While the cat quickly got out of the bag today pertaining to Yahoo’s persistent rejection of Microsoft’s takeover bid, gamers continue to maintain their attention on a potential Microsoft/Epic acquisition deal. Word of the alleged $1 billion takeover offer coincided with Epic’s announcement of Gears of War 2 at this year’s GDC (Game Developer’s Conference). However, there are some industry insiders who say that, short of a turnaround, Microsoft’s gaming division is "a sinking ship" that Epic would do better to avoid rather than join.

With Bungie now an independent development studio and Microsoft retaining the rights to the Halo franchise, the deal would appear to make perfect sense from Microsoft’s perspective. However, a case can be made for Epic being better off remaining independent from both an artistic and financial standpoint.

It remains to be seen, though, whether or not Microsoft will in fact make a formal offer to Epic Games this summer, as well as whether or not it will be greater or lesser than the rumored $1 billion bid.