Microsoft Buys Havok, A Leading Game Physics Engine, From Intel

  • Microsoft has acquired Havok, developer of the leading physics engine for game development, from Intel.
  • Intel had bought Havok in 2007 $110 million.
  • Microsoft plans to integrate Havok's physics engine into its VR game development environments for Windows, Xbox, and HoloLens.
  • The acquisition of Havok makes a lot of sense because VR gaming represents a business of growing importance for Microsoft.
  • Microsoft's Havok acquisition and ownership of its technology represents an incentive for game developers to port their creations to Microsoft's Xbox, HoloLens and future devices.

Microsoft (NASDAQ:MSFT) has acquired Havok, a leading developer of software solutions for game development, from Intel (NASDAQ:INTC), which had bought it in 2007. The financial details of the deal haven't been disclosed. Havok, which offers a comprehensive game development software suite with many modules, is best known for Havok Physics, the leading physics engine - the software subsystem that handles realistic real-time physics in games. Havok has also been used to create special effects for films like The Matrix and Troy.

Havok was the winner of the Game Developer Magazine’s Front Line Awards for Best Middleware for five years in a row, from 2008 to 2012, and the winner of the 59th Annual Technology & Engineering Emmy Awards in 2007, for advancing the development of physics engines in electronic entertainment.

"Havok is an amazing technology supplier in the games industry and the leading real-time physics creator," notes the Microsoft announcement, republished on the Havok website. "We saw an opportunity to acquire Havok to deliver great experiences for our fans. Throughout the company’s history, they’ve partnered with Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), Ubisoft, Nintendo, Sony Corp (NYSE:SNE), Microsoft and many others to create more than 600 games including Halo, Assassin’s Creed, Call of Duty, Destiny, Dark Souls and The Elder Scrolls."

The Verge reports that Microsoft plans to integrate Havok's physics engine into Windows and Xbox game developer toolsets. Those include the Direct X12 suite of game programming APIs, the Visual Studio app development kit, and Microsoft's Azure cloud platform, which most recently was shown powering a stunning real-time destructive environment in the upcoming crime game "Crackdown 3." Microsoft plans to continue licensing Havok to external game developers.

The announcement notes that Havok shares Microsoft’s vision for empowering people to create worlds and experiences that have never been seen before, and the companies look forward to sharing more of this vision in the near future. "We will continue to innovate for the benefit of development partners," states the announcement. "Part of this innovation will include building the most complete cloud service, which we’ve just started to show through games like 'Crackdown 3'."

Seeking Alpha notes that the buyout price is likely higher than what Intel allegedly paid for Havok, which was $110 million in 2007.

TechCrunch notes that Microsoft, which is working on both gaming and Augmented Reality (AR), needs the best development tools for its Xbox game console and HoloLens AR viewer. In particular, a recently announced visual effects product, Havok FX, which supports current generation game platforms such as Xbox One, PlayStation 4, and PC, makes visual effects such as particle, dust, shrapnel, and smoke more CPU-friendly and less intensive in 3D game worlds, VentureBeat reported in June.

Also in June, Microsoft unveiled a new Xbox One gaming console and announced a partnership with Facebook (NASDAQ:FB) to bring together the Xbox One and Facebook's Oculus Rift headset in next-generation Virtual Reality (VR) games.

"The era of virtual reality is here," noted the Microsoft announcement. "We’re thrilled to be working closely with the team at Oculus. Their groundbreaking work in virtual reality is inspiring, and the Oculus Rift delivers a truly next-generation VR experience,” said Microsoft head of Xbox Phil Spencer Spencer at an Oculus event in San Francisco. "We at Xbox are passionate about giving gamers the opportunity to play when and where they want. I can't wait to see the incredible games created for the Rift, and we are proud to be part of the experience."

Mocrosoft's HoloLens, a stand-alone computer embedded in an AR headset, brings high-definition holograms to life, seamlessly integrating with the physical world. According to Microsoft, holograms mixed with the real world will unlock new ways to create, communicate, work, and play. "Once you use HoloLens, there’s no going back," said Microsoft CEO Satya Nadella, and added that Microsoft is teaming up with Oculus, Valve and others to advance VR gaming technology. Microsoft was recently granted a patent for key technologies used in the HoloLens device.

The acquisition of Havok seems to make a lot is sense for both the seller Intel, for which VR gaming has never been a top priority, and the buyer Microsoft, for which VR gaming represents a business of growing importance. Microsoft's ownership of Havok technology will give the company an edge for internal development, and represent an incentive for game developers to port their creations to Microsoft's Xbox, HoloLens and future devices. Therefore, Microsoft remains a solid and promising stock for tech investors.

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