This morning, Microsoft confirmed it’s closing four Xbox studios. Arkane Austin, Tango Gameworks, and Alpha Dog Games are being completely shuttered, while Roundhouse Studios is getting absorbed by ZeniMax Online Studios to bolster its work there. It is, sadly, not an original or unique story.
Over and over this year, we’ve seen mass layoffs and studio closures. Embracer Group, once a vacuum absorbing companies left and right, has been selling them, ditching them, and laying employees off. Microsoft, at this point, is garnering a reputation too.
Earlier in 2024, Microsoft confirmed it was laying off 1,900 employees across Xbox and the recently-acquired Activision Blizzard. Today’s closure doesn’t have a head-count associated yet, and Xbox has yet to make an official statement on its own channels. The news of the studio closures was circulated through an email from Xbox Game Studios head Matt Booty, acquired and verified by IGN. Individual studio accounts have shared the news. Microsoft declined to comment on IGN’s report, though employees have since been expressing their frustration on social media.
To put these cuts into perspective highlights the ridiculous situation this industry is in. Arkane Austin had a stumble with Redfall, which will still remain online, but will not receive any further updates, with only a make-good promised for those who purchased the premium DLC pass. Compare that to a statement from Xbox head Phil Spencer, in a May 2023 interview with Kinda Funny:
“In terms of our commitment to the game… absolutely, the team at Arkane is taking the near-term feedback. We’re still working on the 60fps update. We have a good timeline for that, we’re committed to getting that done. And we’re going to continue to work the game. I think we’ve shown a commitment to games like Sea of Thieves and Grounded, to continue to go and build games. But I also know that these games are $70, and I’m gonna take full responsibility for launching a game that needs to be great.”
– Xbox’s Phil Spencer
In interviews, there were assertions that Arkane Austin, a team that had also produced games like 2017’s Prey and the original Dishonored, would get support to bring Redfall back up. Now, the game will likely become a ghost town, and only some Arkane staff are moving to other positions.
Look at Tango Gameworks. Hi-Fi Rush was inarguably a breath of fresh air for Xbox at a time when it needed games, and went on to be critically acclaimed. The two most recent tweets in Tango’s timeline are the news of its closure, and a retweet of the Bethesda account, congratulating the team for a BAFTA win.
Following a report that Hi-Fi Rush underperformed, Xbox’s VP of Games Marketing Aaron Greenberg publicly refuted it, saying: “[Hi-Fi Rush] was a break out hit for us and our players in all key measurements and expectations. We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release.”
Just recently, Hi-Fi Rush was tapped to be part of a small slate of Xbox games heading to other platforms. Now, Tango Gameworks’ games will remain available to play, but the studio is closing down.
Whether a studio releases a game that falters, or one that wins awards, the outcome doesn’t really seem to matter. Booty’s letter cites the following as the reason for these shifts:
“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.
To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.”
– Head of Xbox Game Studios Matt Booty, per IGN
What does success look like to Xbox, though? Here’s a breakdown from Microsoft’s FY24 Q3 earnings, dated April 25, 2024:
Microsoft Corp. today announced the following results for the quarter ended March 31, 2024, as compared to the corresponding period of last fiscal year:
- Revenue was $61.9 billion and increased 17%
- Operating income was $27.6 billion and increased 23%
- Net income was $21.9 billion and increased 20%
- Diluted earnings per share was $2.94 and increased 20%
And for an extra bit of Xbox context: “Xbox content and services revenue increased 62% (up 61% in constant currency) driven by 61 points of net impact from the Activision acquisition”
This is not necessarily a new story for Microsoft, either. In January 2024, the same month it announced it was laying off 1,900 Activision Blizzard and Xbox employees, Microsoft became the second company to reach a $3 trillion market cap.
There are questions now of what Xbox’s game plan is. There are plenty of talks about how this shifts strategy moving forward. Anxieties abound, as the market continues to look flat in outlooks. Undoubtedly, there is a scrutiny placed on studios right now to perform, and perform in an environment where the metrics for success are opaque. There’s a quote I’d like to cite here, though, that reminds us of what’s at the center of all this:
“I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don’t want this industry to be a place where people can’t, with confidence, build a career.”
That’s a quote from Phil Spencer, speaking to Polygon back in March about the layoffs rocking the industry. It is ironic, yes, but it does cite the actual issue. When these decisions are made, when cuts are determined necessary by whatever metric is thrown at them, it’s people who make the games paying the price.
Reports have already indicated that talent is leaving the industry. It rubs a little salt in the wound that some of these layoffs happen in the wake of return-to-office mandates. But it seems almost a certainty that no sector emerges unscathed from 2024. At the start of 2024, a friend joked to me that the motto for the next year would be “survive.” I felt they were right, but I wasn’t ready for just how right they were.
Where does that leave us now? A lot of talent, without jobs, in an industry where openings are difficult to find and, if you consider independence, publishing dollars are reportedly harder to come by. Here’s another quote, about that tension between the “fuel” needed to make games, and the passion that’s just as necessary to make them, from Larian CEO Swen Vincke:
Meanwhile, in June, Xbox will host a showcase as part of the annual Summer Game Fest festivities. Every year, events like SGF promise to talk about the biggest and brightest new games on the block. And, often, shows like this fail to address the very real conditions plaguing the industry, and the people, who make those games happen.
I’m curious what the tenor around Xbox’s show will be, and what’s said. Heck, I’m curious if they sit down with anyone to talk this year. A lot of people lost their jobs today, and I hope at some point, someone has to answer, on the record, why.
