Hi-Fi Rush 2, potential new Dishonored game were reportedly being launched by now-closed Xbox studios

Arkane Austin and Tango Gameworks were reportedly in the process of pitching sequels to two much-loved titles – namely Hi-Fi Rush 2 and a potential new Dishonored game – when Microsoft made the shock decision to close the studios, and more Xbox cuts are said to be on the way.

That’s according to Bloomberg’s Jason Schreier who, citing sources familiar with the matter, says Arkane had been looking to return to its roots following the release of last year’s critically panned multiplayer shooter Redfall, and had launched a new single-player ‘immersive sim’ – “such as a new entry in the Dishonored series” – to Xbox executives.

Tango Gameworks, meanwhile, was also in the pitching process, hoping to make a sequel to last year’s critically acclaimed rhythm-action hit Hi-FI Rush – a game Microsoft previously called “one of the most successful launches for Bethesda and Xbox in recent years “.

Inevitably, following Microsoft’s decision to shut down both studios – a move that also saw the closure of Mighty Doom developer Alpha Dog Games and the merging of Roundhouse Studios with ZeniMax Online – neither pitch will proceed. And the company’s justification for the team closures remains vague.

According to Schreier, Xbox president Matt Booty and head of ZeniMax studios Jill Braff addressed ZeniMax employees regarding this week’s closures in a townhall meeting earlier today. Booty reportedly praised Hi-Fi Rush during the gathering, but did not specify why Microsoft had chosen to shut Tango Gameworks down, and insisted Arkane Austin’s closure was unrelated to the poor critical and commercial performance of Redfall.

Instead, Booty reportedly said ZeniMax’s studios were spread too thin like “peanut butter on bread,” and that leadership had made the decision to close some of them to free up resources elsewhere. Braff also suggested Arkane and Tango Gameworks’ requests for additional staff as they begin pitching new projects was the “main factor” behind their closure, and expressed hope the reorganization of ZeniMax would put more focus on fewer projects.

“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 added. “I think we were about to topple over.”

Bloomberg reports the sudden closure of Arkane Austin, Tango Gameworks, Alpha Dog, and Roundhouse forms part of a widespread cost-cutting initiative at Xbox that still isn’t finished. According to people familiar with Microsoft’s plans, the company has started offering voluntary severity agreements to producers, quality assurance testers, and other ZeniMax employees, while “others across the Xbox organization have been told that more cuts are on the way.”

This week’s ZeniMax studio closures follow Microsoft’s decision to lay off 1,900 Xbox employees earlier this year. And while condemnation has been widespread – Arkane Lyon boss Dinga Bakaba publicly called this week’s move a “fucking gut stab” – former Blizzard president Mike Ybarra has spoken out in support of Xbox boss Phil Spencer, saying, “”I know this hurts him as much as anyone else.”