'Halo' fights to the finish with merchandise

Microsoft wants videogamers to 'finish the fight' when the last chapter of its Halo trilogy comes out next week but a carefully crafted merchandising strategy will make sure the space-marine protagonist Master Chief lives on for years to come.

Halo is crucial to the success of Microsoft's Xbox video game business, which has lost billions of dollars since it was started in 2001 as a way to counter Sony's growing dominance.

Hailed by some as the Star Wars for Generation Xbox, the Halo franchise has spawned a mini-empire of licenced toys, clothing and tie-ins. The game features a space marine called Master Chief trying to save humanity from an alien army known as the Covenant.

For a US company expected to post $57bn in revenue this year, such licencing deals are little more than a rounding error. Yet Microsoft is driving to make the games division profitable this fiscal year, so every penny counts.

"Halo merchandise is a logical way to earn some extra revenue, and they are trying to collect on as many fronts as they can to turn Xbox into a profitable business," said Matt Rosoff, an analyst with Directions on Microsoft.

The most important effect of new Halo-branded products, however, is to make people more aware of the game.

"We make money and making money is great because this is a business. But we want long-term money that satisfies the fan base, not money today," said Steve Schrek, director of franchise development at Microsoft.

Microsoft also hopes Halo will help it 'finish the fight' against Sony, whose PlayStation 3 console has struggled in the US since it made its debut nearly a year ago.

The PS3's high price -- still $500 after a July cut -- is the biggest factor behind its woes but Sony has also failed to deliver a true 'system seller' -- a game so good that people will buy a particular console just to play it.