Why Xbox believes it must cut costs and close studios

Companies, particularly public companies like Microsoft, need to grow.

[gold_drake]

i mean its pretty simple, they spent close to 30 billion in acquiring activision, they thought they'd make it bk no problem, and that didnt happen.

its just shit that because of MS's miscalculation alot of people lost their jobs.

[Jingsing]

This is exactly what many people said would happen including the CMA and FTC. Lies lies and more lies and they allowed a $69 billion buy out to happen.

[gold_drake]

oh yeh it was 70 billion. that was my bad haha even worse.

[JackBNimble]

MS has educated financial advisers, they knew there was little chance to recoup the 70billion just to break even on the Activision deal let alone whatever other nonsense is going on in MS.
This whole thing was to corner the market for leverage.

[thesoftware730]

gold,

You can't be serious, right?

Do you think that MS thought they would make 80bill in a year & Half? They haven't even released titles under MS yet, lol.

But in fact, that A/B revenue is already paying off, look at the last earnings call. That $80 billion is long-term money, my guy, no sane person/company would think they would make that back in any short-term situation, it's a long-term investment.

Let's play silly then. If MS's reason for laying off staff and closing studios was due(which it really was not) to the A/B deal, tell me what Sony's reason was for past studio closures, the recent 900-person layoffs, closing Sony London, shutting down Dreams, and closing Japan Studio? Zipper? Psygnosis? cuts at all their internal studios.

Keep in mind, you are claiming MS's reason is because of the A/B deal; please explain Sony's reason.

[Hofstaderman]

You actually still defending them? Sheesh.....

[gold_drake]

this is not a sony vs MS debate. dont make it something it isnt.

and of course not, but im pretty sure they thought they'd make more money after the deal. they didnt, and closed off some studios.

its pretty insane to think there is any other reason for the closure of studios in this case.

[romulus23]

(It really was) due to the Activision Blizzard deal and the loss of physical sales due to gamepass. You keep bringing up Sony in all your posts about this, stop deflecting and trying to change the topic, this is about MS and what they are doing.

[BehindTheRows]

Has nothing to do with Sony. Stay on topic.

[notachance]

once in a while you see someone too invested in their make-believe console war that everything happened has to be connected to said war…

a bit of banter between fans is normal, this crusade you’re doing now isn’t.

[Chevalier]

Wow idiotic. You bring up very old closures not that there haven't been recent ones from Playstations, but, seriously stop deflecting. This has NOTHING to do with Playstation.

Does Playstation got $3 trillion behind them and daddies wallet? No they don't so stop making a fool of yourself.

Xbox has never been profitable really and they just keep losing money so between their worst hardware sales, terrible 3rd party sales and now terrible 1st party sales.

Gamepass numbers that are no longer being announced shows their numbers after 3 years of missed targets has flatlined. Plus their recent gains up to 34 million were ONLY because they folded Gold members in too. Absolutely take your idiotic rhetoric out of here. Keep on topic without deflecting.

[S2Killinit]

Ayayayay with these xbox/MS excuses.

[Reaper22_]

How dare you mention Sony! Everyone here knows when Sony closes a studio and lay off workers it was the right thing to do. Even when they bought Gaikai and fired almost everyone it was the right thing to do.

Gamers can be such hypocrites sometimes.

[andy85]

Is it? That's revenue not profit. Completely different.

[fr0sty]

The earnings call only showcased how dire the situation is... Even with ABK and Bethesda, they still couldn't make enough to keep investors happy, gamepass subs are stagnant, and hardware sales are tanking.

[thesoftware730]

Drake,

"this is not a sony vs MS debate. dont make it something it isnt."

You are correct that it's not an MS Vs Sony Topic, but when exaggeration and imagination mix from a one-sided social group, similar examples are needed to ground radical thoughts; in this instance, the example was that shutting down 3,4,5, even 6 studios during a restructure/ buyout/acquisition is not some anomaly(it can suck) that has to be dissected or spell doom and gloom.

"But I'm pretty sure they thought they'd make more money after the deal. They didn't, and they closed off some studios."

But they did make more money, a lot, actually; the last earnings call showed a huge growth in profit, almost all due to A/B revenue.

"its pretty insane to think there is any other reason for the closure of studios in this case."

The fact that they did make money, kinda throws this out the window, and besides, you don't wake up and say, hey let's close a studio, you look at the output, you look at the dev as a whole, the long term and short term, you weigh it against all other studios and goals, you keep key members, ect..then you close if they are the weakest links...which by MS analysis they were.

Again, I will make a small Sony comparison, just so some of you can understand and see past the bias; Insomniac, ND, and Bungie have made some of the best games ever created, yet Sony saw fit to cut jobs in every of these studios, even tho Insomniac & ND are the biggest producers of PS games, leagues ahead better than Tango and Arkane, yet, they saw cuts, mind you, while being the TOP produces of PS first party. They were told to cut costs, and more jobs may be on the line, and Bungie is being threatened by a hostile Sony takeover. Put that in perspective, as I know that layoffs and dev closures are different, but if the best of the best is getting cut off, it is less than surprising, that lesser studios are closing.

