What the Hell is Happening at Xbox?

Where were you all those years ago when Microsoft announced its acquisition of Bethesda? I was sitting at my desk when I received the call – but no, on a serious note, it was on September 21st, 2020, when the announcement first came through. There was shock, some confusion and anger, but also the question: Could Microsoft do that?

Sure, it had been acquiring development studios left and right, but an entire publisher? It was a paradigm shift, regardless of how successful Bethesda’s titles had been over the years since a major player in the console wars could “buy” their way to exclusives.

About three and a half years later, four studios under Bethesda are no more. They include Arkane Austin, known for the controversial Redfall but also for the more positively received Prey; Tango Gameworks, lauded for Hi-Fi Rush and rumored to be developing it for the Nintendo Switch 2; Roundhouse Studios, which assisted on Redfall and is now being absorbed into ZeniMax Online Studios to work on The Elder Scrolls 6; and Alpha Dog Studios, which released the mobile game, Mighty Doom.

Mighty Doom will be sunset on August 7th, while Redfall development has ceased, despite the latter not receiving two DLC characters from its Hero Pass more than a year after release. The reason, per an internal email from Xbox Game Studios head Matt Booty, is the “reprioritization of titles and resources.” “These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds, which you have nurtured over many decades.”

IGN reports that Arkane Austin was working on a “big update” and delivering the characters by Halloween before the announcement happened. Some members will be working on other Bethesda projects even though the studio is no more. However, perhaps the more concerning issue is that no one – not Microsoft nor the studios – has confirmed how many employees have been laid off, especially following the 1900 jobs cut last January.

The reaction from the industry is understandably livid. Even though fans were “assured” that Arkane Lyon is still alive and working on its project (presumably referring to Marvel’s Blade), director Dinga Bakaba has tweeted about how “absolutely terrible” this all is. “To any executive reading this, a friendly reminder that video games are an entertainment/cultural industry, and your business as a corporation is to take care of your artists/entertainers and help them create value for you.

“Don’t throw us into gold fever gambits, don’t use us as strawmen for miscalculations/blind spots, don’t make our work environments Darwinist jungles. You say we make you proud when we make a good game. Make us proud when times are tough. We know you can, we have seen it before.”

Moon Studios founder Thomas Mahler, who recently launched No Rest for the Wicked in early access, also said, “To everyone who’s been pestering me for years about why we didn’t allow Moon Studios to get acquired by a big publisher…That’s why. I’ve lived through the 90s and saw what happened when smaller studios got acquired by EA. Never again.”

You could justify these closures in several ways. Redfall was a failure, its player base was in the gutter. Reports of its development also weren’t great, with staff citing an unclear direction and how the project could have benefited from cancellation or a reboot after Microsoft’s acquisition. However, plenty of fingers were pointed at Microsoft as well. Why didn’t it support Arkane Austin at the time? Microsoft Gaming CEO Phil Spencer would later reveal that it had supported Starfield better, but that was more for reassuring fans than confirming any shift in philosophy.

Even if it didn’t want to continue pouring resources into the project, one has to ask: Why shutter the entire studio? Why not invest in existing IPs like Dishonored and Prey? Furthermore, what happened to Spencer assuring everyone there are no plans to shut down the studio? Perhaps the obvious response would be “Plans changed,” but it’s still a shame.

Then there’s the case of Tango Gameworks, which saw middling success with The Evil Within 2 and Ghostwire: Tokyo but struck gold with Hi-Fi Rush. Even if it was a Game Pass release, a new IP and shadow-dropping out of nowhere, Microsoft’s Aaron Greenberg said it was a “breakout hit for us and our players in all key measurements and expectations.

“We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release.” Was that not enough to save the developer? Did that not represent any value for the future? Was the recent PS5 release not good enough or something?

Roundhouse Studios could be explained as working more closely with The Elder Scrolls team, which it’s been doing more of lately. Alpha Dog Studios’ closure may be due to Microsoft shifting away from mobile titles. However, the bigger picture of troubling leadership over the years is becoming harder to deny.

Titles like State of Decay 3, Perfect Dark, Fable, Everwild and even the third-party Contraband are nowhere to be seen, with some having reports of troubled development. Some projects like South of Midnight, OD (developed by Kojima Productions), Indiana Jones and the Great Circle, Starfield’s Shattered Space expansion, Clockwork Revolution and Stoic Studio’s Towerborne are moving ahead. However, the sheer lack of updates for many of its heavy hitters for years is becoming concerning. That too after many years of no exclusives, disappointing releases and cancellations before the company’s “new era’ of acquisitions.

Then, there’s the 31 percent drop in Xbox hardware sales for Microsoft’s Q3 2024 fiscal year, fueling further queries into how much longer the company will continue investing in the same, especially with its new multiplatform approach. Some could point to the fact that the company posted $61.9 billion in revenue and $21.9 billion in net income and how Xbox’s content and services revenue is up by 62 percent. Or how Game Pass has reached 34 million subscribers, and overall gaming revenue is up 51 percent.

However, much of the success of the gaming division is thanks to the recent acquisition of Activision Blizzard, the latter seeing a loss due to the operating costs of integrating into Microsoft. It’s also worth reiterating that despite the publisher contributing so much, it wasn’t safe from layoffs. Who knows where it could go in the following months? For that matter, who is to say that any project or developer is safe?

For years, public opinion has shifted on Microsoft’s acquisition strategy, whether it’s the lack of benefits for developers or the lack of oversight in managing them. At one point, one could have surmised that the company has nowhere to go but up in this regard, making changes and improving itself to live up to fans’ expectations and make good on the people creating its titles.

After this year’s layoffs, it showcased an alternative – cut costs and jobs, hype up future products, tout Game Pass subscribers and don’t look back. If all else fails, buy another publisher for billions of dollars and start afresh. Why not?

The question now isn’t what to look forward to from Xbox – it’s whether the brand and its developers will even look the same a year or two down the line, if they’re lucky to get that fair. But hey, at least there’s an Xbox Games Showcase on June 9th with the next Call of Duty to be revealed. Surely that means something, right?

Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.