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Report: Xbox Planning More Cuts Following Studio Closures

Report: Xbox Planning More Cuts Following Studio Closures - News

by William D'Angelo , posted on 03 June 2024 / 3,592 Views

Xbox recently announced it is shutting down three studios at Bethesda - Arkane Austin, Tango Gameworks, and Alpha Dog Studios - as well as having Roundhouse Games merge with ZeniMax Online Studios.

Bloomberg's Jason Schreier is now reporting that Xbox is planning more cuts and is "offering voluntary severance agreements to producers, quality assurance testers and other staff at ZeniMax," according to people familiar with Microsoft's plans.

Several other across the Xbox division at Microsoft have been told more cuts are coming.

Xbox president Matt Booty in a town hall meeting with ZeniMax staff praised Hi-Fi Rush, but did not state why the studio was shut down, according to three people who attended the meeting.

The sources claim Booty said the company's studios have been spread too thin, described as "peanut butter on bread." Leaders across ZeniMax have felt like they have been understaffed and the reason for the studio closures was to free up resources to be used elsewhere.

Booty did say poor performance of Redfall was not the reason Arkane Austin was shut down. Sources did claim the studio was looking to pitch a new single-player "immersive sim" game, like a possible new entry in the Dishonored series.

The head of ZeniMax studios Jill Braff in the town hall meeting said the closures and reorganization will help them put more focus on fewer games.

"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," said Braff, according to Bloomberg who reviewed audio from the meeting. "I think we were about to topple over."

Arkane Austin and Tango Gameworks were both looking to hire more employees as they pitch new games, which is the main factor as to why they were shut down.

Microsoft acquiring Activision Blizzard has increased scrutiny on the Xbox division from leadership at Microsoft, according to sources.

The gaming industry has seen growth slow down or stop entirely over the last couple of years, which has lead to nearly 10,000 laid off in the industry in 2024 through early May and a little over 10,000 laid off in 2023.


A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.


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39 Comments
rapsuperstar31 (on 08 May 2024)

Are they going to wait until a day after Hell blade 2 releases or wait a few months? Give Machine Games a few months until after Indiana Jones, before they axe them?

  • +13
CosmicSex rapsuperstar31 (on 08 May 2024)

We have seen layoffs across the industry but what makes this so bad is raw body cout Xbox has now is equal to the rest of the industry combined... AND Microsoft is the richest companynin the industry and world. If Microsoft is firing people it's not because they can't afford to pay them.

.

  • +2
Azzanation CosmicSex (on 09 May 2024)

You have no idea how capitalism works. Regardless of how rich a business is.

  • -5
KLXVER (on 08 May 2024)

Any plans to advertise the soon to release Hellblade 2 while firing people?

  • +12
Manlytears (on 09 May 2024)

So, where are the guys who argued that MS buying ABK/Zenimax was a good thing?

  • +8

Still wanting more acquisitions and with the head up their asses

  • +2
Azzanation Manlytears (on 09 May 2024)

Whats that got to do with closures?

  • -9
Manlytears Azzanation (on 09 May 2024)

Realy!?

  • +1
Azzanation Manlytears (on 10 May 2024)

Yes really

  • 0
yvanjean Manlytears (on 09 May 2024)

If Zenimax hadn't been purchased, Starfield might have been released in an even worse state, potentially resembling Fallout 76. Nevertheless, Microsoft's decision to close four studios seems counterproductive, especially when they need more studios producing diverse content for Gamepass. As an Xbox fan, it's disheartening to see.

  • +1
SecondWar (on 08 May 2024)

“Arkane Austin and Tango Gameworks were both looking to hire more employees as they pitch new games, which is the main factor as to why they were shut down.”

Wow, that doesn’t half read back to front.
Dev “We want to hire more people to developer”
Publisher “Ok then. We’ll shut you down”
Dev “But that not…”

So if they said they had no plans for new games would they have been sent of a hiring spree?

  • +8
Hiku SecondWar (on 08 May 2024)

Not like they demanded more staff. Just a suggestion to the company with a higher GDP than every country on the planet except three.

  • +4
Hardstuck-Platinum (on 08 May 2024)

I don't even understand why they purchased Ninja Theory. They clearly only care about popular mega franchises like Elder scrolls, Fallout, and COD. Ninja Theory's games don't seem to align with their vision cos they'll always be somewhat niche and never mass market popular like COD. I hope Hellblade doesn't suffer the same fate sales wise as Forza. That game wasn't even that bad but it's sales were disastrous beyond what I'd imagined

  • +5

Variety

  • -5
2zosteven (on 09 May 2024)

when is it time to realize Phil is the problem?

