Ensemble has been wanting to make an MMO for a long time. That was in production for a long time. The Halo IP was a great IP to launch an MMO with. Microsoft... hasn't had the best track record with those. And we worked on it for a long time—we had staffed up an almost-40 person team. And then there was some reorganization at Microsoft, and the new bosses thought it wasn't the best idea anymore. It had actually been green-lit, and then it got cancelled after that.

Today, we shared with our employees at Ensemble that we have plans to close the studio after Halo Wars RTM. Such a decision is never easy. Like any business, we're accountable for making tradeoffs and the right level of investments that will drive profit and future growth. However, as we reviewed our first-party portfolio and where we need to invest and divest our resources to achieve our long-term strategies, it became clear to us that closing the studio and redeploying those resources to other more scalable ventures is the right thing for our business at this time. Unfortunately, our decision to close Ensemble will adversely impact many of the studio's team members. Following the closure, the Ensemble leadership team will form a new entity and have agreed to partner with Microsoft to develop future products and provide support for Halo Wars post launch. While the new company will be hiring a portion of the Ensemble employees, its size and resources prevent it from offering positions to the entire Ensemble team. We hope to integrate much of this creative talent into MGS or the broader IEB team, where we have relevant openings. Ensemble Studios has produced many notable games over the years – including the Ages franchise – that have helped MGS become a leader in interactive entertainment. And now, Halo Wars is already proving to be a hit by people who have seen and played early versions of the game. The Ensemble team is committed to continuing its development, testing and support of Halo Wars through to the completion of halo wars. We're also working closely with the studio's leaders to ensure a smooth launch of the game in early 2009 and continuing support thereafter. We will support the studio in every way possible as they work to deliver this highly anticipated game. This action notwithstanding, I want to emphasize that the overall investment Microsoft is making in video game development is not diminished, and we will continue to bring in talent to work on titles and franchises where we'll see the most ROI. Our priority is to continue to nurture the creative freedom that allows us to successfully drive our business strategy forward. Meanwhile, we're launching some outstanding games over the next few months. We've just launched Too Human and Viva Piñata: Trouble in Paradise, and soon we'll see many other games hit retail store shelves, including Scene It! 2, Fable 2, Gears of War 2, Banjo-Kazooie: Nuts & Bolts, Lips and, of course, Halo Wars. I want to thank you for your hard work and focus as we head into the next few months and make this a blowout year for first-party games. Please be supportive and respectful of our Ensemble colleagues as they go through this tough time. Phil

Halo Wars" is being developed from the bottom up for the Xbox 360 and its control scheme to ensure that we deliver a groundbreaking console RTS experience. Given that, we have no plans to develop "Halo Wars" for Windows Vista at this time.

I think we've got magic in the disc.