Microsoft Corp. has apparently started a big cost-cutting plan beyond the recent layoffs in its Xbox gaming division. This week, employees at ZeniMax, the former parent company of Bethesda, were offered the option to leave with a severance package. Reports suggest that more cuts are expected across the whole Xbox organization.
Bloomberg confirmed all this. The abrupt closure of several Xbox subsidiaries, including Tango Gameworks, known for Hi-Fi Rush, surprised employees. Tango was in the process of pitching a sequel to the game. During a town hall meeting addressing the closures, Xbox president Matt Booty explained that the decision was made to free up resources, stating that studios had been stretched too thinly. He clarified that the shutdown of Arkane Austin, known for games like Prey, was unrelated to the performance of their recent title, Redfall.
That was pretty hard to believe until a former Senior PR Manager revealed a lot of strife in Xbox’s background. Additionally, ZeniMax’s Jill Braff has highlighted the importance of concentrating on fewer projects within the division. He acknowledged the challenges of supporting a large global network of studios with limited central resources. The recent closures of Tango and Arkane, which released games last year and were actively hiring, appear to align with this consolidation strategy.
The severance deal offered to those ZeniMax employees may be better than what will be received later. I can’t say I wouldn’t take the deal, knowing there’s a chance it could end with a worse offer.
Xbox is experiencing cuts during a time of shrinkage in the video game industry. The gaming sector grew significantly during the pandemic, but it might be slowing down now. Microsoft has invested heavily in gaming by acquiring ZeniMax and Activision Blizzard. These major deals have brought more attention to the Xbox division from within Microsoft.
In recent years, Xbox has been promoting its Game Pass subscription service, which offers a wide range of games, including titles with smaller budgets and more modest sales expectations. However, some analysts suggest that Game Pass has not experienced the dramatic growth anticipated by Xbox leadership. Even the Senior PR Manager mentioned above agreed that the service wasn’t doing what it needed to do.
While there is no indication that Microsoft plans to abandon Game Pass, the recent job cuts and studio closures hint at a possible change in strategy, potentially shifting away from smaller projects and towards larger, more commercially focused games.
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