The Fallout of Microsoft’s Studio Closures

The recent news of Microsoft shuttering Hi-Fi Rush studio Tango and Arkane Austin has sent shockwaves through the gaming industry. According to reports, these closures are just the beginning of a widespread cost-cutting initiative that is still ongoing. It appears that ZeniMax studios are bearing the brunt of these cuts, with Xbox offering voluntary severance to producers, quality assurance testers, and other staff.

During a meeting with ZeniMax staff, Xbox president Matt Booty suggested that the company’s studios had been spread too thin, likening the situation to “peanut butter on bread.” Leaders across the division had reportedly felt understaffed, leading to the recent closures of Tango, Arkane Austin, Mighty Dog, and Roundhouse. Head of ZeniMax Jill Braff expressed concerns about the studios being unable to support their workload effectively.

The closure of Arkane Austin is particularly troubling as the studio was deep in development of more content for the vampire live service Redfall and potentially a new installment in the Dishonored series. Xbox had previously praised Tango’s Hi-Fi Rush as one of the most successful launches for Bethesda and Xbox in recent years. These closures have raised questions about the future of ongoing projects and the impact on the gaming community.

ZeniMax Studios were acquired by Microsoft in 2020 for $7.5 billion, making it one of the largest acquisitions in the gaming industry. However, the recent closures and cost-cutting measures are raising concerns about the direction of the company. The acquisition of ZeniMax was followed by Microsoft’s even larger acquisition of Activision Blizzard for $76 billion, further amplifying the pressure on the Xbox division to deliver results.

One of the potential reasons behind the cost-cutting measures could be the stagnant growth of Game Pass. Analysts have noted that Game Pass spending peaked in late 2019 through early 2021 and has since plateaued. This lack of growth may be impacting Xbox’s willingness to take risks on smaller, more creatively risky games that do not guarantee high sales numbers. The shift in focus could have long-term implications for the industry.

As the fallout from the studio closures continues to unfold, the gaming community is left wondering about the future of Xbox Studios. The recent events have highlighted the challenges of managing multiple studios worldwide with limited resources. The industry will be closely watching how Microsoft navigates these turbulent waters and what it means for the future of game development under their umbrella.