Microsoft and game developer Crytek are now working together on the upcoming Xbox 360 game Ryse but long before that game was announced Microsoft had conversation with Crytek about working with them on first-party based Xbox 360 games. The UK edition of the Official Xbox 360 Magazine reports that Microsoft's corporate vice-president Phil Spencer told them that the company started meeting with Crytek "around seven or eight years ago, and we started talking about what it'd mean for them to become first party."
This would be after Crytek released its first game, the modern day shooter Far Cry. Whether Microsoft just wanted a publishing deal with Crytek or actually wanted to acquire the Germany-based developer is unclear in the article. Spencer does say that in chatting with Crytek "it was a process of what do you guys want to do, what's unique for us." However Crytek was apparently too keen on making its next game, the sci-fi shooter Crysis. Because of that Spencer states, " ... we said we've probably got enough military future shooters, so go do that." That's a likely reference to the Gears of War franchise.
In any case it appears that Crytek's concept for its next game Ryse did in fact get Microsoft's attention and that game will now be an Xbox 360 exclusive. The game, formerly known as Project Kingdoms, is set in ancient Rome and will use the Kinect motion controller camera extensively. Other than that there's been no other info revealed on the game which is due out in 2012.