Sources: after closing several video game studios, Microsoft plans more cuts, as the massive Activision acquisition has ramped up scrutiny on the Xbox division

Xbox is offering voluntary severance agreements to producers, quality assurance testers and other staff at ZeniMax as part of a broader cost-cutting initiative

Bloomberg 2024-05-09 Jason Schreier

Context & Ripple Effects

This follows Microsoft’s move to shut several Bethesda studios and consolidate teams around higher-impact titles, a Bethesda studio consolidation that made cost discipline a visible Xbox priority.

The reported ZeniMax severance offers extend that rationalization from studio closures to remaining development functions. The Activision acquisition is the stated source of heightened scrutiny, tying workforce decisions to accountability for the enlarged Xbox organization.

First-order effects

ZeniMax producers, QA testers and other eligible staff face voluntary-severance decisions, while Xbox reduces or reshapes staffing costs without relying solely on studio shutdowns.
Microsoft’s Xbox leadership comes under more immediate pressure to justify the operating structure of the combined Xbox, Bethesda and Activision businesses.

Second-order effects

Teams retaining ZeniMax projects may have to reallocate production and testing work as staff depart, increasing the premium on projects Microsoft classifies as high impact.
The move establishes a cost-control precedent across Xbox’s portfolio; later reporting of cuts across King, ZeniMax and Halo Studios suggests that scrutiny was not confined to one subsidiary.

Third-order effects

If repeated, consolidation could leave Xbox with a smaller set of internally funded development bets and a more centralized portfolio-allocation model.
The episode is an early marker of the later Xbox reset, in which workforce, studio and budget decisions become recurring mechanisms for reconciling a large games organization with corporate return expectations.

The trend: Large game-platform acquisitions are being followed by sustained portfolio rationalization as owners test whether expanded studio networks can meet tighter financial accountability.

