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How Epic cost MS $1 billion dollars

...and spared the world Xbox 1.5. This historical anecdote turned up in Major Nelson's last podcast (as transcribed by 1up):

When Microsoft was finalizing hardware specifications for Xbox 360, they apparently asked developers to make a choice: a bundled hard drive standard to every Xbox 360 or 512MB RAM, compared to the previously planned 256MB RAM. Epic Games' VP Mark Rein told this story at an Xbox Community Party in Canada recently, as recorded in a Major Nelson podcast and picked up on by Team Xbox.

Epic Games chose RAM and produced a screen shot of what Gears of War would look like with just 256MB RAM for Microsoft. "...the 512 megs of RAM was way more important, cause otherwise you couldn't do this level of graphics if you had to both write your program and do your graphics in 256 megs. Nothing would really look that HD," he said.

Despite the costs, Microsoft gave into the pressure. "So the day they made the decision, we were apparently the first developer they called; we were at Game Developers Conference, was it two years ago, and then I got a call from the chief financial officer of MGS and he said 'I just want you to know you cost me a billion dollars' and I said, 'we did a favour for a billion gamers'."

You can say that again. It almost makes me feel obligated to run out and buy a five copies of Gears of War in weepy gratitude. I hope that comparison shot is framed in the Narrowly Averted Disaster Hall of Fame.