For The First Time In Five Years, Microsoft Buys A Game Company

Gunstringer Twisted Pixel Microsoft

Photo: Twisted Pixel

Here’s evidence that the gaming space is hot: Microsoft just bought a small game developer after a five year hiatus.Late last night, Microsoft announced it bought Twisted Pixel, a studio based in Austin, TX. Twisted Pixel created “Splosion Man,” a casual game for Xbox Live, and “The Gunstringer,” one of the first games that uses Microsoft’s Kinect technology.

In the early years of the Xbox, Microsoft snapped up a bunch of game developers to create the core of Microsoft Game Studios, including Bungie, which was responsbile for the smash-hit Halo franchise. (Bungie was later spun back out.)

But Microsoft hasn’t bought a game studio since 2006, when it bought Lionhead, which is responsible for the Fable series.

The success of Kinect and a recent wave of interest in the casual games space, such as EA’s $1.3 billion buy of Seattle-based PopCap and Zynga’s impending IPO, may be spurring Microsoft to open its wallet again.

Microsoft told us that it bought the company because of its demonstrated success on the Xbox 360, and that it evaluates acquisition opportunities on a case by case basis. Twisted Pixel has about 25 developers on staff.

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