Opinion: Microsoft’s latest studio closures are a worrying portent

Sad news, fans of good games: three studios that were very proficient at making that exact thing are no more. Xbox has announced that as part of its latest round of cuts, three Bethesda studios will be closed.

Redfall developer Arkane Austin, headed by legendary Deus Ex developer Harvey Smith, along with Hi Fi Rush developer Tango Gameworks and Mighty Doom creators Alpha Dog are all affected.

Another studio, Roundhouse Games, will be merged with ZeniMax to support Elder Scrolls Online’s development.

That means Redfall won’t be getting any further post-launch support, and Mighty Doom’s servers will be shut down on 7 August.

Sad news for everyone working at those studios of course, and for the players who enjoyed their releases. It’s also a grim indication of Microsoft’s strategy going forwards, particularly when you digest the company’s rationale behind the closures.

In an email sent by head of Xbox Game Studios Matt Booty, subsequently shared to IGN, the reason for the closures is "grounded in prioritising high-impact titles and further investing in Bethesda's portfolio of blockbuster games and beloved worlds".

"To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success," the email continues.

"This reprioritisation of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us."

Putting more money towards the blockbuster releases by reallocating funds away from everything else is not an encouraging tactic to hear from a company who’s been on a shopping spree for brilliant game studios in recent years.

A studio who closed an historic acquisition in 2023 and now owns Call of Duty and Overwatch publisher Activision-Blizzard.

Because here’s the thing: you don’t know what’s going to be the next massive, industry changing, earth-shattering blockbuster title until it releases. Starfield, the biggest release under Microsoft’s stewardship last year, performed well financially and made an estimated $657 million in 2023. But at the top of that list is Hogwarts Legacy, which reportedly sold 256 per cent more than publisher Warner expected.

Let’s consider the games that actually changed things in recent years. PUBG started as a mod within a mod, an obscure one-person project for DayZ that first released in 2013 and then utterly changed multiplayer gaming when it blew up in 2017. Nobody predicted it.

Well, nobody except Epic, perhaps. Having just watched its new PvE survival game Fortnite welcomed by players like a stifled fart escaping into a busy train, the company decided to pivot and release its own battle royale-style mode for the game. The rest is baffling, Carlton-dancing, record-breaking history.

Nobody foresaw the rise of mid-budget development projects Fall Guys or Among Us during the 2020 lockdowns. Not even Among Us developer Innersloth, who had to cancel work on a sequel to return to supporting their suddenly stratospherically popular game.

How does Microsoft know where the next game-changers are coming from, then? Surely not by production budgets alone. Any company that owns Minecraft knows that “high-impact titles” can come from anywhere, and they don’t need the GDP of a small country to produce.

As proficient around a lap of Forza Motorsport’s track roster as we are, we concede that we probably don’t have as much nous as Phil Spencer or Matt Booty when it comes to running the Xbox empire.

They know something we don’t – at least, let’s hope so, for everyone’s sake. Now it’s time for Microsoft to show us that plan. To reassure us that the art of making innovative games that transcend the medium and change the industry doesn’t just come down to pouring the most money into a given project. Spencer’s team needs to show us where the next double-A and indie gems are coming from, as well as the next massive franchise release. Because owning as big a slice of the games industry pie as Microsoft now does comes with a responsibility to uphold creativity and innovation beyond triple-A games.