After weeks of rumors across the interweb, Microsoft’s golden child, the makers of the Halo franchise Bungie will be moving out. Microsoft acquired Bungie Studios in 2000, launching Halo, the juggernaut killer-app for the Xbox. And in case you hadn’t heard, on this past September 25th, Bungie and Microsoft release Halo 3 for the Xbox 360, selling almost $300 million in a single week.

Speculation has been brewing all week that Bungie was going independent - that the studio was getting tired of churning out Halos and wanted to do something different. Now, Bungie will “branch off” as Bungie, LLC, effective since October 1st. Microsoft retains the rights to Halo and gets first crack at any new Bungie properties.

In today’s press release, Microsoft spun the break-up as an “evolution of [their] relationship.” Now that’s spin. All the details of Bungie’s separation have yet to be fished out, but I can’t believe Microsoft is happy. Part of the reason they waited five days to announce the separation was probably to avoid bad press so close to the Halo 3 launch (not that Halo wasn’t without its own controversy).

This summer, Microsoft bragged about how Halo 3 would help make its video game division profitable. Not only would they sell more 360s, but since Microsoft owned Bungie, the game was all profit. Now, not so much. Halo will remain mostly profit for Microsoft, but Bungie’s on its own now. Microsoft may get first crack at games, but any cut Bungie gets is not part of Microsoft’s bottom line. Anything Microsoft gives to Bungie is an outright expense. And with this deal, who knows what happens to Halo 4 and any other spin-offs. What if Bungie just doesn’t want to make these games right now. Will Microsoft outsource Halo to another developer? Oh the horror.

Microsoft doesn’t have many console selling franchises. While its doing a good job stealing exclusives away from the PS3, Microsoft would be helped by in-house development. But now their best resources has…evolved. I hope nothing goes extinct.