Xbox: Microsoft is reportedly planning further cuts, management is wary after the purchase of Activision

The closure of Bethesda’s four studios yesterday may not be the last maneuver imposed by Microsoft to adjust the budget numbers of Xbox. According to sources from Bloomberg and The Verge, the company is considering it further cuts within its gaming division.

In particular, Bloomberg states that the closure of Tango Gameworks, Arkane Austin and two other Bethesda studios which took place yesterday is part of a broader maneuver to reduce costs which unfortunately has not yet reached its conclusion.

It seems that Microsoft is proposing agreements for the consensual termination of the contract to producers, testers and other employees of ZeniMax, the company headed by Bethesda, while other members of the organization would have been told that further staff cuts are coming within the company.

The Verge instead states that there are rumors concerning layoffs within the core Xbox Game Studios which includes teams such as 343 Industries and The Coalition.

The acquisition of Activision has increased attention on Xbox’s costs

Returning to Bloomberg, it seems that this staff cut maneuver began due to the massive acquisition of Activision Blizzard finalized last year, which put management on notice and initiated a more scrupulous examination of the costs incurred by the Xbox division.

Unfortunately, layoffs and closures are news that are only surprising up to a certain point considering the current situation of the videogame sector and the approximately 20,000 employees who have lost their jobs in the last two years. In the case of Microsoft, 1,900 employees were also laid off in February, many from Activision Blizzard.

While we don’t know the Xbox division’s current costs and profits, we know from last quarter’s data that revenue increased 51% year over year. However, this is mainly due to the contribution of Activision Blizzard, acquired for 67 billion dollars last year. Otherwise, according to analyst Daniel Ahmad, there would have even been a decline of 5%, with “zero growth in software and services and a sharp decline in hardware revenues”.