As the news of Hi-Fi Rush studio Tango and Prey’s Arkane Austin being shuttered by Microsoft continues to settle in, the impact of these closures is becoming more evident. According to Bloomberg, these closures were part of a broader cost-cutting initiative that is still ongoing. It seems that ZeniMax studios are the main target of these cuts, with reports indicating that voluntary severance packages were offered to producers, quality assurance testers, and other staff at ZeniMax this week.

During a meeting with ZeniMax staff, Xbox president Matt Booty expressed concerns about the company’s studios being spread too thin. He likened the situation to “peanut butter on bread,” suggesting that the division had been feeling understaffed. This desire to free up resources was cited as the reason behind the closures of Tango, Arkane Austin, Mighty Dog, and Roundhouse. ZeniMax’s head, Jill Braff, echoed these sentiments, stating that the company was on the brink of toppling over due to the strain of supporting nine studios worldwide with limited resources.

The Impact on Arkane Austin’s Projects

The closure of Arkane Austin comes at a critical time, as the studio was deeply involved in the development of new content for the vampire live service Redfall. Additionally, the studio was also exploring the possibility of creating a new immersive sim game, potentially a sequel to the popular Dishonored series. Xbox had previously lauded Tango’s Hi-Fi Rush as one of the most successful launches for Bethesda and Xbox in recent years.

Zenimax itself was acquired by Microsoft in 2020 for $7.5 billion, making it one of the largest acquisitions in the gaming industry’s history. However, the recent closures and cost-cutting measures indicate a shifting focus within the Xbox division. The acquisition of Activision Blizzard by Microsoft for $76 billion has also increased scrutiny on the Xbox division, especially in light of Activision Blizzard’s massive layoffs earlier this year.

The Game Pass Model and Its Impact on Xbox’s Strategy

The cost-cutting measures at Xbox may be attributed to the stagnation in Game Pass growth, which was seen as a key revenue driver for the company. Analysts have noted that while Game Pass saw significant growth between late 2019 and early 2021, it has since plateaued. This could be due to US consumers’ preference for purchasing games and add-on content over subscription services like Game Pass.

The Game Pass model was designed to allow for more creatively risky and innovative game releases, as sales expectations were not the primary focus. However, with the slowdown in Game Pass growth, Xbox seems to be shying away from taking risks on similar releases. This shift in strategy could have far-reaching implications for the types of games that are developed and released under the Xbox umbrella.

The closures of Hi-Fi Rush studio Tango and Prey’s Arkane Austin signal a broader shift within the Xbox division towards streamlining operations and focusing resources on key projects. With ZeniMax studios feeling the brunt of these changes, the future of game development under the Xbox brand remains uncertain. Only time will tell how these decisions will impact the gaming landscape in the long run.


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