical grosses for Universal’s remake of King Kong.

In the late summer of 2005, Universal production president Mary Parent had seen a six-minute short, Alive in Joburg, by South African director Neil Blomkamp, who would go on to make District 9. Soon after, she approached Jackson about mentoring Blomkamp on Halo. Jackson soon agreed to the idea, and by October 2005, his involvement was officially announced.

After Universal Pictures chairman Stacey Snider stepped down in February 2006, her replacements, David Linde and Marc Shmuger, agreed to keep Jackson’s rich deal in place: A hefty slice of the Halo grosses would go to Jackson for supervising the neophyte Blomkamp, even though 10 percent of Halo’s gross was already promised to Microsoft.

But by September 2006, with no locked script, 20th Century Fox chairmen Tom Rothman and Jim Gianopulos were worried. And after a joint meeting held on the Fox lot to discuss the project with its creative team and Universal’s brass, the Fox co-chairmen expressed grave concerns about the spiraling development costs and, more important, the gross-participation costs. They were decidedly not okay with any of it. (Things got so tense that News Corp. CEO Peter Chernin is said to have even personally called on Microsoft CEO Steve Ballmer to remove Universal from the deal entirely, but to no avail.)

By October 2006, with another option payment looming for Universal, Rothman and Gianopulos insisted the first-dollar deals for Jackson, his producing partner Fran Walsh, and original producer Peter Schlessel all be scrapped, or Fox would walk.

Suddenly facing the loss of its much-needed partner on a massive $135 million blockbuster, Universal — having already spent millions to option the project and employ Jackson, Walsh, and Blomkamp for the better part of a year — was forced to issue an ultimatum, delivered poetically enough, on Yom Kippur: At the gilded Peninsula Hotel in Beverly Hills, reps for Jackson and Schlessel were told that they needed to immediately agree to cut their deals — or the picture would go away. Predictably, all three declined, saying that if the studio had said as much from the start, they wouldn’t have wasted a year of their lives helping prep the movie.

But Universal had already spent some $12 million in screenwriting and producing fees, and now Fox was refusing to share the costs, alleging mismanagement of the development process by Linde, Shmuger, and Parent; Universal, in turn, threatened to sue Fox. Recriminations abounded. The Halo movie was dead.

While insiders say that Fox and Universal have settled their differences out of court, a person intimately involved with the original Halo deal tells Vulture that “Fox fucked them completely” and Universal lost close to all of its $12 million investment. And that residual anger over the wasted money is the big reason why DreamWorks is so explicitly saying its project is based on the books: By citing “different” source material, it preemptively neutralizes any attempt by Universal lawyers to demand that the new studio reimburse its $12 million in development costs. Oh, you were doing a movie on that Halo? Yeah, we’re doing something else entirely. More literary. Another helpful side effect of using the books is that it appeases Microsoft, which authorizes them all; it shows them that DreamWorks takes the canon seriously (even if the process ends with a completely original script). Snider, who declined to comment for this story, is now CEO of DreamWorks, and knows from her days ushering Halo through Universal the importance of keeping Microsoft happy.

At this point, however, no writer has been hired. Last year it was reported that Stuart Beattie, the screenwriter behind such studio movies as Pirates of the Carribean and G.I. Joe: The Rise of Cobra, had the job, but he tells Vulture that while he did write an adaptation of the novel Halo: The Fall of Reach during the 2007 writers’ strike and sent it to Microsoft, he did so completely on spec: “I’m just a huge fan,” he says, “and my long-term goal is to get three Halo movies [based on the three novelizations] made. It’s not something I can accomplish tomorrow. But if I can help, I am glad to do it.”

But after all of these years, many wonder whether the idea of a Halo movie is an impossibility. Because while Hollywood politics derailed the first go-round, there are also Microsoft politics that lay in wait. While Microsoft execs have at least paid lip service to wanting to see the movie made, one source scoffs, “It’s a gigantic waste of time, because [Microsoft] doesn’t want anything to happen in any other media that could screw up a multi-billion dollar franchise. Somebody has to be in control of a movie; it’s a director’s medium. But they’re completely averse to that. Because if Steven Spielberg fucks it up, what’s your recourse? So the rule is: ‘First, do no harm.’”

Maybe so, but if anyone has enough street cred to get Microsoft to relax, it’s Spielberg. One can imagine him casually turning to Microsoft’s Steve Ballmer at dinner and murmuring, “Halo’s only made $2 billion worldwide? I thought it was like, a big deal or something? I mean, my films have grossed $8.5 billion worldwide, so … well. Anyway, who’d like dessert?”

The New Halo Game Is a Hit — So What’s the Status of the Halo Movie?