In a move that has sent shockwaves through the gaming industry, Microsoft has announced the closure of three prominent game studios under its Xbox umbrella: Tango Gameworks, Arkane Austin, and Alpha Dog Games. This decision comes shortly after the tech giant’s historic $69 billion acquisition of Activision Blizzard in 2023, prompting increased scrutiny from Microsoft’s top leadership regarding the Xbox division’s operations.
The studio closures were followed by a town hall meeting on May 8, where Xbox President Matt Booty and Bethesda head Jill Braff addressed staff members, shedding light on the reasoning behind these cuts. According to reports, Booty acknowledged that the company’s studios had become overstretched, likening the situation to “peanut butter spread too thin on bread.”
Booty and Braff reportedly emphasized the need to consolidate resources and focus on fewer projects moving forward. They cited understaffing and the lengthy, expensive road ahead for the shuttered studios to release new games as key factors contributing to the decision.
“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,” Braff said during the meeting, as reported by Bloomberg. “I think we were about to topple over.”
The closures have drawn mixed reactions from the gaming community. While some applaud Microsoft’s efforts to streamline operations and prioritize key projects, others question the wisdom of shuttering successful studios like Tango Gameworks, the creators of the critically acclaimed “Hi-Fi Rush.”
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Hi-Fi Rush afaik has no physical version, no marketing, no multiplayer…
If Xbox is pressuring ZeniMax to deliver sales of its games, maybe it shouldn't put so much emphasis on Xbox Game Pass? What's the goal here? https://t.co/ou4rDLxpXZ
— Jez (@JezCorden) April 21, 2023
Tango Gameworks and Arkane Austin had reportedly pitched ideas for new games, including a potential “Hi-Fi Rush” sequel and a new entry in the “Dishonored” series. However, with the studios’ closures, these projects are unlikely to materialize.
Booty and Braff maintained that the decision to close Arkane Austin had nothing to do with the underwhelming performance of “Redfall,” the studio’s latest release. Instead, they cited the need to focus resources on what they termed “priority games,” widely speculated to refer to Bethesda’s flagship franchises like “The Elder Scrolls” and “Fallout.”
The fourth studio impacted by the restructuring is Roundhouse Studios, which will be absorbed into ZeniMax Online Studios to work on the popular “The Elder Scrolls Online.”
As Microsoft continues to navigate the aftermath of the Activision Blizzard acquisition and the increased scrutiny from its leadership, further cuts within the Xbox division are anticipated, according to sources familiar with the matter.
The studio closures have reignited debates about the priorities and decision-making processes within the AAA gaming industry, where financial considerations often clash with creative ambitions and employee well-being. As the dust settles, the gaming community eagerly awaits Microsoft’s next move and the impact these changes will have on the future of Xbox’s gaming lineup.
