Between changes of direction and studio closures, is Xbox sabotaging itself?
, by Thibaut
In September 2020, Microsoft announced the acquisition of ZeniMax Media, the parent company of publisher Bethesda Softworks. The American company then went on a buying spree that culminated with the buyout of Activision Blizzard King, but in the end, all this seems to have backfired.
Phil Spencer, President of Microsoft Gaming, is a high-profile industry figure who is quite present on social networks, and was full of praise for the teams he had just acquired. Alas, between the 1,900 layoffs last January and the closure of four former Bethesda studios](https://news.instant-gaming.com/en/articles/6245-microsoft-has-closed-tango-gameworks-hi-fi-rush-and-arkane-austin-redfall), it seems Xbox has reached a turning point.
Microsoft and its contradictions
Before closing its doors in May 2024, Phil Spencer visited Tango Gameworks back in September 2023, The businessman proudly posed with the Japanese firm's teams, all smiles and controler in hand. Earlier in the year, he made a statement that went against all that has ended up happening with the studio responsible for The Evil Within, Ghostwire: Tokyo and Hi-Fi RUSH.
"When a team like Rare wants to do Sea of Thieves, when a team like Obsidian wants to do Grounded, and Tango wants to go do Hi-Fi [Rush] when everyone probably thought they were doing The Evil Within 3. I want to give the teams the creative platform to go an push their ability, push their aspirations."
In a documentary broadcast in 2021, Sarah Bond (current Xbox president) and Phil Spencer look back at a sad fragment of the company's history. We're talking about the closure of Lionhead (Fable) in 2016, just ten years after being acquired by Microsoft. At the time, the two brand leaders said they had learned from the failure and that they wouldn't repeat the same mistakes. Oh well.
In another example, Aaron Greenberg, head of marketing at Microsoft, was praising the success of Hi-Fi RUSH at a time when journalists were reporting that the company wasn't satisfied with sales.
"Hi-Fi RUSH was a break out hit for us and our players in all key measurements and expectations. We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release."
In August 2023, Tango reported that its game had over 3 million players. It's hard to know whether this was considered a success at the time, since this figure includes Game Pass users.
A fragile business model?
Last february, we learned that Xbox Game Pass had more than 34 million subs. At first glance, this may seem a pretty good figure, but Microsoft is aiming for 100 million subscribers by 2030. There's still a long road ahead. There is also the question of whether the company's AAA games coming day one to the service. This is great for consumers, sure, but may not be very helpful in terms of amortizing the ever greater development costs of big-budget games.
What's more, it's pretty safe to say that when the acquisition of Activision Blizzard King was priced at $69 billion, one imagines that Microsoft is hoping for a fast return on its investment. However, the publisher's games are coming to Game Pass really slowly, as Diablo IV is the only game to have joined the service so far.
Finally, and to ensure that the merger is profitable, major IPs such as Call of Duty are still coming to competing consoles. But this doesn't stop there. Other games such as Hi-Fi Rush, Pentiment, Sea of Thieves and Grounded have already found its way to PlayStation and/or Switch. It's a rather unexpected turn of events that suggests the urgent need to increase profit. And since Xbox consoles are still selling poorly since the failure of the Xbox One gen, Microsoft has been forced to expand beyond its own ecosystem.
And now what?
It's clear that Microsoft will be focusing on the licenses that sell. Matt Booty, head of Xbox Game Studios, made this clear in the e-mail to his staff announcing the closure of Tango, Arkane Austin, Alpha Dog and Roundhouse Studios.
"These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades."
So, this means more Fallout, The Elder Scrolls and Doom, but less Hi-Fi RUSH, Dishonored and even Redfall.
The latter is also bearing the brunt, as all its updates and additional content, due to arrive shortly, have been cancelled. While it's true that Redfall was poorly received by the press and fans, it was Arkane Austin's only slip. The studio had previously worked on excellent games such as Prey and the Dishonored IP. Once again, contradition rears its ugly face here, as the same Matt Booty stated in June 2023 that he had no plans to close the studio.
So what will happen to devs like Double Fine Productions, inXile Entertainment and Ninja Theory, who make stunning games but struggle to find an audience? While Hi-Fi RUSH didn't set the sales charts on fire, it did win plenty of prizes, from the Game Awards to the BAFTA. Quality is no longer of any meaning to a studio's existence.
Video games may be a form of entertainment, yes, but above all they are an industry worth over 282 billion euros worldwide. This means that big companies such as Microsoft, Sony and even Nintendo will be betting more and more on what works, and taking fewer and fewer risks... even if it means losing something very special.