Arkane Austin and Tango Gameworks shut down by Microsoft

[Elttharion]

TLDR key bits of info

> COD on Game Pass being debated
> Game Pass Ultimate price increase considered
> Hellblade 2 on PS5 (under discussion)
> Core Xbox Game Studios facing cutbacks

Inside Microsoft’s Xbox turmoil

Just hours after learning that Microsoft was shutting down a number of game studios this week, Dinga Bakaba, head of Microsoft-owned Arkane Lyon, decided to let the company know how he felt about the decision — right in public. “Don’t throw us into gold fever gambits, don’t use us as strawmen for miscalculations / blind spots, don’t make our work environments Darwinist jungles,” Bakaba wrote on X.

Bakaba, whose studio wasn’t impacted by the layoffs this week, said his message was aimed at “any executive reading this,” including the Xbox leaders behind the latest wave of layoffs. It was a rare public display of criticism, but sources at Microsoft tell me it reflects a growing discontent and fear among Xbox employees about what comes next.

Microsoft’s latest round of layoffs shocked both employees and fans. Arkane Austin’s big Redfall update was on the way with a new offline mode, and the DLC was being worked on just hours before the studio was closed.

The shutdown of Tango Gameworks, the studio behind Hi-Fi Rush, has surprised people the most. The game was considered an Xbox hit, winning praise among critics and making its way to PS5 earlier this year. Even Microsoft was happy with Hi-Fi Rush.

“Hi-Fi Rush was a break out hit for us and our players in all key measurements and expectations,” said Aaron Greenberg, head of Xbox games marketing, just a year ago. “We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release.”

Greenberg and Xbox chief Phil Spencer both visited Tango Gameworks in September, playing games with the team and posing for group photos. Now, the studio is the latest victim of layoffs that have rocked the game industry over the past 18 months.

Three Bethesda studios — Arkane Austin, Tango Gameworks, and Alpha Dog Games — are being shuttered, and the team at Roundhouse Studios is moving into ZeniMax Online Studios. The studio closures come less than six months after Microsoft laid off 1,900 Activision Blizzard and Xbox employees and just months after Sony closed some of its own game studios and laid off around 900 employees. The depressing list of layoffs at game studios continues to grow on a weekly basis, with GTA 6 and BioShock publisher Take-Two laying off hundreds of employees last month and cutting projects.

Inside Xbox, there’s now uncertainty about what the future holds and questions over Microsoft’s gaming strategy. While Microsoft is looking toward a more PC-like future for its Xbox console, the company continues to battle a slowdown in Game Pass subscribers, lackluster Xbox console sales, and game launch delays.

A combination of these events led to four previously Xbox-exclusive games launching on the PS5 recently and some landing on the Nintendo Switch. I reported earlier this year that Microsoft had been considering bringing Gears of War to rival consoles, and we’re still waiting to see if a long-rumored Gears of War collection is ever confirmed. Either way, I’m still expecting to see more Xbox games arrive on PS5 and Switch, and it will be interesting to see if the Xbox game showcase in June includes any new announcements for rival hardware.

Microsoft has also had internal debates about whether to put new releases of Call of Duty into Game Pass. I understand this is a debate that has been ongoing internally for quite some time, with concerns from some that the revenue that Call of Duty typically generates for Activision Blizzard will be undermined by Game Pass.

I’m told that Microsoft has also considered increasing the price of Game Pass Ultimate again. These are only considerations, so a final decision could mean we still see a future Call of Duty release appear in most versions of Game Pass. The debate internally reflects the fact Microsoft’s Xbox strategy has shifted from just delivering its games exclusively into Game Pass to considering bringing more Xbox games to multiple platforms.

In yesterday’s memo from Matt Booty, head of Xbox Game Studios, there was a hint of a reprioritization for Bethesda teams that we may well see elsewhere with Xbox. “These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games,” said Booty, before noting that Xbox is doubling down on Bethesda franchises that are “best positioned for success.”

Did Hi-Fi Rush really not meet that bar? Now, there will be inevitable questions about what other Xbox games aren’t “best positioned for success.”

