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Microsoft Research Games was created from staff at Microsoft's research division in late 1997 or early 1998 when VP of Research Rick Rashid and Ed Fries, of Microsoft Games, wanted to put together a special team to work on new games using Microsoft's DirectX networking technology, DirectPlay, which at the time was still getting off the ground.
The initial team was only a few people: Robert Girling, lead designer; Joel Dehlin, producer; David Pugh, gameplay designer; Curt Carpenter, lead developer; and Rick Rashid, developer/manager. Later additions included Mark Snyder, test manager, and Pete Arisman, artist. Eventually the group was fleshed out into dozens of people as they geared up in the development of Allegiance, their one and only game. Allegiance was released in March 2000 and moved only a dismal 29,000 units, prompting MSRG to disappear into the mists of time. These days, the only online record of the group's existence is a series of developer diaries (starting here) and a single, unmaintained page on Microsoft's website.