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Eurogamer's own sources confirmed this today. One person close to Crytek told us a pre-production deal for Ryse 2 was on the cards, and that Microsoft wanted to do the deal, but its terms proved a sticking point.
Apparently, in exchange for funding Ryse 2's development, Microsoft wanted to take over the Ryse intellectual property, something Crytek couldn't agree to, so both parties decided not to continue. Retaining IP is important for independent developers, as we've seen from the likes of Bungie with Destiny and Respawn with Titanfall.
This, after German magazine GameStar said Ryse: Son of Rome's development as a "disaster".
Ryse, announced in 2010 as an Xbox 360 Kinect exclusive called Codename Kingdoms, was dogged by missed milestones and poor quality builds throughout its production - and at one point was nearly cancelled.
As Eurogamer revealed in May 2011, Crytek Budapest, the original developer of Ryse, suffered around 50 redundancies after Microsoft had Crytek shift development of the game from Hungary to its Frankfurt office in Germany, effectively rebooting it as a controller-based Xbox One launch title.