Xbox now has a strong lineup of games planned for 2024, with Senua’s Saga: Hellblade II set to debut in a matter of weeks on May 21st. I understand Hellblade II is another game that Microsoft has been considering for the PS5. If that ever happens, at this point, it’s not clear if even that would be considered a success.

Xbox employees are now bracing for what’s next, as it seems unlikely that we’ve seen the last of Microsoft’s gaming layoffs and cutbacks. There are whispers among employees that core Xbox Game Studios are set for cutbacks next. Last month, Microsoft reported that Xbox hardware revenue was down by 31 percent year over year and an obvious admission that this was “driven by lower volume of consoles sold.” Last year, Microsoft reported a 30 percent drop in Xbox hardware revenue, blaming “increased console supply” from the prior year in 2022. Sony PS5 sales have also slowed, but not like Microsoft’s.

While Xbox hardware sales are a cause for concern, Microsoft has been beating the Xbox Game Pass drum in recent years, telling us, “The [Xbox] business isn’t how many consoles you sell.” But Microsoft’s latest earnings showed that Xbox content and services, which includes Game Pass, would have only been up a single percent without Activision Blizzard, and overall gaming revenue would have declined without this giant acquisition. Microsoft CFO Amy Hood is now expecting Xbox hardware revenues to decline again next quarter.

Microsoft’s gaming business isn’t growing without Activision Blizzard right now, and how that plays out throughout 2024 will be key for all Xbox studios. Microsoft has a busy fall ahead for Xbox, with Bethesda currently targeting September for its Starfield expansion Shattered Space, Activision planning the next Call of Duty for late October, and Avowed and Microsoft Flight Simulator 2024 likely to follow in November. To top that all off, Indiana Jones is currently planned for December.

If Microsoft’s game studios can deliver all of these games on time, then there will be plenty to play on Xbox this holiday, with a new Gears of War title expected to be announced during the Xbox summer showcase alongside some release dates for other anticipated Xbox games.

Microsoft will be banking on some new game announcements lifting the Doom around Xbox. But the company’s gaming strategy still looks unclear — and the challenges run deeper than a handful of holiday launches.

Source: The Verge

 

[911 Jumper]

Lol, people think Ninja Theory is gonna be next. With the recent rumour that Perfect Dark is not in a good way (apparently they still haven't decided if it should be a first-person or a third-person game), it wouldn't surprise me if PD's dev studio, The Initiative, is on the list.

 

[Wirdschowerdn]

The cold sweating must continue.

 

[Infinitron]

For many years I've believed that the mass market casualization of video games would eventually hit its natural limit and grind to a halt due to demographic decline in the developed world. The gaming industry would simply run out of significant new audiences to induct into the hobby. It feels like we're seeing of the impact of that now.

 

[Tyranicon]

For many years I've believed that the mass market casualization of gaming would eventually hit its natural limit and grind to a halt due to demographic decline in the developed world. The gaming industry would simply run out of significant new audiences to induct into the hobby. It feels like we're seeing of the impact of that now.

There's a lot of factors but honestly one of these is just a huge, cancerous degree of incompetence in the AAA space. All across the board, and now we're seeing the consequences of that.

They've been hiring people that have no business in the games industry.

 

[Elttharion]

Lol, people think Ninja Theory is gonna be next. With the recent rumour that Perfect Dark is not in a good way (apparently they still haven't decided if it should be a first-person or a third-person game), it wouldn't surprise me if PD's dev studio, The Initiative, is on the list.

 

[Infinitron]

For many years I've believed that the mass market casualization of gaming would eventually hit its natural limit and grind to a halt due to demographic decline in the developed world. The gaming industry would simply run out of significant new audiences to induct into the hobby. It feels like we're seeing of the impact of that now.

There's a lot of factors but honestly one of these is just a huge, cancerous degree of incompetence in the AAA space. All across the board, and now we're seeing the consequences of that.

They've been hiring people that have no business in the games industry.

I'm thinking specifically about Game Pass here and its failure to grow.

