More cutbacks are in progress days after Microsoft closed down three Xbox studios. Just days ago Microsoft shuttered Alpha Dog, Arkane Austin, and Tango Gameworks. Now it seems cost-cutting measures are materialising via voluntary severances at Bethesda owner ZeniMax.
These voluntary severance packages will naturally lead to a further reduction in headcount as Microsoft, Xbox and the Activision Blizzard King empires continue to fight it out as to what shape the final giant is going to take following the successful conclusion of their hard-fought $69 billion merger.
In this week’s earlier announcement, Xbox Game Studios head Matt Booty explained the closures as Microsoft focusing on “high-impact titles”, and noted that these changes would be “disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market”.
Now, that disruption has become more apparent with layoffs hitting ZeniMax too.
In fact, it appears that Microsoft’s mobile assets (including those gained through their King acquisition) are the only gaming avenue left unscathed by their cutbacks.
The cause of the cuts
Producers, quality assurance testers and more are being let go at ZeniMax, and Bloomberg reports that more job cuts are believed to be on the way across other Xbox organisations; people familiar with the matter shared that Xbox’s studios are spread too thin, with Xbox president Matt Booty reportedly having compared the company to “peanut butter on bread”.
“It’s hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do,” ZeniMax Studios head Jill Braff added. “I think we were about to topple over.”
Xbox saw disappointing Q3 financials, with their Game Pass model struggling as it continues to devour IP, hard work, money and talent. The model has seen developers plough money and time into games only to have them given to the service where they enjoy only a minor spike ‘for free’ before being usurped by new arrivals rather than enjoying a conventional, lengthier on sale retail/premium period or making good on the potential upsell of extra content to fans.
As player interest drops shortly after a game’s launch – even for the likes of global phenomenon Palworld this January – even more new games need to be ready to take their place, all only ever earning an equal share of a subscription revenue in a situation which is looking increasingly unsustainable.
The clearest path
Ultimately, between Game Pass’ struggle to earn enough to pay for the games its consuming and the closures of studios developing for console, the logic behind Microsoft’s mobile ambitions has become ever clearer: When great mobile games can break a billion a year – see standalons smashes such as Monopoly GO! and Honkai: Star Rail for example – why manage dozens of studios pumping out console games for pennies on a subscription service?
Fortunately Microsoft now owns King through the Activision Blizzard acquisition meaning that claims that the deal was all made in the name of mobile (rather than any battle to own Call of Duty or ringfence cloud gaming) ring increasingly true. Candy Crush continues to be one of the industry’s biggest games and based on our recent visit to King HQ, operations are speeding ahead with zero interference from their new owner.
Meanwhile, turmoil on the console and PC sides of Microsoft is only worsening. 1,900 layoffs earlier in the year has already got the tech giant into trouble with the FTC. The commission looked to forcefully undo the merger this February, and could well apply greater force yet with these new closures and layoffs now looming.
