Following the recent closures of multiple video-game studios, Microsoft’s Xbox division is set to implement additional cost-cutting measures, Bloomberg is reporting.
Reports indicate that Xbox has begun offering voluntary severance agreements to various staff members, including producers and quality assurance testers at ZeniMax, which Microsoft acquired in 2020 for $7.5 billion.
While an official statement from Xbox is pending, employees were surprised by the abrupt closure of three Xbox subsidiaries and the absorption of another. Tango Gameworks, based in Tokyo, was among those shuttered, despite receiving critical acclaim for its game Hi-Fi Rush.
The closure occurred during a town hall meeting, where Xbox president Matt Booty addressed staff concerns but did not provide specific reasons for the studio closures.
Booty mentioned that the decision to shut down these studios was part of a broader initiative to reallocate resources within the division. He emphasized the need to focus efforts on fewer projects to ensure better support and quality outcomes.
Jill Braff, head of ZeniMax studios, echoed Booty’s sentiments during the town hall, highlighting the challenges of managing numerous studios worldwide with limited resources. She expressed hope that the reorganization would streamline operations and enable the division to concentrate on key projects such as Fallout and Doom.
The closures at Xbox coincide with a wider contraction in the video-game industry, driven by economic shifts following the pandemic-induced growth.
Microsoft’s gaming division, which recently expanded through acquisitions like ZeniMax and Activision Blizzard, faces increased scrutiny from company leaders.
Despite efforts to bolster its subscription service, Xbox Game Pass, with acquisitions of various studios, growth has plateaued in recent years. Analysts attribute this stagnation to consumer preferences for traditional game purchasing models and free-to-play alternatives.
