Microsoft is once again cutting corners in the gaming department

Microsoft’s gaming division is being hit with a cost-cutting plan. Several of the tech giant’s game studios are being closed. Employees appear shocked.

Microsoft

puts the knife in its gaming department Xbox. Game studios such as Arkane Austin, Tango Gameworks in Tokyo and Alpha Dog in Canada are closing and some employees are losing their jobs, Xbox Game Studios CEO Matt Booty announced. Tango Gameworks released the critically acclaimed action game ‘Hi-Fi Rush’ last year and had been calling for a sequel.

Growth in PC and console gaming is expected to remain below pre-pandemic levels, according to data from research firm Newzoo. However, Microsoft’s Xbox content and services segment reported a 62 percent jump in quarterly revenue last month. This was not due to organic growth, but to the acquisition of developer Activision Blizzard at the end of 2023.

According to Booty, a ‘reprioritization of titles and resources’ is therefore necessary. The tech company’s studios were spread too thin, like “peanut butter and bread,” he said. All affected studios are units of ZeniMax Media, which was acquired by Microsoft in 2021 for $7.5 billion, and Bethesda.

In recent years, Xbox has invested heavily in Xbox Game Pass, a subscription service that provides access to hundreds of games. To provide the service with enough interesting games, Xbox acquired dozens of studios. It didn’t matter if a game was a sales success as long as it helped strengthen the Game Pass library. But Game Pass’s growth has been disappointing.

The gaming department staff reacts in shock. Dinga Bakaba, the head of Arkane Lyon, took issue with X, formerly Twitter. “Don’t throw us into gold rush gambling, don’t use us as stooges for miscalculations and blind spots, don’t turn our work environments into Darwinian jungles,” Bakaba wrote. His studio was spared for the time being.

Microsoft laid off 1,900 employees at Activision and Xbox earlier this year. Some of Arkane Austin’s developers will join other studios and work on projects from Bethesda, maker of “The Elder Scrolls” and “Fallout.” Servers of the game ‘Redfall’, created by Arkane, will remain online for players.

Savings are also being made elsewhere in the sector. The creator of the ever-popular ‘Grand Theft Auto’, Take-Two Interactive

will close two subsidiary studios as part of a mass layoff, the Bloomberg news agency reported last week.