@Cheva,
My response fits well with your comments as well. You even went on to prove that the dev closures are not just due to A/B acquisition. Then you point out Sony has less money than MS, inferring that MS should keep devs open that they see as lesser earners, while Sony having less money makes it okay to close them. lol...it doesn't work that way.

[gold_drake]

im not reading all of that. u have ur opinion, i have mine.

thats rly it.

but this aint sony vs ms.

[ApocalypseShadow]

You're trying to compare a 100 billion company to a company that has 3 TRILLION worth. SIE has to live or die on their own. And in turn, PlayStation has helped the main company again and again. Sony has to balance out what is working and not working in the company.

While Xbox has Daddy Warbucks footing the bill to keep the platform afloat. They have been bleeding money from Nvidia hardware in the OG Xbox, the RROD fiasco, the attempted 2013 DRM nonsense and the lies about being the most powerful console in the world and the losses of paying out millions to prop up a service hoping it catches on with enough subscribers to justify its existence.

They're not comparable if Xbox isn't allowed to live or die by its actions. It's subsidized. Revenue isn't profit. And if they were profiting on their own, they wouldn't be closing developers. If they were profiting, they wouldn't need Daddy Warbucks spending 80 to 100 billion buying up 3rd party publishers to sustain a loss leading platform.

They stopped announcing game sales, stopped announcing hardware sales, stopped announcing game pass subscribers, they are putting games on their competitors platforms but you're telling us that they are doing great even after killing jobs and closing developers at Xbox.

Stop drinking the Kool aid. You're drunk.

[Chevalier]

Again at which point did Playstation have a $3 trillion company shift the market with a giant purchase?

"But they did make more money, a lot, actually; the last earnings call showed a huge growth in profit, almost all due to A/B revenue."

Lol. No they didn't. Increased revenue was ONLY due to adding Activision Blizzard revenue in. Growth was only 1 percent. It's idiots like you that have no idea what they're talking about is why Xbox isn't better than it is. You guys just make excuses continually.

If Xbox got so much profit then why did they stop announcing hardware numbers? Why did they stop announcing Gamepass numbers? Oh right because they're NOT profitable. Their sales in every category has dropped off the face of the planet. It's why Spencer will be closing more studios and canceling upcoming projects too.

[The Wood]

How can they be profitable when they're not selling enough hardware, software or subs. You need take a seat on this one my friend unless you can prove you angles

[jwillj2k4]

Sony didnt shut down the studios you mentioned after they made last of us or ratchet and clank or destiny. Cutting jobs is not equal to closing studios. Sony cuts are a candle in the sun of Microsoft’s closures.

[WelkinCole]

I am pretty sure MS knew this would happen and this was part of their plan. I mean if anyone with half a brain can see this happening I am pretty sure a multi billion company like MS knew this would happen

The whole strategy in buying Beth and Acti/Blizzard is for

1. Buy established games they can have under xbox because they have done a horrible job in building their portfolio internally for the past 15 years

2. Following from 1, try and boost xbox competitivenss against a dominat PS which MS after 3 tries still can't crack

3. Follolwing from 2, try and weaken Playstation dominance by taking out these massive multiplats from the PS

4. Following from 3, try and profit off from the PS domiance with selected games they will still have on the PS to make money like COD

5. Obviously get the IP's by buying them instead of creating them which again as I mentioned in number 1 they have been woeful in doing

None of these had anyting to do with keeping all the devs they accuried. MS has always been very shitty to Devs under them. Look at what happned to Bungie for example.

I believe MS in court truely mean it when they said they had to do something because PS was just too dominant. This was their last roll of the dice.

And from the looks of things. It has not panned out as MS had hoped. PS5 is still as dominant as ever and xbox is still behind. Worse still their MP's they got is not irreplaceable as they thought. Starfield? lol!. There have not been any major shift in momentum in this console war in their favor so now its time to start cutting their loses and it starts with the most expensive cost for any company. People.

[Michiel1989]

for a comparison, sony laid of a bigger % of it's staff this year than ms, it's what companies sadly do nowadays. If you think with GP and Bethesda + acti aquisition they were looking for quick cash, you couldn't be more wrong. It hasn't even been a year, "they thought they'd make it bk no problem, and that didnt happen." shows you have 0 understanding of how a business operates.

[thesoftware730]

@ Michiel1989

Exactly this!

I'm reading these comments, and it's mesmerizing how off-base most of them are.

I posted a few comments above, and their rebuttals have nothing to do with the points that I presented; when they start doing that, I just ignore them because, at that point, they're debating all over the place.

[Profchaos]

30 more like 70 to 80 plus 7 for Bethesda

[Tzuno]

meanwhile everything turned woke an inevitably went downward, i'd say it serves them well if they promote such kind of approach, mwuahahahahahhh!

