In tomorrow's Daily Variety, I'm reporting that Legendary Pictures is in talks to acquire Epic Games. You can read the whole story here.

Of course, there have been rumors before that Microsoft and EA were interested in buying Epic. But those were, as far as I can tell, vaguely sourced speculation. I can assure you based on my reporting that there are serious talks going on. That doesn't mean the deal is a sure thing. Acquisition negotiations like this fall apart sometimes, with the most frequent reason being, of course, price (I don't have enough information to report what the price of this deal would be, except to say that it's a very big number). But I am sure based on my reporting that Legendary Pictures and its chairman, Thomas Tull, are very interested in Epic. For its part, Epic is certainly open to the idea.

Tull, of course, recently quit the board of the troubled Hollywood license-focused videogame publisher Brash Entertainment, which he co-founded last year. The fact that he's now gunning for Epic show that he remains very interested in games; he probably just thinks Brash did not turn into the kind of videogame company with which he wants to be involved. It's pretty clear that he likes Epic's work, since Legendary has signed on to co-finance New Line's "Gears of War" movie. That is undoubtedly how the two companies got to know each other and started these discussions.

It's hard to imagine why anybody passionate about videogames wouldn't want to be involved with Epic, assuming they can figure out a fair price. It's got one of the most successful videogame franchises in "Gears" (the original sold over 5 million units and next month's sequel will surely sell even more) and, more importantly, one of the most widely used pieces of videogame technology in Unreal Engine. The latter point is key, since that means Epic has a source of regular income from UE licensing and isn't completely hit dependent, which makes it a much less risky acquisition than a typical videogame developer. Of course that also makes it a more expensive acquisition.

From the Hollywood perspective, it's worth noting how unusual a Legendary purchase of Epic would be. Several studios (Warner Bros., Disney, Paramount, Universal) are spending their own money on videogames. But Legendary is a private equity-backed film financier. While billions of dollars of private equity funds have flowed into Hollywood in the past few years and gone into film, TV, and online production, none of it has touched videogames. This would be the first time. And it would be a very substantial start.

The folks at Legendary declined to comment, while Epic gave me this very friendly quote that, while not saying whether they're really going to get acquired or not, indicates they wouldn't be averse to Legendary and Thomas Tull being the ones to do so:

We have publicly announced that Epic and Legendary ae partnering on the "Gears of War" movie. We’re very excited about that project and have the highest regard for Thomas Tull and his organization.