Report Claims Xbox Is Planning More Cuts Following Studio Closures

"The sudden closure of several video-game studios at Microsoft Corp.’s Xbox division was the result of a widespread cost-cutting initiative that still isn’t finished.

This week, Xbox began offering voluntary severance agreements to producers, quality assurance testers and other staff at ZeniMax, which it purchased in 2020 for $7.5 billion, according to people familiar with the company’s plans. Others across the Xbox organization have been told that more cuts are on the way.

Speaking about the closures more broadly, Booty said that the company’s studios had been spread too thin — like “peanut butter on bread” — and that leaders across the division had felt understaffed. They decided to close these studios to free up resources elsewhere, he said.

Game Pass has not seen the massive growth that Xbox boss Phil Spencer may have been hoping for."

[Sonic1881]

We already know 😂

[just_looken]

Sense it seems very few remember that human's were around before 2020 the next studio to close will be bethesda based no doubt on the history of.

Fallout 76
Elder scrolls online
elder scrolls blades mobile
fallout mobile
The vr versions of old games

Then you got starfield pissing out cash nothing to cover it.

I doubt tod's team or any sub team is making m$ cash they are no doubt on the chopping block for job cuts

If you can remember before 2020 even fallout 76 was made with over 4 studios.

[purple101]

pretty sure starfield coming to playstation 2024, nx gamer deep diving on the creation engine update in a recent blog, he seems to think, there is a lot of stuff developed to use on starfield for its Playstation release,

who will buy it though, ?? I think M$ has lost all good will now, after the Activision debacle, and now all these studios closing, people dont want to support them even if the game is half decent

[Abear21]

Bethesda is the only studio to release anything noteworthy on Xbox. Take Bethesda out and they have nothing this Gen. Hifi Rush and Starfield are probably their two biggest hits.

[Cacabunga]

They are counting on bethesda and activision on consoles and PC.
I really hope there would be a massive boycott movement against just the next release. I’m sure they will reconsider.

They see employees as trash, i will never give them a dime.

[Andy_Dee]

I think you missed this.

https://www.gamespot.com/ar...

[Eonjay]

Someone said that cost $350 million to make Starfield. The use cost of making games has gotten crazy. With MS putting everything on GP it makes it harder to recoup costs. This is why I assumed that everything is coming to PC and PlayStation. I think they will have a whole slew of titles ready for the Switch 2 launch.

[-Foxtrot]

"Speaking about the closures more broadly, Booty said that the company’s studios had been spread too thin — like “peanut butter on bread” — and that leaders across the division had felt understaffed. They decided to close these studios to free up resources elsewhere, he said"

So what you're saying is...you bought all these studios and you guys can't run them.

Jesus.

[Inverno]

Spread thin after firing over 2000 employees a few months prior. So basically they created the problem and their solution was to just fire more people. Absolute geniuses over at Xbox, of course can we even believe this to be the reason for the closures?

[FinalFantasyFanatic]

I was just thinking this, they just fired all those people and now stated they are spreading their staff thinly, this just reeks of incompetence.

[Profchaos]

Leaders can't run them hire more management create new roles don't shutter entire studios cause you can't figure out how to run them.

Unless the reality is this whole consolidation thing was really an excuse for IP harvesting

[anast]

He's lying. They are doing it for the shareholders.

[SeTTriP]

Exactly what I heard.

[kayoss]

The crazy part is that if Xbox goes under, all these great studios will also go under. They've bought up all these studios and instead of letting the studio manage themselves, they fire 2000 across and now they're complaining that they're understaff. Sounds like xbox bit off more than chew. Just like all the promises that they've made but cant keep.

[JEECE]

Well, what do you mean by "if Xbox goes under"? Because MS itself isn't going under. So if they decided Xbox was no longer worth it, it's not like they would just eat all those losses. Sure, for individual developers where there are substantial costs in terms of the people working at the studio and minimal money to be made selling related IP (i.e. Arkane Austin probably costs a lot in resources but MS couldn't have made much selling the studio because Redfall is worthless and they probably want to keep the Prey IP), they may just close them, but if they were getting out of gaming completely, they could sell the IP and related studios elsewhere. Like we may mock Bethesda Games Studios on here, but their biggest IP (Elder Scrolls and Fallout) are very valuable. Similarly, I know Halo has seen much better days, but you are kidding yourself if you don't think that IP is worth a lot.