Individual games can sell in greater or fewer copies, but the concept of a subscription-based gaming service relies on the strength of a general population of dedicated Gamers with a capital G. Particularly young gamers, who are the ones with enough free time to justify the expense of a "Netflix for video games". But if there aren't enough kids anymore...

I think Baldur's Gate 3 is emblematic of this trend. It was very successful, but does a game like BG3 introduce any new gamers to the hobby? Probably relatively few. It's a highly refined title designed to maximally soak an existing aging population of gamers, and it did so very well.

 

[Tyranicon]

I'm thinking specifically about Game Pass here and its failure to grow.

What good games have come out on it recently?

I think that's probably your answer, rather than global demographics of young gamers.

Young people don't want to play lame games.

 

[lycanwarrior]

I had played Hi-fi Rush a month ago and I enjoyed it greatly. My favourite Tango Gameworks game. And I see it's their final one now because Microsoft being Microsoft. Again. And...ugh...Hi-Fi Rush was supossed to be a success. Or it was a big lie or it's just incompetence (I would'nt be surprised).

Tango was pitching a sequel to Hi-Fi Rush to Microsoft top brass:

https://www.theverge.com/2024/5/8/2..., according to a,praised, award-winning game.

 

[BrainMuncher]

Microsoft's strategy over the last few years makes no sense to me. They seem to be following the loss leader strategy with the cheap service, with the hopes that one day it will be profitable when they fill it full of ads and jack up the price. Like twitter, netflix or spotify, but those companies used it as a way to snowball to investment billions. Well MS is already the biggest corp on the planet, so that can't be the strategy. The other reason to go loss leader is to eliminate competitors that can't withstand a period of unprofitability and then buy them out when they fold. But that requires some sort of interchangeable service or commodity, which isn't the case for games which are quite varied. You can't satisfy demand for counter-strike with pentiment. All that really leaves is that they want to phase out buying individual games altogether, so you must subscribe if you want to play any of their games. But that would require having actually good games that people can't resist, or some sort of cult like devotion or fashion appeal a la apple. MS has neither of those things.

That leads to the other part of the strategy, buying up established developers. This makes no sense from an investing perspective, venture capitalists don't go around giving money to bloated corps that have been in decline for 10+ years. Some investors might buy a company for cheap so they can gut it and flip it for a profit but that's not MS's plan. If they were trying to invest and grow a real gaming division they would start buying up tiny EA titles from steam and helping develop them.

So it would seem that the buyouts are an attempt to satisfy the "having actually good games that people can't resist" part. But they've chosen the laziest route of simply overpaying for what they think are prestigous IPs without any idea how to translate them into actually good games. I guess they thought they could shortcut the process of spending many years slowly building up a library of talent and desirable product. So they are just burning money on studios only to close them having gained nothing in the process.

Can anyone paint me a narrative where this isn't completely crazy behaviour?

 

[Assisted Living Godzilla]

Lol, people think Ninja Theory is gonna be next. With the recent rumour that Perfect Dark is not in a good way (apparently they still haven't decided if it should be a first-person or a third-person game), it wouldn't surprise me if PD's dev studio, The Initiative, is on the list.

Ninja Theory seems like a weird one to mean. More like people just pulling a name out of their ass that they know rather than really thinking about it. Ninja Theory was a studio Microsoft specifically went after, and they’ve seemingly given them a whole lot of leeway with Hellblade 2.

Now if I was one of these studios like 343 Industries, The Coalition, or The Initiative I might be a little worried after the Activation buyout gave Microsoft a huge influx of developers that do first and third person shooters.

 

[DemonKing]

It sold very well, but does a game like BG3 introduce any new gamers to the hobby?

Given the normie chicks in my office talking about their multiple playthroughs over lunch I'd say yes (all on console of course).

So they are just burning money on studios only to close them having gained nothing in the process.

Yeah you can buy all the IPs you want but in the end you still have to produce good games. Kotick must be laughing that he got $70billion for a company that was running on empty creatively.