  • +4
KazumaKiryu (on 09 May 2024)

Thousands of Xbox fans are currently selling their Xbox. Even popular Xbox fans (since the Xbox1 days) have been posting pictures on Insta/Twitter of how they bought a PlayStation 5 today. Personally, I'm impressed - the Xbox is dead for me too. But it doesn't really matter, because in the future most Xbox games will come to PS5 - you can be sure of that.

  • +1
EpicRandy (on 08 May 2024)

"Arkane Austin and Tango Gameworks were both looking to hire more employees as they pitch new games, which is the main factor as to why they were shut down."

I call BS on this.
It's not that they were looking for their new project it's because they didn't have an ongoing project or in other words, they did not have ongoing investment that needed protection until release. They were let go because they did their job to completion and MS did not want to finance another.

A spineless fold from investors who have grown afraid of an industry they overinvested in thinking COVID was a unicorn sent to them to make profits.

  • +1
tslog (on 08 May 2024)

Over 2 years Xbox was in charge of Bethesda Zenimax....and it looks like a mini-disaster. Pure incompetence from Xbox.

Only time Xbox is not hands-off, is when they are sacking dev's or smashing studios into oblivion.
Disgraceful that the most responsible like Matt Booty and Phil Spencer.....never get the sack but actually get promotions. Part of the Class war.

  • +1
SecondWar tslog (on 08 May 2024)

Aren’t you the guy who was eager to see the Xbox ABK merger close and slating the courts and agencies for holding it up?

  • +8
jsowers (on 10 May 2024)

I don't work for Xbox, but they can fire me if that helps them get their fix.

  • 0
Mozart1511 (on 08 May 2024)

Every time I see a report explaining this wave of layoffs in the XBox division, I become more convinced of the "incompetence" in managing its studios.

Is the gaming market in crisis? Have your studios produce low-budget games while another team produces a big-budget game. Make that studio generate revenue from small games so it can produce something big. Damn it! It is so difficult to tell shareholders that the division generated profits or did not close with a deficit, therefore, jobs will be preserved.

Couldn't senior management set an overall goal? three consecutive quarters generating a deficit will result in layoffs of underperforming employees, but three consecutive quarters generating a surplus will result in a bonus for employees. Phil! Do something that motivates your teams! Create smaller teams within each studio to produce low-budget but creative games, which I'm sure will generate revenue to support large games. Launch mobile games, as they require little investment and can generate large revenues... there are several things that can be done!

  • 0
Pemalite (on 08 May 2024)

With the money that Bethesda was bringing in, most recently with a reinvigorated fallout, I am sure they could have shored up extra resources for these other studios.

  • 0
Leynos Pemalite (on 08 May 2024)

They are only worth 3 trillion as a company. How Could MS afford them? /s

  • +2
Pemalite Leynos (on 08 May 2024)

That's market cap, that is what the shareholders "value" the company as.

In terms of market cap, Microsoft is ranked 1st. ($3,000 Billion/$3 trillion.)
In terms of revenue Microsoft is ranked 30th. ($211 Billion)
In terms of profit they are ranked 3rd. ($73 Billion)
In terms of cash on hand, they are ranked 72nd. ($80 billion)

The amount of cash they have to play with is significantly less than the Market cap implies.

But investors favor the company strongly with strong future prospects, so Microsoft's ability to finance is very favorable to bankers.

  • +2
mjk45 Pemalite (on 10 May 2024)

Sure they could have but roi needs to be taken into account, just because an enterprise is generating good revenue and is profitable it doesn't mean it is spread evenly across all sectors, it's like a car company making record profits with brands that are selling in numbers that range from hundreds of thousands to millions closing a division that is selling in the thousands and losing money.

My criticisms in these situations isn't so much the closure it mainly sits around how much of an attempt besides handing them a severance payment was made to help those affected, like were they proactive and making use of the natural turn over that exists in these large organisations to try to find them similar roles before closing or looking to retrain them in areas or other retention ideas even if these attempts don't alleviate all the problems and aren't a surefire cure all for closure they surely are better than statements that come across as rote platitudes that are bordering on saying next to my wife's childbirth this team closure is the most painful experience I have endured.

  • 0
Tober (on 08 May 2024)

At this time I am wondering if MS knows things the general public does not. WW3 incoming?

  • 0
Imaginedvl Tober (on 08 May 2024)
  • -14
KLAMarine (on 09 May 2024)

What's the big idea!?

  • -3
Mr Puggsly (on 08 May 2024)

I guess MS is just focusing on established IPs as well.

  • -5
LittleCloud Mr Puggsly (on 09 May 2024)

Ah, the gangbuster franchises like Halo and Gears no young person cares about...

  • 0
Azzanation (on 09 May 2024)

Industry is struggling and those that undersell will feel it the most. Xbox is in danger of removing themselves from the hardware division.

  • -6
LittleCloud Azzanation (on 09 May 2024)

So buy Activision then?

  • +3