[Eonjay]

Reports are suggesting that Game Pass will be getting a price hike soon and that Call of Duty may not be added to the day one offering. I honestly have a hard time believing this but it does beg the question why exactly did GP fail? I think the answer is that it just didn't get the growth that it anticipated. Jim was right but I wish he wasn't because at the end of the day, its gamers, devs and other front-line workers who have to absorb the blow for Spencer and team's miscalculations.

[NotoriousWhiz]

And out of the ashes something even better than Xbox will be born.

[Eonjay]

Honestly as long as is not a situation where the industry has to contract in order focus wealth on a few people who are already trillionaires..

[Barlos]

It's already here and it was born before Xbox was even a thing. It's called PlayStation.

[Tacoboto]

I think 2022 killed the Series X.

2021 was a good year for Xbox though and maybe the best in a long long time, hardware and software and as a publisher. Halo Infinite launched to popularity, Forza Horizon 5 blew everyone away, Psychonauts 2 was so well received, Flight Simulator on console, Deathloop even on PS5 & PC.

But they followed that up with next to nothing. Then 2023 with Redfall, a disappointing Forza, Starfield, and 2024 leads with closures and layoffs. And some tweets reminding us Hellblade is days away.

The only disappointment with the PS5 is not enough Sony games. Xbox followed up no games with disappointing ones.

[Einhander1972]

PlayStations history has been built around third and second party publishing. The vast majority of games that people recognize as PlayStation games were made like this.

Insomniac only because a PlayStation Owned studio a few years ago in response to Microsoft buying up studios, every game they made prior to that for PlayStation was as a third party making a games published by Sony.

PlayStation has had an incredible year using that business model.

We got Granblue Fantasy: Relink, Final Fantasy VII Rebirth, Helldiver 2, Rise of the Ronin, Stellar Blade, and Silent Hill is right around the corner.

[Eonjay]

I think Xbox S. Brand was already dying for some time. Your 2022 point is interesting but also remember that is a year after the lock down which hD created false demand.

[Einhander1972]

"I honestly have a hard time believing this but it does beg the question why exactly did GP fail? I think the answer is that it just didn't get the growth that it anticipated."

What?!?

Game Pass failed because from day one it was maintained by subsidization. Game Pass was never profitable, I mean, sure you can say that was because it didn't get the growth they predicted, but their predictions of it having "billions" of subscribers were completely ridiculous, to the point where saying that it didn't have fast enough growth is as completely out of touch with reality as their predictions.

[Eonjay]

To clarify, what I am saying is that there is a scenario where GP would have worked and thats where they had a lot more subscribers. You see MS isn't dumb and they charted out how many subs they would need to make the system work. That's why Spencer testified that they would need 80 million subs by 2027 (which is crazy now in retrospect). Now we also understand why Satya Nadella's bonus a few years back was based on that unrealistically high Growth in GP subs. From the beginning they knew that the only way to make it work was with a large base of subs. This is because as you said simply subsidizing won't work forever.

[Einhander1972]

"To clarify, what I am saying is that there is a scenario where GP would have worked and thats where they had a lot more subscribers."

Yea... but again they expected/wanted an obviously unobtainable number of subscribers. Do you think that taking the risk was a good idea if it was based on getting billions (even 80m) of users?

"You see MS isn't dumb"

Are you sure? Have you been reading the news?

"That's why Spencer testified that they would need 80 million subs by 2027"

This was a refined estimate for the courts, and probably more truthful maybe... but go back and look at the first few years of game pass Microsoft actually said they were going to reach billions of people. Yes that was marketing, but still what they presented to the public to sell the idea.

I actually don't want to argue with you, normally I find your comments agreeable, but this one just came off a little off base to me.

