Following Xbox's shuttering of three Bethesda studios, key figures in the company have offered more details regarding the situation. Consequently, it appears Xbox is not done with the cuts.
Microsoft Takes on Cutthroat Approach Amid Turbulent Game Industry Climate
Studio Closures Merely Part of Xbox's Wider Plans of Restructuring and Cost-Cutting
Amid ongoing challenges in the gaming industry, Microsoft's Xbox division made significant decisions impacting three Bethesda studios. The closure of Dishonored and Prey dev Arkane Austin, Hi-Fi Rush dev Tango Gameworks, and mobile game dev Alpha Dog Games, along with the consolidation of Roundhouse Studios with ZeniMax Online Studios, denoted another round of restructuring within Microsoft. This came less than several months after the company's massive layoffs affecting 1,900 employees across its gaming division including those at Activision Blizzard.
Arkane Austin, in the midst of developing a major update for Redfall, had its plans abruptly halted, while Tango Gameworks was also met with the unexpected shutdown. Though unnecessarily unprecedented given the trend of layoffs and studio shutterings, the sudden closures of these studios came as a shock to employees, fans, and even figures in the business.
According to people familiar with the matter, Arkane was pitching a new single-player simulation game, such as a new entry in its Dishonored series, similarly with Tango Gameworks that also pitched a Hi-Fi Rush sequel to Xbox. Both studios were considering hiring additional staff to help actualize such proposed projects. All of which, as inferred from Xbox Game Studios head Matt Booty and Head of ZeniMax studios Jill Braff, were main factors of the studio closures, taking into account the company's broader plans.
As Booty previously explained in his email to staff, the decision was driven by the need to reallocate resources and focus on high-impact projects. The closure of these studios was also part of an ongoing cost-cutting initiative within Microsoft's Xbox division, likewise stated by Booty, with Bloomberg reporting that Xbox had begun offering voluntary severance agreements to various types of employees at ZeniMax this week. In line with these, there will be more cuts expected down the road.
Booty clarified that Arkane Austin's closure was unrelated to the underwhelming performance of its recent multiplayer game, Redfall. Braff, during a recent town hall meeting, reiterated Xbox's goal to concentrate efforts on fewer projects. "It’s hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do," Braff said, according to Bloomberg, "I think we were about to topple over."
Hi-Fi Rush was a major success for Xbox, bagging in several awards and hitting milestones. MSFT Gaming CEO Phil Spencer had praised the game in various interviews over the past year, as well as noting its significance to Xbox's wider moves to ingrain the brand "everywhere."
"These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades," read Booty's email to employees.
Despite the success of Hi-Fi Rush and Prey, Xbox opted to close these studios in favor of investing in projects, particularly its blockbuster titles, that align more closely with the company's long-term vision. Xbox said it likewise aims to address challenges regarding studios being "stretched too thin," aiming for a narrower focus in game development.
Harking back to Spencer's words amid the layoffs in February, Xbox is resolute on being a profitable, growing business arm of Microsoft, whatever it takes it appears. "I need to make sure we have enough of the right people and the right number of people in the right places for us to succeed," Spencer said.
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