Hollywood trade journal Variety reported on October 19:
It's game over for Universal's and Fox's participation in the feature adaptation of Microsoft's Halo.
Both studios that agreed to co-finance the Halo movie have abruptly backed out of the project after Microsoft and the filmmakers (Peter Jackson, Fran Walsh, etc.) refused to reduce their profit participation. The movie budget was rising above the original projected $135 million and rumored to approach $200 million. Microsoft demanded an up-front payment of $5 million for the film right to be made on October 15, a further payment of 10 percent of gross, and a screenwriter (Alex Garland) and a first-time director (Neill Blomkamp) dictated by Microsoft, Bungie and Peter Jackson.
The studios demanded a pay cut at the last minute before the October 15 deadline. Microsoft, Bungie and the filmmakers said no. So Universal and Fox pulled the plug on the Halo movie.