The Xbox division of Microsoft is currently undergoing a cost-cutting phase that includes offering voluntary buyout deals to ZeniMax employees, who were acquired in 2020, according to Bloomberg journalist Jason Schreier. This move comes after the unexpected closure of several Xbox game studios, leaving employees and industry observers surprised and concerned about the future of Microsoft’s gaming division.
Studio Closures and Strategy Shifts
The closures included major studios like Tango Gameworks, based in Tokyo, known for their acclaimed game Hi-Fi Rush, and Arkane Austin, the creator of titles like Prey. Xbox President Matt Booty attributed these closures to the division being too scattered and the need to reallocate resources to support fewer projects more effectively.
Jill Braff, head of ZeniMax studios, emphasized the importance of focusing on fewer projects to ensure the division’s sustainability in a context of rapid growth and increasing workload. The closures come amid broader industry contractions and economic shifts following the pandemic-induced boom in the gaming market.
Challenges and New Strategies
Despite Microsoft’s significant investments in Xbox Game Pass and studio acquisitions, including ZeniMax and Activision Blizzard, the growth of the subscription service has plateaued in recent years. While Xbox Game Pass offers a diverse game library, it has not seen the expected increase in subscribers, raising concerns about the long-term viability of the model.
According to analysts, while the recent acquisition of Activision Blizzard by Xbox boosted sales figures, the underlying growth of game revenues remains stagnant or declining. This has led Xbox to explore alternative revenue sources and launch some games on competing platforms to offset declining hardware sales.
Xbox boss Phil Spencer has expressed concerns about the industry’s lack of growth and the need for new strategies for future success.
New Developments and Outlook
– 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
For more information, follow Jason Schreier’s latest updates: [link to article].
— Jason Schreier (@jasonschreier) May 8, 2024
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