[Tacoboto]

"Game Pass failed because from day one it was maintained by subsidization"

I do agree with Eonjay here - *if* Microsoft got the subs they want, Game Pass could have worked. Microsoft assumed people would buy into a subscription service like they already do for TV and Movies and Music.

But that didn't work out, at all, with the catastrophic consequences that we're seeing today.

"Microsoft actually said they were going to reach billions of people"

Reach != Subscriber count. That's your own conflation. Reaching just means "being available in" and usable in, billions of people with the awareness and ability to access the service. There exists no quote saying they estimate "billions" of subscribers.

[Eonjay]

No worries. I consider it more of a conversation than an argument. I learn alot from people who don't agree with me. Bring it on lol!
And yeah I forgot about the whole 'reach billions' PR from MS. I think theybare a victim of their own BS. I think at these companies you do have people push back on pipe dreams from the management.
I mean clearly it wasn't a good idea lol.

[FinalFantasyFanatic]

Maybe they need to put less games on there or just simply charge more from the beginning, I think they guttered their bottom line, they didn't make as much as they could have from selling games.

[kayoss]

GP fail because these studios poured in $100 of millions to makes these games only for it to given out free in GP. Even if Microsoft pay them to put in on GP, they are not making some of the profits they can potentially make. Especially not for AAA games. For studios making lower quality games, this may work but not for AAA. Look at Sony, their AAA games are award winners. Look at god of war ragnarok, they sold 5 million copies to date and needed to sell 3 million copies to break even. Thats a tough market to be in when your AAA game is not guarantee to break even let alone trying to make a sizeable profit.

[JEECE]

Ragnarok sold 15 million as of last November.
https://blog.playstation.co...

[kayoss]

Sorry, i missed the 1 when typing 15. But the point i was making is that not all AAA games are guarantee to be a success.

[Scissorman]

For all the armchair executives who were calling for Sony to release its big-budget AAA games on PS+, the same exact thing would have happened at PlayStation. Game Pass has killed Xbox. Congrats.

[shinoff2183]

There's not many of of us clamoring for Sony to do this because most of us understand it would kill Playstation. I'm sure there's a few but I've not seen alot of it myself.

[porkChop]

"the same exact thing would have happened at PlayStation"

But the same thing *has* been happening at PS. They've closed, what, 3 or 4 studios so far this gen? Laid off plenty of staff, restructured studios, etc.

[BehindTheRows]

PlayStation isn’t struggling. Xbox is. That’s the difference.

Sony also didn’t buy out multiple publishers with LOTS of studios and leave them in a state of uncertainty.

So, he’s absolutely right that Sony not following Game Pass in its entirety was smart as this very thing could have happened. Name a team, like Tango, who wasn’t struggling (like Tango) that Sony closed. Every closure was because of a studio who wasn’t pulling their weight.

[rlow1]

You’re right about that. People on here will turn a blind eye and downvote because it’s Sony. Jim Ryan flew to the London studio and spent the day with them. The very next day they were all fired.

Calling out MS and not Sony. No matter how the studios came to be. Won’t make a damn difference to those who lost their jobs. In the end it’s all the same.

[FinalFantasyFanatic]

This is why I have always advocated that Sony should not follow Microsoft's footsteps and adopt their model, Xbox couldn't afford to do it, Playstation certainly can't either.

[Aloymetal]

Next up should be that collab game between Kojima and MS. MS should canned that game, that's a waste of time and resources from Kojima Productions, no need to spend time on a mundane and irrelevant game. Kojima is better off dedicating 100% of his time on his actual baby aka Death Stranding 2 and beyond.

[-Foxtrot]

I just don’t want his horror title to be so online / cloud focused

He should have really focused on a P.T like game instead of DS2 in my opinion.

I just find it strange how PT was such a huge hit on PS and the horror game he does is for Xbox.

[Eonjay]

Is Overdrive a game? I honestly can't figure it out.