Discussion

Gameranx Ryan Parreno on x
Rumor: Sales & Awards Didn't Matter, Arkane & Tango Closed Because Of Zenimax's Consolidation
Pure Xbox Fraser Gilbert on x
Tango Gameworks Had Hopes For Hi-Fi RUSH 2 Before Xbox Closure, Says Report
Pure Xbox Fraser Gilbert on x
Report Claims Xbox Is Planning More Cuts Following Studio Closures
Pure Xbox Ben Kerry on x
Arkane Apparently Wanted To Work On New ‘Immersive Sim’, Potentially More Dishonored
@adamholisky.bsky.social Adam Holisky on bluesky
I'm at a loss for words. So disappointed. [embedded post]
@dbakaba Dinga Bakaba on x
This is absolutely terrible. Permission to be human : to any executive reading this, friendly reminder that video games are an entertainment/cultural industry, and your business as a corporation is to take care of your artists/entertainers and help them create value for you.
@dbloodworth2 Daniel Bloodworth on x
It's wild to me that the reasoning here doesn't sound like it has anything to do with quality or performance or profitability. Simply, “we bought too many companies to keep up with them all.”
@canadianguyehh @canadianguyehh on x
So let me get this straight >Spencer goes to Buy Activision >FTC pushes back >Satya Backs up Spencer and wants the sale to go through >2 years later- sale goes through >"Other" Microsoft Execs question the sale afterwards >Shutdown other studios to Validate acquisition ...what?
@megan_nicolett Megan Farokhmanesh on x
if you work at a studio that could potentially be impacted by Xbox cuts and want to talk about it/the impact these sudden closures and periods waiting for news have on you, DMs open, signal available via request. RTs appreciated
@seantnoonan Shania on x
I wonder what happened late-2019 thru mid-2021 that would have caused people to spend more on video games and video game services! Beats me!! [image]
@_boehm_ @_boehm_ on x
@jasonschreier Jason, in your opinion, how fucked is the industry right now? Can you tell me using RPG terms?
@succinct_punchy @succinct_punchy on x
The short version appears to be that Arkane and Tango were closed simply because they were the studios that most recently shipped? So they closed them before they could start any new projects to cut costs. absurd justification, deeply rotten decision making
@rachelkaser Rachel Kaser on x
I might be grabbing the wrong end of this, but I'm kinda hearing that the reason they closed these studios isn't because they released bad games, but because they released games... meaning their next projects were early in development?
@tomwarren Tom Warren on x
Bloomberg's @jasonschreier reports that Tango Gameworks was pitching a sequel to Hi-Fi Rush before the studio closure. Xbox Game Studio chief Matt Booty held a townhall with employees earlier today, and we'll have some additional details on that shortly https://www.bloomberg.com/…
@wario64 @wario64 on x
“Before its closure, Arkane had been looking to return to its roots by pitching a new single-player “immersive sim” game, such as a new entry in the Dishonored series, according to the people familiar.”
@bradshankar Brad Shankar on x
Xbox leadership: Spends billions to acquire tons of studios Also Xbox leadership: Whoops, we're too understaffed for this, let's just close a few of them This is just maddening. [image]
@jasonschreier Jason Schreier on x
@_Boehm_ It's like a big snake that just ran into Sephiroth
@destinlegarie Destin on x
If Xbox / Microsoft was going to do this it should have been done all at once. Not padded out through 2024. This is brutal and it must be near impossible to go to work at Xbox with any optimism right now.
@adaell90 Adam Holmberg on x
“It's hard to support nine studios all across the world” So why did you BUY them then?! Oh, I know, because you just wanted Elder Scrolls, Starfield and Fallout. Jesus Christ I mean what the fuck. [image]
@ethangach @ethangach on x
Microsoft spent five years buying up studios only to turn around and decide it doesn't have the bandwidth to run them all. [image]
@entityrecalls @entityrecalls on x
This almost reads like “we cannot manage all these studios because we don't have enough managers” Well why did you buy all these studios then! Just to under resources and shut them down! This is just so sad 😞 @nib95_ @faulkie87 @Zuby_Tech [image]
@gathomas33 Alex Thomas on x
I honestly think this is better for Xbox long term. This means there's more accountability for the division. Hopefully there's never another case of games getting announced and not hearing about them for 3-5 years like Everwild, State of Decay 3, Contraband, Perfect Dark, etc
@jasonschreier Jason Schreier on x
NEW: - Xbox still isn't done cutting costs, sent voluntary buyout offers to some Zenimax staff - Why were Arkane Austin and Tango Gameworks closed? Bad timing, perhaps - Activision purchase has ramped up scrutiny on Xbox And much more - here's my latest: https://www.bloomberg.com…
r/gamernews r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
r/IndianGaming r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
r/PS5 r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/kindafunny r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/TwoBestFriendsPlay r on reddit
[Verge] Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/XboxSeriesX r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/playstation r on reddit
It makes sense to launch Hellblade II on PS5, it's the type of game that suits Playstation more than Xbox
r/pcgaming r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
r/GearsOfWar r on reddit
Tango Gameworks was pitching a sequel to Hi-Fi Rush before the studio closure. Could The coalition be in trouble next with more layoffs coming?
r/pcmasterrace r on reddit
Microsoft is considering increasing the price of Game Pass Ultimate again. It's also had internal debates on whether to put new Call of Duty releases on Game Pass. …
r/hellblade r on reddit
The Verge: Hellblade II being considered for PS5
r/TwoBestFriendsPlay r on reddit
[Verge] Inside Microsoft's Xbox turmoil - Microsoft still debating whether to put new CoD's on Game Pass or not, considering raising Price of Game Pass Ultimate again.
r/xboxone r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings - Bloomberg
r/dishonored r on reddit
Arkane was pitching a single player immersive sim, such as a return to the Dishonored series before getting shut buj Microsoft
r/Games r on reddit
Inside Microsoft's Xbox turmoil
r/gaming r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
r/kindafunny r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
r/HiFiRush r on reddit
Jason Schreier reports that Tango Gameworks was in the process of pitching a Hi-Fi Rush sequel before their closure
r/pcgaming r on reddit
Inside Microsoft's Xbox turmoil
r/XboxSeriesX r on reddit
Microsoft's Xbox Is Planning More Cuts After Studio Closings
Gameranx Ryan Parreno on x
Rumor: ABK Has Not Protected MS Gaming, More Layoffs Expected As They Argue On COD in Game Pass
Pure Xbox Liam Doolan on x
Xbox Apparently Still Needs Smaller Games For ‘Prestige And Awards’
@realalexmouse @realalexmouse on x
It's ironic how the plot of Hi-Fi Rush is that it's about teaming up to take down a megacorporation and Tango Gameworks just got shutdown Congrats Microsoft, You proved the game right [image]
@robbiedaymond Robbie Daymond on x
Ahhh, the bitter irony. Hi-Fi Rush is one of my favorite projects if my entire career. Such a passionate & creative dev team... Some decisions suck, but Tango Gameworks will always rock!! 🎸⚡️
@matpiscatella Mat Piscatella on x
How is it only Wednesday.
@ign @ign on x
Tango Gameworks was in the process of pitching a Hi-Fi Rush sequel and wanted to hire additional staff before its sudden closure, according to a new Bloomberg report. https://www.ign.com/... [image]
@modernvintageg @modernvintageg on x
I do want to point out that Hi-Fi Rush isn't a ‘small game’. It took over 4 years to develop. No defense of how Xbox leadership has been running the show, but Matt Booty isn't wrong. He's referring to smaller games that don't take an entire generation to build.
@emannland Emilio Lopez on x
“We need more games like HiFi rush” and yet these clowns just closed the studio that made the game. Talk about the right hand not knowing what the left is doing. https://www.theverge.com/...
@tomwarren Tom Warren on x
“We need smaller games that give us prestige and awards,” said Matt Booty, head of Xbox Game Studios, in a Microsoft town hall today 👇https://www.theverge.com/ ...
@genki_jpn Genki on x
Hi-Fi Rush studio Tango Gameworks and Arkane Austin were closed due to Microsoft forcing ZeniMax to consolidate! ZeniMax ended up choosing to let go the studios that were pitching new projects and trying to hire new staff! via @jasonschreier - Tango were in the process of... [ima…
@piratesoftware @piratesoftware on x
Honestly insane to watch @Microsoft shut down @TangoGameworks. Hi-Fi Rush was one of the best games I played last year. Needless disruption of a truly talented group of people I was hoping to see a sequel from. [image]
@wario64 @wario64 on x
“Tango was in the process of pitching a Hi-Fi Rush sequel, said the people, who asked not to be identified discussing nonpublic information.”
@dreamboum @dreamboum on x
“Hi-Fi RUSH” is Xbox and Bethesda's highest-rated title of all time on Steam with 97% positive reviews. It is higher-rated than the entire Fallout series, DOOM, Fallout, Quake, Ori, Halo, Gears of War, Ages of Empire, etc. Only the first Dishonored from 2012 matches it. [image]
r/technology r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/pcgaming r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio
r/Gaming4Gamers r on reddit
Microsoft says it needs games like Hi-Fi Rush the day after killing its studio

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