Fox and Universal, the studios financially backing the Halo movie
adaptation, have decided to back out at the last minute.  As it stands,
the Halo movie remains in preproduction but with no funds to eventually
move forward to the actual production and post-production stage.

It is reported that the Fox and Universal partnership asked that
Microsoft, owner of Bungie Studios who develop the Halo video games, and
the filmmakers to significantly reduce the profits they were seeking from
the gross of the movie.  Microsoft wanted $5 million up front for the film
rights and the script, plus 10% of the gross. Reportedly, with the budget
ballooning well beyond the initial $135 million, and the absence of a
reduced cut for the filmmakers, the studios decided to cut and run.

A lack of faith in the film's director, Neill Blomkamp, is rumored to have
also contributed to this move.  Blomkamp, who has directed a few short
animation and 3d animation films, as well as some music videos, would be
directing his first feature-length, big-budget movie in Halo. Peter
Jackson, the executive producer of the Halo movie and iconic director of
the Lord of the Rings trilogy, maintains his faith in Blomkamp's vision of
Halo.

With Microsoft and Jackson behind this project, it's hard to imagine that
this film won't find the funding someway.  Pre-production continues while
another distribution and financing deal is sought.  Don't expect the Halo
movie to be finished and in a theater near you by the time Halo 3 comes
out on the XBox 360.