In a surprising move, Microsoft has announced the closure of several key studios under the ZeniMax umbrella of Xbox Game Studios.
Employees received emails notifying them of the closures of Arkane Austin (developer of Redfall), Tango Gameworks (developer of Hi-Fi Rush), and Alpha Dog Games (developer of Mighty Doom). Tango Gameworks has confirmed the cessation of its operations via Twitter.
Restructuring Strategy
The decision follows morning emails sent by Xbox Game Studios head Matt Booty to staff members. The restructuring aims to prioritize high-impact titles and continue investing in Bethesda’s beloved and successful gaming portfolio cultivated over decades. Xbox Game Studios is strategically evaluating opportunities positioned for success.
Matt Booty
A Microsoft spokesperson confirmed the legitimacy of Booty’s email but declined further comments. Not all employees from the shuttered studios will lose their jobs; some from Arkane Austin will be offered positions at other Xbox Game Studios.
Industry Impact
Similar to the January layoffs affecting over 1,900 employees, notably from the newly acquired Activision Blizzard, affected employees are bearing the consequences of business decisions made by individuals far removed from their pay grade.
Microsoft’s focus on Xbox Game Pass has not yielded the anticipated returns for investors. Titles like Redfall and Hi-Fi Rush may not be delivering the desired return on investment. Since its launch, the growth of the service has fallen short of Microsoft’s projections.
Studio Challenges
Reports suggest that Arkane Austin and Tango Gameworks, now closed, might have struggled with their productions. However, it’s not necessarily attributable to the staff who have lost their jobs.
Development reports on Redfall highlight the studio’s drive to create a live service video game, leading to high turnover and inadequate investment in a genre where the studio lacked prior design or technical expertise. Xbox head Phil Spencer acknowledged mismanagement and admitted that his team should have intervened sooner after Microsoft’s ZeniMax acquisition.
— Tango Gameworks (EN) (@TangoGameworks) May 7, 2024
On the other hand, while Hi-Fi Rush from Tango Gameworks received critical acclaim and attracted three million players, recent titles like Tokyo Ghostwire and Evil Within 2 didn’t achieve substantial commercial success.
It’s worth noting that Xbox expressed satisfaction with Hi-Fi Rush’s performance last year. Vice President of Gaming Marketing Aaron Greenberg tweeted that the game was a “smash hit,” and the company “couldn’t be happier with Tango Gameworks.”
Additionally, the absorption of Roundhouse Studios by ZeniMax Online Studios marks the conclusion of an unusual journey for a company born swiftly from the remnants of Prey developer Human Head Studios.
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