1UP: What was the reaction internally when the rumor appeared online? You guys had to laugh a little, especially given how many people dismissed it as crazy talk.
Jarrard: Yes, it was a little amusing to see the various reactions online, mostly the people who were absolutely certain it was completely unfathomable and anyone who thought so was a fool. Ha. It was also a little nerve wracking though, since we were still working with Microsoft and neither of us was quite ready to publicly say anything.
1UP: Did the rumor's traction end up pushing up the actual "officialness" of the deal?
Jarrard: No it did not. The original timing for the announcement was always going to be right after Halo 3 was out the door so everything worked out according to plan.
1UP: What was Microsoft's first reaction when you guys realized this was a move you wanted to make? Backing out of an acquisition isn't exactly the most sane idea we've ever heard of.
Jarrard: Well I wasn't in the room for those discussions but it seems that both groups quickly came to the realization that this was a mutually beneficial evolution of our relationship.
1UP: You guys have talked about the frustrations around finishing Halo 2. How quickly did that fast track the idea of Bungie splitting off, and did that create any tension during Halo 3's development?
Jarrard: Our frustrations surrounding Halo 2 were purely our own doing - it was a matter of our team having to make compromises to our initial vision based on our own planning and development stumbles. Halo 3 was quite the opposite - in many ways, our hardships finishing Halo 2 inspired the team to do much better this time around. We hired some great people, we worked really hard during pre-production to agree on solid concepts and a realistic scope for the project given the resources we had available. Dare I even say that the bad taste in our mouths from Halo 2 made us do an even better job than we may have otherwise on Halo 3. Maybe. 
1UP: What if Microsoft had simply said "no, sorry, we're keeping Bungie internal, that's that?" Part of this deal seems to be covering Microsoft's end -- if they pushed you guys too hard, people would just leave, anyway.
Jarrard: It's hard to say what could or would have happened. Who knows. But it's definitely true that this newfound relationship with Microsoft will help to reinvigorate and energize many of our elder team members.
1UP: Is Bungie now contractually obliged to give Microsoft first-look on future titles, Halo-related or otherwise?
Jarrard: We aren't at liberty to discuss the specifics of this business arrangement but suffice it to say that we look forward to continuing to work with Microsoft as a great partner and world class publisher.
1UP: For all the super fans: does this mean Bungie won't work on whatever "Halo 4" turns out to be?
Jarrard: Well we are already at work on another Halo game -- I wouldn't call it "Halo 4", but it is based in the Halo Universe and represents a collaboration between Bungie and Peter Jackson. Halo 3 was definitely not the last Bungie Halo game.
1UP: And perhaps most importantly, this means we're going to finally see some progress on Pimps at Sea, right?
Jarrard: Fortunately, Bungie LLC does retain ownership of the Pimps at Sea franchise so anything is possible!
http://www.1up.com/do/newsStory?cId=3163440
