Microsoft acquires ‘Gears of War’ franchise from Cary-based Epic Games

dbracken@newsobserver.comJanuary 27, 2014 

“Gears of War: Judgment” is the latest installment in the blockbuster video game franchise

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Microsoft Studios announced Monday that it has acquired the rights to the blockbuster “Gears of War” franchise from Cary-based Epic Games.

The deal includes rights to the first four installments of the franchise as well as future games and merchandise. Terms weren’t disclosed. Microsoft had published the games for its Xbox consoles.

“Gears of War” has been a cash cow for Epic, selling more than 22 million units and generating more than $1 billion in sales. The latest installment of the series, “Gears of War: Judgment,” was released in March of last year.

Epic is also behind the “Unreal Tournament” franchises as well as the creator of the popular Unreal Engine technology used by other game companies to create cutting-edge titles. The company has 301 employees, including 200 in Cary.

Epic officials declined to comment beyond a statement issued by founder and CEO Tim Sweeney.

“We’re very proud of the franchise we built in close partnership with Microsoft over the past decade and are happy that this agreement enables Microsoft to forge ahead with the ‘Gears’ universe on their industry-leading platforms as Epic concentrates its efforts on new projects,” Sweeney said. “Epic remains totally dedicated to supporting Xbox One and is licensing the Unreal Engine 4 technology to Microsoft in support of their future projects.”

Among Epic’s new projects is an action game called “Fortnite” that has been in development for several years.

Epic’s decision to sell the “Gears of War” franchise makes sense when you consider how much it now costs to develop a major game for the latest generation of consoles, said Alexander Macris, publisher of The Escapist, a Durham-based gaming magazine.

“As huge and rich as Epic is, they’re not that huge and rich relative to the size of the budgets of the next-gen console games,” he said.

The cost of developing and marketing such games can now total $100 million or more for the Xbox One and Play Station 4 consoles. As a so-called shooter game, “Gears of War” is also in the most saturated and competitive section of the video game market.

“The question for Epic is does it want to get in the business of staking its entire company around one particular franchise where it risks everything,” Macris said. “Or does it make more sense to sell that franchise to a company like Microsoft for whom it won’t be an existential risk and then they can focus on other projects.”

Microsoft said Black Tusk Studios of Vancouver, B.C., would take over development of the “Gears of War” franchise, and Rod Fergusson, former director of production at Epic, will join Microsoft and play a lead role in the development of the franchise.

In an interview on Microsoft’s website, Hanno Lemke, general manager of Black Tusk, said Microsoft Studios and Epic expect to continue to collaborate.

“Epic remains great partners and good friends of Microsoft Studios,” he said. “In fact, we will collaborate closely with Epic to ensure the inclusion of the Unreal Engine technology into the “Gears of War” franchise going forward remains consistent with the high quality fans have come to expect from the franchise.”

Monday’s announcement is the latest major change for Epic.

Over the past 18 months, the company has shutdown its Baltimore studio and put development of its latest “Infinity Blade” game on hold. It has also lost two high-profile executives: Cliff Bleszinski, better known as CliffyB, whose creative leadership accorded him rock star-like status in the gaming world; and Mike Capps, the company’s president.

In June 2012, the Chinese Internet giant Tencent paid $330 million to purchase a 40 percent stake in Epic. Tencent’s investment marked the first outside investment in the company.

Bracken: 919-829-4548; Twitter: @brackendavid

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