The recent news of Hi-Fi Rush studio Tango and Prey’s Arkane Austin being shuttered by Microsoft has sent shockwaves through the gaming industry. This decision is just one part of a larger cost-cutting initiative that Microsoft is currently undergoing. The closures of these studios, along with others like Mighty Dog and Roundhouse, have raised concerns about the future of ZeniMax studios, which seem to be the main target of these cuts.
According to sources familiar with the company’s plans, Xbox has been offering voluntary severance to producers, quality assurance testers, and other staff at ZeniMax. During a recent meeting with ZeniMax staff, Xbox president Matt Booty expressed concerns about the studios being spread too thin. He likened the situation to spreading “peanut butter on bread” and mentioned that leaders across the division felt understaffed. This desire to free up resources was cited as the reason behind the recent closures.
The Fallout of the Closures
The closures have come at a difficult time for studios like Arkane Austin, which was deep in development of new content for the vampire live service Redfall. Additionally, they were also looking towards creating a new immersive sim, potentially a new installment in the Dishonored series. Tango’s critically acclaimed game, Hi-Fi Rush, was hailed as one of the most successful launches for Bethesda and Xbox in recent years. However, these achievements were not enough to save the studios from the chopping block.
ZeniMax was purchased by Microsoft in 2020 for $7.5 billion, making it one of the largest acquisitions in the gaming industry. Following suit, Microsoft acquired Activision Blizzard for $76 billion, which has sparked increased scrutiny on the Xbox division. The industry has seen a trend of major companies cutting costs through mass layoffs, with Activision Blizzard laying off nearly 2000 employees in January.
One of the reasons cited for the cost-cutting measures at Xbox is the lack of growth in Game Pass subscriptions. Analysts have noted that Game Pass spending peaked between late 2019 and early 2021, but has since plateaued. US consumers still prefer purchasing games and add-on content or engaging with free-to-play models rather than subscribing to Game Pass. This stagnation in growth has led Xbox to become less willing to take risks on new releases.
The closures of studios like Tango and Arkane Austin signal a shift in the gaming industry towards more conservative and risk-averse practices. The Game Pass model, which was intended to encourage creativity and risk-taking, seems to have hit a roadblock. With Xbox reevaluating their strategies, the future of the gaming industry remains uncertain. As the fallout of these closures continues to unfold, it is clear that the landscape of game development is changing rapidly.
Leave a Reply