The Fallout of Microsoft’s Recent Studio Closures

The recent news of Microsoft shutting down Hi-Fi Rush studio Tango and Arkane Austin has left many in the gaming industry surprised and concerned. According to reports, these closures are part of a widespread cost-cutting initiative that Microsoft is currently undergoing. This has raised questions about the future of other studios under the ZeniMax umbrella, as sources reveal that Xbox is offering voluntary severance to producers, quality assurance testers, and other staff at ZeniMax.

During a meeting with ZeniMax staff, Xbox president Matt Booty mentioned that the company’s studios had been spread too thin and leaders across the division had felt understaffed. This resulted in the closures of not only Tango and Arkane Austin but also Mighty Dog and Roundhouse. The aim behind these closures was to free up resources, as stated by head of ZeniMax, Jill Braff, who expressed concerns about managing nine studios worldwide with a lean central team.

Impact on Game Development

The closures have had a significant impact on ongoing game development, particularly at Arkane Austin, which was working on additional content for Redfall and potentially a new Dishonored game. Tango’s critically acclaimed Hi-Fi Rush was also a success for Bethesda and Xbox. These closures come at a time when ZeniMax itself was purchased by Microsoft in 2020 for $7.5 billion, making it one of the industry’s largest acquisitions.

The recent scrutiny on Xbox’s spending measures could be attributed to the lack of growth in Game Pass subscriptions. Analysts have noted that while there was significant growth in Game Pass spending between late 2019 and early 2021, it has since stagnated. This has led Xbox to reassess their approach to game development and become more risk-averse, as evidenced by the recent closures of studios.

Future of Xbox Game Pass

The Game Pass model was lauded for its ability to support smaller, more creatively risky games without the pressure of meeting sales expectations. However, with the growth of Game Pass subsiding, Xbox may be less willing to take risks on similar releases. This shift in strategy could have broader implications for the gaming industry as a whole, especially for independent developers and smaller studios looking to showcase their work.

The fallout of Microsoft’s recent studio closures reflects a larger trend in the gaming industry towards cost-cutting and risk aversion. While the specifics behind these decisions may be financial in nature, they have the potential to reshape the landscape of game development and publishing in the years to come. Players and developers alike will need to adapt to these changes and find new ways to navigate an increasingly challenging and competitive market.