XBOX's Biggest Gamble Starts With Major Layoffs, Studio Restructuring

Things could go either way for XBOX in the next few days, which could affect the company for years to come. Several sources in the industry say Microsoft is planning to cut a lot of jobs across its games business again. The futures of several studios are uncertain, and long-term projects are being looked at.

On the flip side, fresh news on XBOX’s plans for physical games suggests a time when digital ownership will be even more critical. There are many opportunities and risks at play right now for XBOX fans, developers and the gaming industry as a whole. One of the biggest changes is that a feature called “Disc to Digital” is said to be being tested inside Xbox.

Players with supported XBOX One and XBOX Series X games would be able to turn those discs into digital licenses that are related to their XBOX accounts. It is said that XBOX 360 games are not part of the feature.

If it gets off the ground, the program might alleviate one of the biggest concerns about the industry’s shift away from physical media. Eligible games would remain accessible to players digitally across compatible XBOX consoles, Windows PCs and future XBOX devices connected to their account, eliminating the need to use a disc every time they want to play.

This is interesting because digital purchases have been slowly gaining popularity in the gaming industry for years.

Physical releases are happening less often these days since digital sales are now the main way people buy games. Reports have also said that the next generation of XBOX hardware, which is currently called Project Helix, may also lean heavily toward a digital-first approach.

That, of course, has made people wonder if standard disc drives might become less important or even go away completely. Reports say XBOX may still be looking into ways to support real collections through hardware solutions that work with it. This could give longtime collectors a way to move forward without having to give up their libraries.

While the way people own games is changing, XBOX's marketing business is also going through big changes. It has been revealed by IO Interactive that their publishing deal with XBOX for Project Fantasy is over. The fantasy role-playing game, which was first revealed years ago with the code name Project Dragon, will still be made after the split.

In a statement, the studio said that staffing has changed because of the end of the relationship, but they stressed that work on Project Fantasy will still go on. The project is still a top priority for IO Interactive and it could come out on more than one platform once development is done.

The news is another sign that Microsoft is taking a close look at how it spends its development budget. In the next few days, that review should be seen by a lot more people.

Microsoft is planning another round of large-scale layoffs that will affect many parts of the company, including XBOX. While the announced layoffs only represent a small percentage of Microsoft’s global presence, those working in the industry believe the gaming division could be in for some major changes.

Various news outlets are reporting that each studio is being assessed on its own merits and some may need to downsize, become independent, or close altogether based on their current projects and financial outlook. This has already sparked concern within XBOX Game Studios despite there not being an official list.

The upcoming announcement is going to be one of the most significant shakeups to the game industry in recent years due to the sheer size of the expected changes.

With speculation surrounding the XBOX ongoing, a number of high-profile projects have come under the microscope.

State of Decay 3 remains one of the most anticipated Xbox exclusives, but the game is still very much in development despite being announced a few years ago. Reports claim the project has had positive internal feedback but the lengthy production cycle for the project goes to show just how difficult it is to make AAA games these days, where development can take a full console generation.

Marvel’s Blade is another game with a lot of unknowns. Reports say the game has been progressing well but may need more work before it’s ready to release. One of the biggest questions surrounding the project is whether Microsoft will continue funding for a longer production.

There have also been more rumors about a few companies that are owned by XBOX.

Obsidian Entertainment has come up a lot in rumors about possible reorganizations, but new reports say the company itself is not likely to close any time soon. Obsidian is still rumored to be secretly working on a new Fallout game, but there’s no evidence to support this at the moment.

Double Fine Productions and Compulsion Games are also names that come up during the conversation. Sources say that recent commercial performance has increased pressure on smaller teams whose games received good reviews but did not perform well in sales or subscriber growth.

Reports about restructuring have also been linked to Ninja Theory. The studio’s advanced motion-capture skills remain very valuable, even though there are still questions about its place in Microsoft’s future gaming business. The news isn’t all bad though, and there is a growing sense of skepticism, with several outlets reporting that XBOX is focusing on a select few marquee titles that are more likely to be successful commercially.

It seems like Microsoft is focusing its energies on games that could be successful for longer periods of time rather than trying to work on several expensive projects at the same time. This is part of a broader trend in the industry with development times getting longer, budgets getting bigger and publishers under ever more pressure to cut costs without delaying big releases.

Now might be the most important time for XBOX to put that balancing act to the test.

The next wave of announcements should show us which companies are still in Microsoft's future plans and how XBOX will compete in a gaming market that is increasingly digital and increasingly expensive.

We still don't know if these changes will make the XBOX brand stronger or if they are the start of a very different age. But one thing is for sure, the choices made in the next few days could have long-lasting effects on XBOX creators, players, and the future of the console itself.

The whole gaming industry is now waiting for big announcements. One question hangs over everything: what will XBOX look like after all the dust settles?