[anast]

They are going to use AI for a large portion of the game development process. Upper management need bonuses and the shareholders need more money. So, people will lose their jobs.

[Skuletor]

Maybe they were already using AI to make business decisions, which would explain why they closed Hi-Fi Rush's studio, then said they need more games like Hi-Fi Rush not long after that announcement.

[anast]

Good point

[Crows90]

They shouldn't have bought any studios. Some is okay...but they went on a shopping spree...stupid

[Einhander1972]

The better question is why did Microsoft buy publishers for a service they were subsidizing they knew couldn't support.

And why are so many websites trying to make people feel sorry for Microsoft instead of truly criticizing the fact they are closing studios and killing jobs that would have been fine if Microsoft themselves hadn't gotten involved.

Quit feeling sorry for Microsoft and start feeling sorry for the industry and the all the gamers who are actually losing out.

THIS IS MICROSOFTS FAULT.

[RNTody]

The first thing that happens after any major acquisition or merger is a consolidation of the whole new portfolio, which includes cutting any excess, bloat or portfolios that don't fit the larger MO of the big boy. So far, it's been par for the course with Microsoft and that's why gamers have been so against this acquisition. Tango Gameworks is the beginning. You think Microsoft wants to pay to keep small timers like Ninja Theory in business?

There is absolutely zero evidence to suggest that Microsoft will improve any of these studios, but plenty to suggest that they will get rid of what they don't need and hold onto the IP. The real agenda of the acquisition was always to acquire The Elder Scrolls, Diablo, Fallout, Call of Duty, Candy Crush etc. that will create millions in passive revenue stream for Microsoft regardless of where the games release. Microsoft simply wants their cut.

Because of Games Pass Microsoft has no interest in investing in new IP which is risky and requires creative talent they can neither nurture nor manage. Game Pass has also not grown in the way Microsoft expected it to, even post acquisitions. Therefore the logical thing to do, without serious money makers to release, is to cut as much cost as possible.

[Knightofelemia]

Basically spent too much money buying up both Zenimax and Activision. Not getting back the return they thought they would get back. Close down studios lay off staff so some CEO and other higher ups can get a bonus or a hefty pay cheque. Test the waters on putting older Xbox exclusives on other platforms, releasing two Xboxes one with horsepower and the other that needs games to be nerfed down. The Xbox division seems is a bloody mess that even Google maps can't figure out. Just wow and I thought Embracer was bad and a giant mess.

[Markusb33]

remember when xbox fans said, i think they should buy Take2 next, then EA or Ubisoft, Destin and lots of others were pro consolidation, now look, they said its good for gamers, so short sighted.

[Redgrave]

The "gamers" they spoke for were never gamers as a whole, but specifically those who own XBOX and Gamepass.

This is essentially an unspinnable topic to turn the negative into positive, and when even Sarah Bond can't provide a good proper answer it's no wonder why the XBOX faithfuls are quiet except for the odd one who pops out to go "b-b-but Sony" because a weak deflection is all they can manage.

[Barlos]

I'm genuinely worried about Obscure Observer. Why hasn't he been commenting on this? He might have done himself a mischief, or perhaps he feels betrayed by his lord Phil and is going to do him a mischief?

[Hofstaderman]

Well SOMEBODY has created about 5 or 6 troll accounts in the last hour. Poor mods have their hands full

[Hofstaderman]

See below... lol

[Chevalier]

That idiot just rolls along with his dumb excuses for Xbox. Even the inexcusable he will let go. Can't wait to see what spin he has for how this is all good for the industry and Xbox. Lol

[Doomeduk]

This is about studio's finishing and releasing games and MS deciding to not fund those next 5 + year developments
Proof in the pudding will be ninja theory giva a couple of months for patching and then is it onto a new game or ..?

[HyperMoused]

The self defeating theory of business, you have to make more and more profit every year, and at a certain point that isnt possible...yes it is, cut this, fire them, close that,we will form new divisions, with hookers and black jack

[sagapo]

It’s about profit margins for the company and its shareholders, which is the case with every company.

[purple101]

thats not how art works though, is it? You paint the picture, people decide wether to bid on it, or not, or how much

You create the art - you do your best job, the market decides its value. (in this case of games, its number of sales)

[sagapo]

I think you’re stretching what art is here. In most cases there is only 1 original painting like the Mona Lisa or a Lichtenstein, Van Gogh,.., in that case you are right, the value is mostly determined by what people want to pay but you will own a unique piece.
And although games start a lot with artwork and the creativity of those involved, you can barely call a game an “unique “ piece. The value is set by industry standards mostly. But then again you decide if that price is worth it I suppose.

[TheGamingHounds]

You can't grow without games that sell
Make good games.
Acquisitions upon acquisitions with no results followed by services and subscriptions can only take you so far.
Bad decisions galore. Expenditure seems to be infinitesimally high with little to no boost in gains.
Two paths now exist in front of it and this company needs to wholeheartedly commit to ONE.