Xbox is embarking on a deeper wave of cost-cutting measures that extend beyond the recent shuttering of several Bethesda Softworks studios, a move that has sparked concerns and discussions within the gaming community and industry. According to a detailed report by Bloomberg's Jason Schreier, the video game giant closed down Tango Gameworks, creators of *Hi-Fi Rush*, Arkane Austin of *Dishonored* fame, and Halifax’s Alpha Dog Games, known for *Mighty Doom*, on May 8th. Additionally, Roundhouse Studios was absorbed into ZeniMax Online Studios, which handles *The Elder Scrolls Online*.
These closures are said to be part of a larger, ongoing strategy by Xbox to navigate through a period of economic tightening, as the quest for profitability becomes more challenging. Bloomberg suggests that these drastic actions are a result of flat to low single-digit growth in video game subscription spending in the U.S. since mid-2021, directly affecting Xbox's heavily promoted Xbox Game Pass. Consequently, overall Xbox revenue has taken a hit.
In parallel with these studio closures, it was revealed that voluntary severance packages are being offered to various staff members at ZeniMax, the parent company of the shuttered Bethesda studios. These moves hint at the broader implications of Xbox's cost-cutting initiatives, which were already evident in January when Microsoft eliminated nearly 2,000 jobs across its Xbox portfolio, including a significant number at Activision Blizzard. This acquisition spree, including the $7.5 billion USD purchase of ZeniMax in 2021 and the staggering $69 billion USD acquisition of Activision Blizzard, leaves observers bewildered by the contradiction of buying new companies while trimming down existing operations.
During a town hall held on the day of the closures, Xbox Game Studios boss Matt Booty and Jill Braff, head of ZeniMax studios, shed light on the rationale behind these decisions. They highlighted the operational challenges of supporting a sprawling network of studios worldwide with a lean central team, painting a picture of an organization spread too thin, akin to “peanut butter on bread.” This strategic realignment led to the shutdown of studios to reallocate resources more effectively.
However, these closures not only affect the teams and projects in progress but stir a broader discourse on the future of game development at Xbox and the gaming industry in Canada and beyond. While Xbox's strategy is aimed at consolidating its operations and optimizing productivity, the impact on the gaming world is palpable, especially considering the successful launches and developments from the now-closed studios. The industry-wide layoffs, hitting around 20,000 people since last year, underline a concerning trend for gaming professionals, making Xbox's future moves a critical area of focus for observers and stakeholders in Canada and across the globe.
Overall, as Xbox continues to navigate its comprehensive cost-cutting strategy, the gaming community watches closely, hoping for a balance between corporate efficiencies and the nurturing of creative, innovative gaming projects that have long characterized the industry.
