Xbox debacle: Microsoft closes two of its most acclaimed development studios

Microsoft will close Arkane Austin and Tango Gameworks, creators of great titles like HiFi Rushthe saga The Evil Within, Prey, Dishonored and Deathloop. Those responsible for Xbox, the video game division of the American giant, assure that this “restructuring” will serve to focus resources on promoting Bethesda’s major franchises (see fallout and The Elder Scrolls) and in creating new games and intellectual properties.

The news has not been liked and many video game developers, fans and players have criticized Microsoft’s decision on networks. In addition, this news comes on top of all the other news about layoffs in the industry (we have already had more than 8,000 cases this year) and the closure of Roll7 and Intercept by Take-Two Interactive at the beginning of May. Far from fading, it seems that the crisis in the sector is growing and consolidating.

Making good video games no longer guarantees you keeping your job. The electronic entertainment industry is experiencing gray days: layoffs and studio closures are the daily bread in a sector that prioritizes profits and investments over people and art. Nothing new under the sun of late capitalism. The victims of this latest raid have been Arkane Austin and Tango Gameworks, owned by Microsoft.

Tango Gameworks, the Japanese studio founded by Shinji Mikami (author of the first resident Evil), launched one of the best Xbox exclusive games in 2023: HiFi Rush. An action and rhythm title that was published at the end of January with what is known as shadow dropthis means that it was published without a marketing campaign or prior notice. It quickly became a hit and an instant classic.

At The Game Awards 2023 it won the award for best audio design, it also won the award for its sound section at the Game Developers Choice Awards 2023 and, recently, the British Academy awarded it the BAFTA for best animation. In addition to accumulating dozens of other nominations. HiFi Rush It sold more than expected for a game of this style and was acclaimed by critics and the public, but that is not enough.

Arkane Austin are the developers of Preyone of the best immersive simulators of the last decade. They have also worked on the saga Dishonoredin Deathloop and now they were in charge of Red Fall. If we ignore the latter, Arkane Austin seems like an outstanding, creative studio with a very particular style. Like Arkane Lyon, they have specialized in a very specific genre – action and immersive sims – and have published some of the best games in recent years.

Red Fall it was a mistake. Although, looking at the history of the study, it is easy to imagine that the problems of Red Fall – the game as a service of Xbox vampires – are more the responsibility of executives in suits with graphics and studios under their arms than of the creative team at Arkane Austin. But they are the ones who have paid the price.

Some reactions from colleagues and friends

One of the first to react to the closure of Tango Gameworks and Arkane Austin has been the director of Arkane Lyon, Dinga Bakaba. In his X thread (formerly Twitter) he sends an open letter to industry executives: “This is absolutely terrible. Permission to be human: For any executive reading this, a friendly reminder that video games are a cultural/entertainment industry and that your job as a company is to take care of your artists/entertainers and help them create value.

Bakaba follows up with a clear request: “Don’t engage us in gold rush tactics, don’t use us as front men for miscalculations/blind spots, don’t make our work environments Darwinian jungles. You say we make you proud when we play a good game. Make us proud when times are tough. We know you can, we have seen it before.”

Added to these statements are those of Thomas Mahler, CEO of Moon Studios (the saga Ori and No Rest for the Wicked): “To everyone who has been bugging me for years about why we didn’t let Moon Studios be acquired by a big publisher… That’s why. I lived through the ’90s and saw what happened when EA acquired smaller studios. Anymore”.

The networks have been on fire since the closure of Arkane Austin and Tango Gameworks was announced. Enrique Colinet, from the Spanish studio The Game Kitchen, says: “Imagine tweeting about winning a BAFTA without knowing that your next tweet will announce the closure of your studio.” The director of Alan Wake 2,Kyle Rowley, also assured in X that “We are very inspired by Evil Within and Evil Within 2 when we develop Alan Wake 2. They are both excellent horror games and I am very sorry that we won’t get to see a continuation of the Tango Gameworks franchise. We have open positions at Remedy, so get in touch!”