[Eonjay]

WARNING: Please avoid responding to ALT accounts

[Aloymetal]

I'm expecting at least 4 or 5, he's really hurting;)

[-Foxtrot]

We all know who it is at this point

Yet I don’t see why the mods haven’t banned his main account and blocked his IP from making new accounts

[Elda]

I wonder if it's XB main cheerleader with the alt accounts because they are ashamed of their beloved platform including showing who they really are...lol!!

[anast]

for sure

[notachance]

What’s the point of xbox gamepass then if not for these studios to release smaller but creative games?

I’ve had a blast playing pentiment and hi-fi rush, both of which the developers have gone on record to say that those kind of games wouldn’t see the light of day if not for gamepass. Now that a game like Hi-Fi Rush which was nominated for like 5 categories and won 1 at last year’s TGA didn’t even stop MS from closing the studio, why bother with the narrative that gamepass style business is good for the devs?

[kayoss]

here's the problem with Gamepass. Please let me know if you disagree and why. But for me, it will never work.
Studios can make smaller and creative games. However, will those smaller and creative games get new subscribers? the answer is probably No. The other problem with GP is that if studios release AAA games to GP, can those studios recoup or even make a profit on those AAA games. We all know that games are costing up to $100 millons + to make. I honestly dont think that new subscribers can make up that difference. So there lies the dilemma with GP. You cant make smaller games because you wont get new subscribers, you cant make AAA games because you will lose money. Microsoft pay these studios a chunk of money to put their games on GP, however that kills any potential profits that those studio could have made if they didnt release it on GP. The other problem is that let say a AAA game is released on GP, it gets very few subscribers. So what do you do? Theres nothing those studios can do because now they didnt make money so they cant really support that game. Microsoft wont help fund new projects because it didnt make them money, therefore the studio may get shutdown.

[jznrpg]

A lot of us saw this coming. MS has a poor track record of making games. How were they going to handle all of these studios? They weren’t is the answer. A lot more closures coming over the years. They want to control the IP of games are made or they aren’t.

[just_looken]

Yep they are making money not jobs that is how they became trillionares like halo lens being tossed to the us military.

Meanwhile another company is hardly billionaires anymore.

[shinoff2183]

Probably the plan from the beginning if it didn't work out. They also thought starfield was gonna open up alot more subscriptions. I already had mine but I did buy an Xbox series x for it and got rid of my one x.

It just didn't work out like that for them. Now this. Fits the timeline

[Crows90]

Let me get this straight....didn't they complain about ghost wire Tokyo being console exclusive to PlayStation? So instead they bought the studio and then closed them.....congrats! Gamers lose with Microsoft as usual.

[Demetrius]

More ways for idiots in upper management to pocket money, someone should hire those people who lost their jobs smh I'm sure they'd be happy to try and go to sony or even nintendo, someone who will LET them RELEASE games

[isarai]

😀🫳 🍿

[MatrixxGT]

I sense another “Xbox business update” podcast brewing.

[Hofstaderman]

I would watch just to see those buggers squirm and Ms. Bond to nod maniacally with that joker-like smile.

[Crows90]

I feel like I'd instinctively try to punch Phil through the screen...no thanks. I like my screen.

[purple101]

I actually laughed out loud, well done sir

[phoenixwing]

Yearly fallout elder scrolls and cod everything else dumpster is my guess.

[XiNatsuDragnel]

Yeah Microsoft keep falling lower for the gamers 🙄 man this sucks.

[Sciurus_vulgaris]

The big game companies [aside from maybe Nintendo] are moving towards focusing on high revenue studios. No Microsoft, Sony, Take Two, etc. all axed some of their smaller lower revenue studios. The game industry is too volatile. Small independent studios can crash and burn based on one title. Conversely, being part of big company doesn’t guarantee you safety.

[kayoss]

Nothing wrong with lower revenue studios. They just need to make a hit. Look at some of the games that became big hits, Team Ico with shadow of the colosuss and the game ICO.

[Elda]

I've said in another article XB fans that are interested in playing Hellblade 2 better support by buying the game instead of renting it on Gamepass otherwise Ninja Theory may be the next to go especially after co-founder Tameem Antoniades left last month.

