It is one of the cruelest stories in video game lore.  Fans of the Halo series have again and again had the morsel of a potentially awesome Halo movie dangled in front of them, only to have it disappear time and time again. Each time it sounds more promising, with big names attached, which just makes the inevitable disappointment worse when things crumble apart. So while the news of Spielberg and Dreamworks pursuing the rights to the Halo franchise is interesting, like Bush said, fool us once, shame on you. Fool us twice… well, won’t get fooled again.

The online website for the New York Magazine, Vulture, is reporting that Spielberg and Dreamworks are pursuing the movie rights for the Halo franchise. But rather than dealing with the legal minefield (and numerous hurt feelings) left in the smoking ruins of the previous Halo movie attempt, Dreamworks is being clever and sneaky, and is instead attempting to buy the movie license for the Halo novels, not the game itself, thus sidestepping any potential litigation from Fox or Universal who were left holding a $12 million bill when studio politics landed a headshot on the movie and killed it dead.

For those that missed the painful story the first time around, the history of the Halo movie began in 2005 when Columbia Pictures president Peter Schlessel decided that he wanted to make a movie based on the game produced by Microsoft. Rather than taking the project directly through the studio system- an almost certain death sentence for a sci-fi adaption of a video game- Schlessel took the project and decided to sidestep the studio process altogether. Imagine Uwe Boll directing Halo, and you have an idea of why he wanted to avoid the standard channels that adaptations, especially video game adaptations, tend to go through.

Schlessel went directly to Microsoft and convinced them to bankroll screenwriter Alex Garland (28 Days Later) a cool million dollars to write a Halo script that would belong to Microsoft and Schlessel. Once Garland completed the script, it was presented to the six largest studios with a sticker price of $10 million against 15-percent of the grosses for the rights. At this point, Microsoft had risked just a $1 million (a relatively insignificant sum for them), and was passing all the risk on to the studios while retaining a huge potential upside.

Partly because of Microsoft’s demands, and partly because of the risks associated with filming a $100+ million movie based on a video game, four studios passed (including Dreamworks), leaving just Fox and Universal. Rather than starting a bidding war, the two studios agreed to co-finance the project and split the revenues evenly.

Universal’s chairman Stacy Snider, who had just paid Peter Jackson a record-setting $20 million salary against 20-percent of the theatrical gross for King Kong, went back to Jackson and asked him if he would be interested in producing the Halo film. Jackson was then approached by Universal production president Mary Parent, who asked if he would be willing to mentor Neil Blomkamp, a South African film makers who’s only claim to fame was a six minute short called Alive in Joburg that had caught Parent’s eye. Jackson agreed, and in October of 2005, he was officially attached to produce with Blomkamp signed to direct. Although the movie was doomed, Jackson and Blomkamp remained close, and went on to collaborate on District 9, which Blomkamp directed and Jackson produced.

Then things began to get tense. Snider left Universal, and although they weren’t thrilled with the idea, her replacements agreed to give Jackson a large slice of the grosses on top of the 10-percent already promised to Microsoft.

Jackson, his producing partner (and wife) Fran Walsh and Schlessel began pre-production on the film. By September of 2006, tensions began to escalate between Fox and Universal over the budget of the movie, and the deals in place with Microsoft and Jackson that cut deeply into the studios’ potential profits. As an option payment loomed for Jackson and his partners, Fox execs demanded that the deal in place with Jackson be scrapped, or the studio would walk.

Universal, which had footed the majority of the bill thus far, went to Jackson, Walsh and Schessel and demanded that they take a cut in their deals or the film was dead. All three declined and blamed the studios for not being honest with them from the start.

The film died a cold and lonely death there and then, but the story did not end there. Universal was left with a $12 million bill for the screenwriting and producing fees, and Fox refused to pay any of it, claiming that Universal mismanaged the project. The studios have since made peace without going to court, but there is still bad blood over the Halo film which Spielberg and Dreamworks are hoping to avoid.

Although the Fox-Universal Halo film died, it didn’t stop screenwriter Stuart Beattie (30 Days of Night, Pirates of the Caribbean) from writing a script based on the novel Halo: The Fall of Reach. He wrote the script on spec during the 2007 writers’ strike, and sent it to Microsoft, simply because he was a fan of the series. The script somehow made its way into the hands Spielberg in 2009, who has since been quietly eyeing his legal options regarding the rights.

By claiming to base a movie on the novels rather than the game, Dreamworks would essentially be creating a competing film to the Fox-Universal project, rather than breaching any copyright laws or violating any contracts which give the Fox-Universal team the rights to make a movie based only on the games. There might still be some legal jiu-jitsu in the works, but in theory it gives Dreamworks a clear road (legally speaking) to begin work on a Halo film. There is still one major hurdle though — Microsoft.

The software giant has never truly shown much interest in creating a Halo movie. The fear — and a justifiable one at that, based on the track record of video game adaptations — is that the movie would be terrible and it would only serve to hurt the $2 billion franchise that is already a huge success. In Microsoft’s eyes, the risks far outweigh the benefits.

It is still early, but if Microsoft does agree to let Spielberg take a crack at it, the negotiations are likely to be intense. If (and it is still a big “if”) a deal can be reached, then the movie will go through the difficult process of deciding on a budget, hiring a screenwriter, and choosing a director — assuming Spielberg only produces, which is probable based on his full schedule which has him booked solid through 2012. If and when that all comes together, Dreamworks would almost certainly want to at least tentatively plan on a franchise, which would further complicate the negotiations. So basically, the Halo movie saga has just been reset.

Here we go again.