Xbox Shuts Down Four Studios, And More Will Follow

This week couldn't have been more bizarre than this in the history of the gaming industry. While Sony's PSN unrest with Helldivers 2 and censorship issues with Stellar Blade seemed to be settling, on May 7, Microsoft announced the closure of four studios, which will result in the cancellation of many games. Things only got worse when Microsoft abruptly shut down three Studios: Tango Gameworks, which developed Hi-Fi Rush; Arcane Austin, which developed Redfall; and Alpha Dog Games, which developed Mighty Doom.

Bloomberg reports that as part of a broad effort to decrease costs at Xbox, more developers would be let go. Everyone seems to be engrossed in the notion that Microsoft's shifting priorities and strategy are completely ignoring Xbox. Anyone who has ever trusted Xbox before will find that this is something that has been discussed for quite some time. They had previously terminated the jobs of 1,900 workers at Microsoft, and now they are closing down Bethesda's Arkane Austin, Alpha Dog Games, Tango Gameworks, and Roundhouse Studios. In the process, they discarded one of the company's most successful new franchises in recent years.

Arcane Austin, the company responsible for developing Redfall and Prey, is being shut down. ZeniMax Online Studios will take on Alpha Dog Games, Tango Gameworks, and Roundhouse Studios altogether. Arcane Austin is splitting up and sending some of its members to different production companies. ZeniMax, which makes Elder Scrolls Online and is working on a new intellectual property, is acquiring Roundhouse Studios. While some Austin members are staying put, others are getting transferred to other ZeniMax.

There is a lack of clarity regarding which Studios or how many employees are being reassigned at this moment. After a disastrous year of layoffs in the gaming business, things are looking much worse as Microsoft shutters many studios, which has a significant impact on Bethesda, the software publishing department of Xbox's first-party company. There is no question that we all have a deep affection for those games; nevertheless, in the process of doing so, they have managed to demolish one of its most recognized studios.

The CEO of Xbox Game Studios, Matt Booty, informed employees via email that Microsoft had "reprioritized titles and resources" as the reason for the layoffs. According to him, the layoffs and budget cuts were due to the "reprioritization" of titles and funds. What this really implies is that they are moving their money away from this franchise and towards others that they likely consider more vital. Since Square Enix has also recently stated that they will be focusing on Triple-A titles going ahead, this comment is extremely similar to theirs. So, in essence, Bethesda will probably start focusing on other games like Fallout 5 and The Elder Scrolls VI as a result of this.

To make matters more perplexing, Xbox has never really thrived in Japan, and Tango Gameworks was their sole studio there. Despite Phil Spencer's repeated statements that they need additional Japanese studios, they are presently shutting down Tango Gameworks, their only Japanese studio. Hi-Fi Rush was a smashing success for Microsoft and gamers in every important metric and expectation, according to Aaron Greenberg, VP of Xbox Games Marketing at the company, last year.

The crew at Tango Gameworks blew them away with their unexpected release, and now, a year later, the studio is no longer in operation. When paired with what he stated last year, it simply does not make much sense. We can guess about its sales numbers—after all, it is a Game Pass game—but that is also significant to remember. Every one of Xbox's development studios is aiming towards this, but their measurements for success might be evaluated differently for certain games than they are for other games. There has to be more to their core measures than just sales volume.

Controversy surrounding the studio's concern over closures erupted as rumors circulated that Xbox requires smaller games when Matt Booty allegedly stated in a meeting that the company needs smaller titles that provide glory and praise, which stoked the fires of shutdown. However, his description seems remarkably similar to Hi-Fi Rush, a video game developed by the firm that recently shut down. The developers claim that despite the game's diminutive size, a large team and a respectable budget were actually behind its creation. 

It's clear Xbox is undergoing substantial alterations because things have changed from the inside, and there has been a shift in the company's operations. It does have an air of Microsoft-ness about it, though—not quite team Xbox, but Microsoft has clearly taken the lead. Perhaps Xbox underwent some unexpected changes as a result of the Activision Blizzard takeover. A lot of people were looking forward to this takeover because of the potential changes it could bring to Xbox in the future, but I feel like it has shifted Xbox in a manner that few predicted. The corporate perspective of Microsoft on gaming differs from that of team Xbox, as we can see for ourselves. The effect appears to have been to make Microsoft bet the farm on the gaming market.

It seemed like the stage was set for Xbox to have a promising future. As everything was happening during the acquisitions, we all had a really positive stance on the next phase of gaming and even a very positive outlook on the Xbox brand throughout the entire time. As they expanded their studios and hired more people, that became even more apparent; they have, on the whole, been highly consumer-friendly. Even more crucially, Xbox finally had the studios and people to support their subscriptions and consoles.

And this is why the shutting down of studios is disappointing. It's disheartening to witness their sudden emphasis on corporate ethics, and this is only going to be clearer over the next few years. Team Xbox is clearly not in charge anymore, as 2024 has proven to be more and more evident. Their actions this year, which contradict their previous assertions, give the impression that Microsoft's leadership is to blame. Even rumors of a power dynamic at Xbox have made it into the rumor pool. And the more you consider it, the clearer it becomes.

Who knows what the future holds for Game Pass? The crew are currently debating whether to enhance the service's pricing by adding Call of Duty titles or to expand it to other platforms, such as PlayStation 5, with titles like Senua's Saga: Hellblade II. Xbox, much like the rest of the gaming industry, is clearly growing skeptical of risk at the moment. The acquisition of the new gaming studios was a risk they were willing to take, but they ultimately decided against it.

No matter how you slice it, the $70 billion Microsoft spent for Activision Blizzard was the largest acquisition in gaming industry history—and Microsoft's history as a whole. Consequently, there is going to be a great deal more attention paid to their gaming industry than there has ever been before since Microsoft would also like to see that ROI. Additionally, it is entirely conceivable that the leadership of Microsoft has assumed control of the Xbox brand, and it is plausible that this is the reason why some of these decisions are a little daunting for long-time Xbox fans. The fact that all these contradict both the brand's previous values and those of Xbox as a whole.