[Hofstaderman]

They too conditioned not to buy games. GamePass hobbled XBOX and their acquisitions killed it. Ironic what was being touted as its saviours are its executioners.

[Elda]

Pretty much.

[__y2jb]

They’re hardly a top tier studio.

[Tankbusta40]

Why would any buy the game if they already pay for gamepass?

[Elda]

It's evident you didn't read my comment thoroughly? Again...I suggested XB fans should buy the game solely for supporting NT/MS to make money off the game. Renting Hellblade 2 isn't the same support as buying the game, not buying the game may result in MS closing Ninja Theory down as well.

[Tankbusta40]

@Elda
I did read it and there is no need to downvote me or be sarcastic. Very few people in their right mind are going to buy this game if they already have gamepass. Not to mention nobody even knows if it is good. NT decided to throw in with Microsoft knowing their games were on gamepass...it isn't up to the consumer to bail them out by paying twice for a game.

[Ronin-Z]

Microsoft about to be worse than Embracer

[gold_drake]

well, we all saw it coming.
buying out Activision has done more harm than good.

[S2Killinit]

Buy half the multiplatform industry, then shut down half the multiplatform industry. Bravo Bravo

[Barlos]

It wouldn't be at all surprising.

As myself and others have said, Microsoft doesn't care about the studios it eats, and it doesn't care about the people they employ. They want the IPs, that's all. They don't care about the fans either, they only care about the money the fans bring.

[Hedstrom]

Imagine a merger between Xbox and Embracer, they could do so many studio closures!

[Jingsing]

I'll tell you what is stunning though, the fact Microsoft are still able to sell around 350.9k consoles a month. Can there be that many brainwashed uneducated people out there? I guess I already answered my own question. :D

[neomahi]

Xbox buys up studios so they can shut them down to keep PlayStation or Nintendo from touching them because PlayStation and Nintendo can produce gold, and Xbox can only take a dumb in a box and make it guaranteed

[neomahi]

This also means we're apparently done getting new IP because it's just too risky, it must be so, so we're gonna continue to get the same stuff, same IPs and reboots and remakes because they're safe...... That's something I've always had an issue with Nintendo over is they're reliance on Mario, Zelda, Metroid, and Pokemon. Its really rare for Nintendo to branch out. Splatoon was a rare occurrence, and Bayonetta is SEGA but Nintendo snapped it up so the competition couldn't get it. Now tell me exclusives don't sell with the Switch closing in on the PS2. Why are we seeing PC ports? We don't need to. Xbox were the ones who jacked up. The PS3 struggled but Sony got it together and fixed it. Xbox can't, they're out of touch and completely clueless. Phil Spencer was always blowing smoke up people's butts and they're just now acting shocked, the rest of us are going: "we told you so."

[neomahi]

And finally, this is also what happens when you drop $69 billion on a buyout. It didn't play out as well as they thought it would and Call of Duty wasn't the cash cow they wanted so to get that money back. It's a good thing Shinji Makami got out when he did, he saw this coming

[romulus23]

So the answer to "spread thin" and "understaffed" is to close developers down as apposed to hire talent to build them up? BS this was the plan all along, acquire and fire.

[boing1]

MicroSoft. We will fire you for someone else's bad decisions. Join us.

[Rikimaru-00]

NT they looking at you. Let's hope Hell-blade 2 does really good. MS ain't playing

[Abear21]

They bought up Park Place, Boardwalk, and all the Railroads, now people are angry as the crooked banker controls the board.

Nothing good ever happens when you let a corporation have complete control, annd don’t get it twisted, this is as close to a Monopoly of an industry I’ve ever seen. M$ are going to cut cut cut costs to maximize profits, they don’t care about what IP you want to play. They only care about which one will make the most money and cost the least to make.

[MocBistro]

People pissed off when I told them this guy Phil Spencer will kill xbox years, years ago

[Knightofelemia]

Nothing new there are other companies out there doing the exact same thing.

[northpaws]

CEO: "How much do we need to cut to get the $70 billions back?
Phil: "Everything."

[Luter]

I'm sad to hear that.