Fun read: https://culturedvultures.com/biggest-xbox-mistakes/

 

[Cyberarmy]

Microsoft says it needs games like Hi-Fi Rush the day after killing its studio​

 

[taxalot]

Well, Microsoft says it also needs people to upgrade the new Windows after killing Windows.

 

[Assisted Living Godzilla]

It sold very well, but does a game like BG3 introduce any new gamers to the hobby?

Given the normie chicks in my office talking about their multiple playthroughs over lunch I'd say yes (all on console of course).

So they are just burning money on studios only to close them having gained nothing in the process.

Yeah you can buy all the IPs you want but in the end you still have to produce good games. Kotick must be laughing that he got $70billion for a company that was running on empty creatively.

Fun read: https://culturedvultures.com/biggest-xbox-mistakes/

Call of Duty prints money at this point. Warzone pulls in billions every year, and when an Infinity Ward main title comes out they make billions more on top of their Warzone Billions.

King also prints money too.

Just skimming through that article, it seems fairly stupid. Like the HD-DVD bit. Backing HD-DVD wasn’t a mistake. The mistake was how they backed it, which was half-heartedly and basically not at all. If the Xbox 360, the main console of that generation, came packed with HD-DVD instead of it being an add-on pretty much nobody got; then HD-DVD would’ve beat out Blu-ray and Microsoft would’ve delivered a blow to Sony. But Microsoft didn’t put the HD-DVD drive in the system, so HD-DVD ended up losing to the Sony made and controlled Blu-ray format that Microsoft now has to pay them to use.

The biggest mistake Microsoft ever made with Xbox was how they handled the launch of the Xbox One, completely flushing away all the lead the gained over Sony during the 360 era. But their second biggest mistake was not buying Sega when they had the chance to buy pre Sammy buyout bankruptcy Sega that still had all their studios. That elusive Japanese audience they always wanted an never got, they could’ve had that with they bought Sega. Their third biggest mistake (which Sony also made) was telling the guy that invented the Wii motion controls to fuck off. Their fourth biggest mistake was letting Resident Evil 4 go by pissing off Capcom so much during their meeting that the Capcom people walked out on them. Their fifth biggest mistake was kind of doing the RE4 thing again when Capcom came to them offering Street Fighter 5 exclusively to Microsoft for the lifespan of the Xbox One, and Microsoft telling them they didn’t need Street Fighter because they were making their own fighting game, (Killer Instinct) which ended up meaning Street Fighter 5 went to Sony and the PS4 ended up becoming the de facto place to play all fighting games. Fighting games aren’t the biggest genre anymore (unless your Smash) but letting a whole genre go to your competition was a pretty fucking stupid move that just ended up being one more thing that hurt them during the PS4 and Xbox One era.

But buying Activision Blizzard? That’s probably one of the few good moves they’ve made. The only mistake there is they probably should’ve done it back in the 360 days when they could’ve got them for way fucking less money, and they could’ve insured any future consoles after the 360 would be the place to play Call of Duty games.

Actually, maybe Microsoft’s biggest mistake was letting Epic, Unreal Engine, and Fortnite get away from them.

 

[Assisted Living Godzilla]

Microsoft says it needs games like Hi-Fi Rush the day after killing its studio​

They probably mean they need games like Hi-Fi Rush that people also play.

 

[Wirdschowerdn]

For many years I've believed that the mass market casualization of gaming would eventually hit its natural limit and grind to a halt due to demographic decline in the developed world. The gaming industry would simply run out of significant new audiences to induct into the hobby. It feels like we're seeing of the impact of that now.

There's a lot of factors but honestly one of these is just a huge, cancerous degree of incompetence in the AAA space. All across the board, and now we're seeing the consequences of that.

They've been hiring people that have no business in the games industry.

Is it really incompetence, or is the humongous effort of making modern blockbuster games simply outstripping the human ability to stay creatively coherent? I doubt that even extremely competent game devs like John Carmack, Will Wright or Demis Hassabis would survive, let alone thrive, today, in making accomplished Triple-A games.

 

[Rahdulan]

Microsoft says it needs games like Hi-Fi Rush the day after killing its studio​

Far be it from me to defend Microsoft, but this is at least in part still dealing with Bethesda's baggage. I have no doubt Microsoft will produce their own fuckups in no time.

