Microsoft’s Xbox is closing multiple studios and consolidating teams to cut costs

Microsoft’s Xbox is closing a number of gaming studios, including Arkane Austin, making it the latest publisher to shutter studios amid signs of a slowdown in gaming.

Studios such as “Hi-Fi Rush” maker Tango Gameworks, headquartered in Tokyo, and Canada-based Alpha Dog will also be closed and some employees will be laid off, Matt Booty, head of Xbox Game Studios, said in a memo which was seen by Reuters on Tuesday.

Xbox did not comment when asked about the number of employees affected by the layoffs.

Personal computing and console gaming growth is expected to remain below pre-pandemic levels as gamers spend fewer hours playing due to weaker release schedules, according to data from research firm Newzoo.

The “reprioritization of titles and assets” is so Xbox can invest heavily in its portfolio of games and new intellectual property, Booty said.

All the affected studios are parts of ZeniMax Media, which was acquired by Microsoft for $7.5 billion in 2021, and Bethesda.

Microsoft’s Xbox content and services segment last month reported a 62% increase in third-quarter revenue, thanks in large part to its acquisition of Activision Blizzard.

“Grand Theft Auto” maker Take-Two Interactive said it would close two subsidiary studios as part of a mass layoff, Bloomberg News reported last week.

Microsoft previously laid off 1,900 employees at Activision and Xbox at the beginning of the year.

Some of Arkane Austin’s developers will join other studios to work on projects from Bethesda, maker of “The Elder Scrolls” and “Fallout” titles.

Servers of the game “Redfall”, created by Arkane, will remain online for players. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta)