Quiver Quantitative - Microsoft (NASDAQ:MSFT)'s (MSFT) Xbox division is shutting down multiple gaming studios, including Arkane Austin, in a strategic move to consolidate teams and cut costs amid signs of a gaming slowdown. Tango Gameworks, known for "Hi-Fi Rush," and Alpha Dog, both subsidiaries of ZeniMax Media, are also closing their doors, according to an internal memo from Matt Booty, head of Xbox Game Studios. "The reprioritization of titles and resources" will allow Xbox to focus its investments on its portfolio of games and new intellectual property, Booty explained in the memo. Xbox declined to comment on the number of employees affected by the layoffs.
All affected studios are units of ZeniMax Media, which Microsoft acquired for $7.5 billion in 2021, and its Bethesda subsidiary. Despite Microsoft's Xbox content and services segment reporting a 62% revenue increase last quarter due to its acquisition of Activision Blizzard (NASDAQ:ATVI), the broader gaming industry is grappling with a slowdown. Research firm Newzoo's data shows growth in personal computing and console gaming remains below pre-pandemic levels, with gamers recording fewer hours of playtime due to a weaker release schedule.
Market Overview: -Microsoft's Xbox division shuts down multiple studios, including Arkane Austin, amidst a slowdown in the gaming industry.
Key Points: -The closures impact studios acquired with ZeniMax Media in 2021, including Hi-Fi Rush developer Tango Gameworks. -Microsoft cites a need to prioritize resources and invest in new IP while facing weaker gaming release schedules. -This follows similar industry trends, with Take-Two (NASDAQ:TTWO) Interactive also announcing studio closures.
Looking Ahead: -The layoffs raise concerns about the long-term health of the Xbox game development pipeline. -Some developers will be reassigned within Xbox Game Studios, potentially bolstering existing projects. -Continued industry consolidation could impact game diversity and innovation.
The studio closures follow mass layoffs at Microsoft and Activision Blizzard earlier this year, where nearly 1,900 employees lost their jobs. Additionally, Take-Two Interactive , the company behind "Grand Theft Auto," is reportedly shutting down two subsidiary studios as part of a similar cost-cutting measure. As Arkane Austin winds down, some developers will join other teams across Bethesda, known for its popular "The Elder Scrolls" and "Fallout" series. Servers for "Redfall," an online game made by Arkane, will remain operational for players.
Despite the studio shutdowns, Microsoft remains committed to delivering high-quality gaming experiences. The company aims to bolster its game development teams by consolidating resources and strategically investing in new projects.
This article was originally published on Quiver Quantitative