Microsoft's Xbox is closing several gaming studios, following a trend of publishers shuttering studios amidst signs of a gaming slowdown.
Multiple Studio Shutdown within Microsoft
Xbox Game Studios head Matt Booty stated in a statement seen by Reuters on Tuesday that the decision was made to realign resources and prioritize certain projects and stressed that the closures do not reflect the talent within the affected studios. Although the precise number of affected employees is undisclosed, Xbox declined to comment on inquiries about the extent of the layoffs.
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Redirecting Resources To Enhance Xbox's Portfolio
Booty emphasized that the decision to streamline operations and close certain studios will redirect resources toward enhancing Xbox's game portfolio and fostering new intellectual property. This reprioritization of titles and resources underscores Microsoft's dedication to innovation and future expansion in the gaming industry. Research from Newzoo indicates that personal computing and console gaming growth is projected to stay below pre-pandemic levels as gamers spend less time playing due to less enticing release schedules.
All affected studios fall under the ZeniMax Media umbrella, acquired by Microsoft for $7.5 billion in 2021, including Bethesda. Last month, Microsoft's Xbox content and services segment saw a significant 62% increase in third-quarter revenue, primarily attributed to the acquisition of Activision Blizzard.
Studios Slated for Closures
Microsoft has announced the closure of four game development studios: Arkane Austin (known for Redfall), Tango Gameworks (maker of Hi-Fi Rush and Ghostwire: Tokyo), Alpha Dog Games (creator of Mighty Doom), and Roundhouse Games. These studios are all part of Bethesda Softworks, which Microsoft acquired in 2021.
The news of studio closures reflects recent industry trends. According to Bloomberg News last week, Take-Two Interactive announced the shutdown of two subsidiary studios as part of a more significant restructuring effort. Earlier this year, Microsoft also implemented significant layoffs, impacting 1,900 employees across Activision and Xbox.
After closures, developers from Arkane Austin will transition to other studios within the Bethesda ecosystem, known for supporting ongoing projects like The Elder Scrolls and Fallout series.
Arkane Austin has confirmed the conclusion of Redfall's development on social media. The game's servers will continue to operate, and players who bought the game's Hero Pass or premium editions will be eligible for a refund. However, Arkane Lyon's projects, such as Marvel's Blade, will continue unaffected. While Redfall's servers will remain active for now, its future remains uncertain. Titles from Tango Gameworks, such as Hi-Fi Rush, will remain available for purchase. Tango Gameworks has confirmed this report in a statement posted on X, stating that its games will continue to be playable wherever they are currently available.
Alpha Dog Games (known for Mighty Doom) and Roundhouse Games (a support studio) are reportedly being closed down and will be integrated into ZeniMax Online Studios. Alpha Dog Games has released a statement confirming that Mighty Doom will not continue and will shut down on August 7. Players can no longer purchase in-game currency with real money.
The exact number of affected developers and the fate of the intellectual property being developed by the affected studios remain uncertain.