 

[IHaveHugeNick]

Bethesda didn't have a big hit for a long time and all the recent flops have been in the works long before the aquisition. Billy G's mistake is buying companies that are creatively spent.

 

[Yoomazir]

Lots of people are having a major hard on dunking on MS right now, screaming doom and gloom all across the rooftops.
I'm actually seeing this in a more brighter perspective, MS seems to be finally getting their shit together after a decade of circle jerking.

 

[IHaveHugeNick]

All the people screaming from the rooftoops would have a hard time naming one good game that came out of all these studios in the past 10 years.

 

[Roguey]

This was a ridiculous amount of growth in such a short amount of time and a culling was inevitable.

Young people don't want to play lame games.

Lame by their definition. The kind of games that alphas play are weird and not to my tastes but this is a tale as old as time.

Microsoft says it needs games like Hi-Fi Rush the day after killing its studio​

They probably mean they need games like Hi-Fi Rush that people also play.

If it didn't do as well as they would have liked, MS brought it on themselves by dropping it without any pre-release announcement or marketing.

 

[DemonKing]

The only mistake there is they probably should’ve done it back in the 360 days when they could’ve got them for way fucking less money, and they could’ve insured any future consoles after the 360 would be the place to play Call of Duty games.

COD was popular then but there were no micro transactions to milk the suckers with, so to imagine it becoming the behemoth it is today is drawing a long bow particularly as there was a lot more mainstream competition back then (Quake 3, Unreal Tournament, Medal of Honor, Team Fortress, Battlefield etc) and MS already had Halo in house which was wildly successful on Xbox Live.

 

[Saint_Proverbius]

I think that's probably your answer, rather than global demographics of young gamers.

Young people don't want to play lame games.

This is more correct. There's also a gigantic amount of titles out there, and let's face the facts here, very few of them are anything new or interesting. Call of Duty still makes money, but how many of Call of Duty games are there? How many Call of Duty like games are there? In terms of just consoles, how many titles were there for the SNES? Then the GameCube? Then the Wii? And then the Switch? Just in the number of titles per generation of consoles, it's a nearly exponential growth in terms of the amount of titles there are competing with one another - and how many of those are just like something else you might already have?

It's not that there might be less gamers out there, it's just that there's a Hell of a lot of the illusion of choice for their money. Meanwhile, publishers are spending tens to hundreds of millions of dollars to develop titles and having to raise the prices of those titles, which is furthering the problem they're going to have in the future.

 

[Assisted Living Godzilla]

The only mistake there is they probably should’ve done it back in the 360 days when they could’ve got them for way fucking less money, and they could’ve insured any future consoles after the 360 would be the place to play Call of Duty games.

COD was popular then but there were no micro transactions to milk the suckers with, so to imagine it becoming the behemoth it is today is drawing a long bow particularly there was a lot more mainstream competition back then (Quake 3, Unreal Tournament, Medal of Honor, Team Fortress, Battlefield etc) and MS already had Halo in house which was wildly successful on Xbox Live.

You don’t have to imagine Call of Duty being where it was today back in the 360 era, once Call of Duty 4: Modern Warfare came out in 2007 it took Halo’s spot as top dog first person shooter. 2007 is also the same year Microsoft gave up their controlling interest in Bungie, so they need someone new anyways. The smart move back then would’ve been to ensure Call of Duty stayed with them by buying them. The 360 was the de facto system everyone played CoD on, but that could’ve changed at any moment; and it did change with the release of the PS4 and Xbox One. But if Microsoft owned Call of Duty going into the Xbox One the Xbox One wouldn’t have ended up in the place it did even if Microsoft completely fucked up by letting Don Mattrick say stupid shit.

Your timeline is also all wrong. I said they should’ve bought Activision (or Activision Blizzard) back in the 360 days. Team Fortress, Unreal Tournament, and Quake 3 Arena are all ‘99... that’s before the original Xbox was even out. The 360 came out in 2005, and was basically done by 2015.