These are just a few examples, but it only takes a short Google search to see how thousands of reactions accumulate. Many, most, express astonishment and anger. How can studios with so much talent be closed? Others directly question Phil Spencer, the head of Xbox, saying that he should stop talking about how much he likes games if he later decides to treat his workers like that.

An industry in crisis

Another discursive line that is gaining strength is the one that questions large acquisitions. A few months ago, Microsoft closed the purchase of Activision Blizzard for more than 65 billion euros, the largest operation in the history of entertainment. And, a few years ago, Microsoft also bought the publishers Bethesda and ZeniMax. Here we have two of the most famous examples, but it is a general trend in the industry: large publishers buying studios. Electronic Arts started and Microsoft, Sony, Take-Two Interactive and the almost disappeared Embracer Group followed.

At the beginning of May, in fact, it was the turn of Take-Two (owners of Rockstar Games, Grand Theft Auto and Red Dead Redemption). The publisher announced the closure of Roll7, the studio responsible for OlliOlli and RollerDromeand Intercept, developers of Kerbal Space Program 2. The case of Roll7 is especially notable and follows the same line as the controversy with Arkane Austin and Tango Gameworks: RollerDrome won the BAFTA for best British game in 2023 and OlliOlli It was a great critical and public success.

The industry is going through a period of “restructuring,” as suited executives like to call it. A word that attempts to hide more tangible realities such as job instability, mass layoffs, studio closures, zero consideration for workers, and toxic work environments. Art and people do not matter, every decision must obey numbers, Excel tables and what excites shareholders.

These “restructurings” have led to more than 8,500 jobs in 2022, more than 10,000 in 2023 and, in 2024, we have already announced more than 8,000 layoffs. Some great examples are Epic Games with 830 layoffs, Sony with 900 or Microsoft, which laid off 1,900 workers last January. Recently, we have published a couple of articles in which we talk in depth about this topic and analyze the situation.

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They only matter Call of Duty, Grand Theft Auto, fallout and The Elder Scrolls. In the letter that the head of Xbox Game Studios, Matt Booty, has sent to the workers is stated clearly and bluntly: “these changes are based on prioritizing high-impact games and investing in Bethesda’s portfolio of major releases.” [“Así que lo siento mucho para aquellos desarrolladores apasionados y creativos que quieran hacer juegos diferentes, pero aquí no queremos eso”]he might have added.

In the end, it turns out that massive studio purchases have served to standardize the sector and monopolize the market… Who would have thought? No medium-budget games, no inventing and creating… For what? What should be done is more games as a service that are not going anywhere, they are more clones of Roblox and Fortnite and more deliveries of Call of Duty because video games are not an art, they are a technological industry that for years has made shareholders who have probably never held a controller in their hands horny.

Since the pandemic ended, it seems that the video game industry has entered a crisis, but it is a most curious crisis, one in which large companies obtain record profits year after year while laying off thousands of workers and closing hundreds. of studies. According to the consulting firm Newzoo, the video game industry grew by 2.6% in 2023 and reached a turnover of 93.5 billion dollars worldwide.

This situation raises very serious questions: What will happen to Ninja Theory in a month? On May 21, this British study will publish Senua’s Saga: Hellblade 2one of the most anticipated Xbox games in recent years. Will it become a success? Does it matter if it is? Will Ninja Theory close at the end of the year? Do the developers of Hellblade 2 Can they be proud of their work or should they update their resumes now?

And this would be a bit of a summary of the situation. I guess, unfortunately, in a couple of months we will be writing about this topic again. I know I’ve raised more questions than answers, but I don’t have any. And nothing happens because… What is this?! It seems that the Hype Train! This week Nintendo talked about the Switch 2 and in June the season of video game events and conferences begins in the wasteland left by the disappearance of E3. Video games are that: illusion and hype. And, meanwhile, let industry workers update their resumes because, between conferences and announcements, it seems that the bleeding will not end soon.

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Marc Brugat

Albert Garcia

Albert Garcia