In light of the looming layoffs and studio closures that are expected to hit Xbox in July, former PlayStation Studios boss Shawn Layden has expressed the belief that Microsoft’s recent moves indicate that the company has a “basic misunderstanding” of how the gaming industry works.
Layden’s comment was sparked as part of a discussion on LinkedIn. The discussion revolved around a post by industry consultant Tadhg Kelly, who noted that Xbox is currently facing an identity crisis, and that things are only going to get worse due to number of reasons, including the division’s overhauled leadership, “a rebrand that was kinda just the old brand”, and an insistence that, while Project Helix will be expensive, “a claim that hardware can’t be expensive to win,” among others.
“At the risk of sounding like a “hater” (which, I’m really not), the moves evince a basic misunderstanding of how the interactive entertainment world moves. [If you know, you know], which also means if you don’t, you don’t,” wrote Layden in response to Kelly’s post.
Kelly’s own post largely revolved around the counter-productive nature of Xbox’s announcements and subsequent divisions. This includes things like announcing brand-new games at its recent showcase, despite reportedly already having decided to shut down the studio making the game. A recent report has indicated that this was the case with Ninja Theory’s unveiling of Senua.
Several other studios across Xbox are also expected to be hit by layoffs and studio closures. Among these are Kiln and Keeper developer Double Fine, and the studio behind South of Midnight, Compulsion Games. Reports have indicated that negotiations between these studios and Microsoft have already begun with the hopes that the studios would be allowed to become independent, rather than just being closed down.
These moves are likely part of Xbox CEO Asha Sharma’s larger plan to improve the health of the business. In a recent post about the “realities” faced by the company, Sharma and CCO Matt Booty had made note of the 3 percent year-on-year loss in “accountability margin” for the current fiscal year.
“We will end this fiscal year at about a 3 percent accountability margin, down year-over-year,” they wrote. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
Hardware has also been a major issue for Xbox; Sharma noted that the recent spike in component prices has led to the company being unable to manufacture enough consoles to meet demand. Along with this, things are also looking grim when it comes to the price of Project Helix. To deal with this, she said that the company needs to figure out “a new business model and partnerships for hardware as we remain committed to Helix.”
However, another report has noted that even other development teams outside of Xbox but owned by publishers are also going to face trouble, and that Microsoft’s moves are going to be “just the beginning of massive bloodbath.”