After Buying Up Studios, Xbox Says It Doesn’t Have The Resources To Run Them

After shutting down multiple Bethesda studios, Xbox and Bethesda leadership held a town hall meeting with staff to discuss the closures, explaining that the company’s studios had been spread too thin and that it wanted to focus on fewer projects moving forward.

On May 7, Xbox announced that it was closing three studios—Tango Gameworks (Hi-Fi Rush), Arkane Austin (Redfall), and Alpha Dog Games (Mighty Doom)—with a fourth support studio, Roundhouse Studios, being absorbed by the team behind Elder Scrolls Online. According to a new report, on May 8, in the aftermath of these surprising shutdowns, Xbox President Matt Booty and Zenimax head Jill Braff held a large meeting with staff and laid out the reasoning behind the cuts.

As reported by Bloomberg, during the meeting Booty praised Hi-Fi Rush, but wouldn’t go into specific details on why the studio behind the colorful action game had been shut down.

Speaking more broadly about the closings, Booty reportedly explained that Xbox and Bethesda’s studios had become spread too thin, like “peanut butter on bread,” and that team leaders felt understaffed. The idea being that by closing studios, Xbox would free up resources elsewhere within the company. Booty also told staff at the meeting that Akrane Austin’s closing had nothing to do with Redfall flopping with fans and critics.

Reportedly both Tango and Arkane Austin had pitched games to work on next, including a Hi-Fi Rush sequel and possibly a new Dishonored or similar single-player immersive sim-like game. Those likely won’t happen.

Braff allegedly said that she hoped the closing of some studios would allow Bethesda/Zenimax to focus on fewer projects in the future.

“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,” she said, according to a recording Bloomberg reviewed. “I think we were about to topple over.”

Tango and Arkane were trying to hire more people while pitching new games, and both Braff and Booty reportedly suggested that the long, expensive road those teams faced before being able to release something new was the main reason for closing the studios, implying that it was just bad timing as Microsoft looks to trim down costs and overhead. It’s reported that more cuts are likely for Xbox, according to people who spoke to Bloomberg.

It’s also reported that ever since the massive $69 billion Activision Blizzard acquisition in 2023, Microsoft leaders have been ramping up their scrutiny of the Xbox division. The Verge reported on Wednesday that executives at Microsoft and Xbox had discussed not adding Call of Duty games to Game Pass, and raising the price of Game Pass Ultimate. However, nothing is concrete yet.

Microsoft’s leaders taking a bigger interest in Xbox might help explain why Booty and others are looking to cut costs. Either way, it’s likely more folks at Xbox will lose their jobs in the future.

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