Whatever happened to the Halo movie? Aliens, guns, explosions, and a massive audience already devoted to the franchise--it seemed like a massive blockbuster in the making. Names like Peter Jackson were attached--but then the movie disappeared.

So what happened? Microsoft demanded too much, a new report claims. The terms Microsoft was seeking would have been "the richest, most lucrative rights deal in history" and that "no property, not even Harry Potter" was able to get anything similar. Did Microsoft bite off more than it could chew?

An excerpt of a new book, Generation Xbox (via Wired), talks about the onerous terms Microsoft demanded. Microsoft wanted "$10 million against 15% of the box office gross, in addition to a $75 million 'below-the-line' budget and fast-tracked production."

Eventually, Fox and Universal were tied to the project. But progress on production was slow, and in October 2006, Universal demanded that the producers' deals be cut. Microsoft refused, and instantly the Halo movie died. "When you have a corporation that potent and that large taking a percentage of the profits, then you've got Peter Jackson taking a percentage of the profits and you start adding all of that stuff up, mixed with the fact that you have two studios sharing the profits, suddenly the return on the investment starts to decline so that it becomes not worth making," the film's would-be director Neill Blomkamp said. "Ultimately, that's essentially what killed the film."

"Microsoft's unwillingness to reduce their deal killed the deal," agrees Creative Artists Agency's Larry Shapiro. "Their unwillingness to reduce their gross in the deal meant it got too top-heavy. That movie could have been Avatar."

The "legacy" of the canned Halo movie, taking advantage of unused test footage and assets created by Weta Workshop, can be seen in Landfall, a live action commercial that would promote the release of Halo 3. Sony Pictures would later sign Blomkamp for District 9, a sci-fi action movie that features an armored hero using alien weaponry.