Just a few days ago, rumors that Halo movie was going to be canceled flooded Internet websites. According to a report from Variety website, Universal Studios and 20th Century Fox backed out of the Halo movie project.

The movie was going to be produced by Lord of the Rings' directors, Peter Jackson and Fran Walsh. The thing that caused the two studio's withdrawal form the project was that the US$ 135 million budget allotted to the movie was exceeded. Fox and Universal representatives tried to convince the movie producers Jackson and Walsh to cut back on expenses but their attempt proved to be unsuccessful.

Furthermore, Microsoft has asked for a US$ 5 million upfront, money that would come out of the film's budget, and also 10% of the gross earnings. Despite all of this turmoil, the pre-production of the video game adapted movie still goes on at Peter Jacksons' WETA Studios located in New Zeeland.

Microsoft representatives have issued an official statement via the Bungie website stating their disappointment by the Fox and Universal withdrawal. They added that the Halo franchise is too popular for it to not have a movie based on it. They explained that Microsoft could not accept the financial renegotiation of the movie rights and that they are looking for financing elsewhere.