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Sources and memos seen by media outlets suggest Microsoft is working on a widespread cost-cutting effort in its gaming division, mirroring issues seen across companies in the market.
Microsoft managed to boost its position in the gaming market last year with the massive acquisition of Activision Blizzard, but it has not been smooth sailing for the company since then.
At the start of 2024, there were reports that Microsoft cut roughly 1,900 jobs at Activision Blizzard and Xbox. It seems those cost-cutting measures have continued, as there are reports that multiple studios within Xbox have been shut down.
Bloomberg reports that voluntary severance agreements are being offered to staff at the gaming studio ZeniMax, while there were reports that the studios Arkane Austin, Tango Gameworks and Alpha Dog Games have also been closed.
Dinga Bakaba, head of Microsoft-owned Arkane Lyon, spoke about the recent wave of studio closures on X and described the situation as “absolutely terrible”.
“To any executive reading this, friendly reminder that video games are an entertainment/cultural industry, and your business as a corporation is to take care of your artists/entertainers and help them create value for you,” Bakaba said.
“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.”
A memo seen by Reuters suggests that the studio closures are part of a broader effort to cut costs across Xbox and reprioritise resources for its portfolio of games and intellectual property.
But Microsoft is not alone in its cost-cutting measures in the gaming sector, as it appears various companies in the industry are suffering from a market slowdown.
Last month, Take-Two Interactive Software, the Rockstar Games parent company, revealed plans to fire around 5pc of its workforce and scrap several titles in development. In February, Sony Interactive Entertainment laid off roughly 900 staff from its global PlayStation workforce.
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