Microsoft Acquires Bungie in Video Game Effort

Expanding its push into digital entertainment, Microsoft Corp. is expected to announce today that it has acquired a leading video-game software developer in the Midwest for an undisclosed sum.

Privately held Bungie Software Products Corp. of Chicago, known for its line of action games, is the third game firm Microsoft has acquired to bolster its effort to launch a video-game machine late next year. Microsoft’s X-Box is set to rival both Sony Corp.’s PlayStation2 and Sega’s Dreamcast.

Microsoft plans to move most of Bungie’s staff to Redmond, Wash., where it will work with the X-Box hardware development team, said Ed Fries, vice president of games publishing at Microsoft.

Over the last 18 months, Microsoft has been structuring deals with software developers to create products for the X-Box, from providing funding for software start-ups to signing deals with publishers such as Activision to outright acquisitions.

In April, Microsoft bought Salt Lake City-based Access Software Inc., the leading developer and publisher of PC golf games. And in January, Microsoft acquired FASA Interactive Technologies Inc., creators of the BattleTech line of games.