In a move that sent shockwaves through the gaming industry, Microsoft made the decision to close several studios within its Bethesda family, including Arkane Austin (developers of Redfall), Tango Gameworks (creators of Hi-Fi Rush), and Alpha Dog Games (Mighty Doom). The move was part of a larger restructuring effort, with Roundhouse Studios being absorbed into ZeniMax Online Studios (The Elder Scrolls Online) and staff cuts implemented across publishing and corporate teams.
The Context: A Shifting Gaming Landscape
Microsoft's sweeping changes came on the heels of a period of immense growth for the gaming industry. However, signs of a slowdown were emerging. Following massive layoffs across the industry in 2023, many companies were re-evaluating their strategies and resource allocation. Microsoft was no exception.
The goal, as stated by Xbox Game Studios head Matt Booty, was to prioritize investment in the company's biggest games and beloved franchises. The emphasis was on ensuring the long-term sustainability of those projects and fostering future innovation to maintain a competitive edge.
This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.
- Matt Booty, head of Xbox Game Studios, Microsoft
In an email to staff sent by Matt Booty, head of Xbox Game Studios, Microsoft blamed the cuts on a “reprioritization of titles and resources”. The email, verified by IGN, is below:
Today I’m sharing changes we are making to our Bethesda and ZeniMax teams. These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades.
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. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.
Here are the changes going into effect:
Arkane Austin – This studio will close with some members of the team joining other studios to work on projects across Bethesda. Arkane Austin has a history of making impactful and innovative games and it is a pedigree that everyone should be proud of. Redfall’s previous update will be its last as we end all development on the game. The game and its servers will remain online for players to enjoy and we will provide make-good offers to players who purchased the Hero DLC.
Alpha Dog Studios – This studio will also close. We appreciate the team’s creativity in bringing Doom to new players. Mighty Doom will be sunset on August 7 and we will be turning off the ability for players to make any purchases in the game.
Tango Gameworks – Tango Gameworks will also close. We are thankful for their contributions to Bethesda and players around the world. Hi-Fi Rush will continue to be available to players on the platforms it is today.
Roundhouse Games – The team at Roundhouse Games will be joining ZeniMax Online Studios (ZOS). Roundhouse has played a key role in many of our recent game launches and bringing them into ZOS to work on The Elder Scrolls Online will mean we can do even more to grow the world that millions of players call home.
With this consolidation of our Bethesda studio teams, so that we can invest more deeply in our portfolio of games and new IP, a small number of roles across select Bethesda publishing and corporate teams will also be eliminated.
Those whose roles will be impacted will be notified today, and we ask that you please treat your departing colleagues with respect and compassion. We will provide our full support to those who are impacted in today’s notifications and through their transitions, including severance benefits informed by local laws.
These changes are not a reflection of the creativity and skill of the talented individuals at these teams or the risks they took to try new things. I acknowledge that these changes are also disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market. We are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.
Bethesda remains one of the key pillars of Xbox with a strong portfolio of amazing games and thriving communities. As we look to the future, there is an impressive line-up of games on the horizon. In 2024 alone we have Starfield Shattered Space, Fallout 76 Skyline Valley, Indiana Jones and The Great Circle, and The Elder Scrolls Online’s Golden Road. As we align our plans and resources to best set ourselves up for success in this complex and changing industry, our teams across Arkane Lyon, Bethesda Game Studios, id Software, MachineGames, ZeniMax Online Studios and the Bethesda publishing and corporate teams will be well-positioned to build new IP, explore new game concepts, and expand on our existing franchises.
-Matt
The Impact on Developers
This decision had a devastating impact on numerous studios and talented developers across the gaming industry. The closures and layoffs were met with shock and disappointment, particularly given the success of titles like Hi-Fi Rush. The move sparked discussions about the cyclical, volatile nature of the video game industry and the importance of supporting developers.
Dinga Bakaba, the chief of Arkane Lyon, expressed his dismay, highlighting the need for corporations to support their creative artists rather than viewing them as resources to be exploited. He further emphasized the importance of fostering healthy, supportive work environments rather than those fueled by a relentless pursuit of profit.
Consequences for Key Projects
For fans of Arkane Austin's work, the announcement meant no further updates or content for Redfall. This included the previously planned offline mode and character DLC. However, Microsoft committed to keeping the game's servers online and provided refunds for the Hero DLC package.
Meanwhile, Tango Gameworks' surprise hit Hi-Fi Rush lived on, available on platforms like PlayStation 5, due to Microsoft's broader multi-platform focus at the time.
The Big Picture: Microsoft's Strategy
While these closures might initially seem like a setback, Microsoft's strategy points to a focus on quality over quantity. By consolidating resources, they can streamline development and devote more attention to their biggest franchises. This approach aims to ensure the longevity of titles like Fallout, The Elder Scrolls, Starfield, and Indiana Jones.
The absorption of Roundhouse Games into ZeniMax Online Studios also suggests a greater emphasis on The Elder Scrolls Online, signifying a long-term investment in this successful MMO.
Lessons Learned
The events of 2024 provide valuable lessons for the gaming industry:
- Even titans can change course: No company is immune to shifting trends and economic pressures. Restructuring might be essential for sustainability, regardless of past successes.
- Communication is vital: Transparent communication with both employees and the public is key. While news of studio closures or changes can be difficult, clarity helps everyone involved to better handle the transition.
- Human aspect matters: The people behind the games should be a priority. Measures such as severance and transition support lessen the impact of layoffs.
- The industry is unpredictable: Studios and developers need to be prepared for volatility, even in good times. Maintaining financial safety nets and diversifying skills is crucial.
The Future: A Cautionary Tale
While the loss of talented studios is undoubtedly a blow, Microsoft's decisions signal a worrying trend within the industry. The pursuit of streamlined development and unwavering focus on blockbuster franchises could stifle creativity and innovation. Smaller studios, known for taking risks and experimenting with unique concepts, often find themselves losing ground in this model.
The industry has always been characterized by passion and the pursuit of artistic expression. As financial stakes rise, creative voices might be sidelined in favor of more predictable, profit-driven endeavors. This restructuring could usher in an era of homogenization, where truly distinct gaming experiences are harder to find.
Ultimately, the true impact of Microsoft's 2024 restructuring remains to be seen. While the company might achieve greater financial stability, the long-term cost might be the loss of that special spark that has long made the gaming industry so captivating.
