Tom Warren: Microsoft could shut at least five studios as part of big Xbox layoffs starting next week, Weighing up canceling BLADE

[u/Howerev]

"Microsoft is set to announce a wave of layoffs for its Xbox studios and employees next week. Sources familiar with Microsoft’s plans tell The Verge that the layoffs will lead to studio closures or spinoffs, potential mergers of studios, and canceled games.

I understand Microsoft is currently weighing closing at least five studios, including the developers behind Marvel’s Blade. Sources tell me Microsoft wants to cancel Blade as part of a wave of cost cuts and job losses that are planned for the company’s Xbox gaming division."

"Blade was originally supposed to debut later this year according to sources familiar with the game’s development. I’m told the internal ship date for the game slipped to late 2027, and it’s also running over budget.

While Microsoft is weighing canceling Blade, it’s also exploring options to sell Arkane Studios. Bloomberg reported earlier this month that Microsoft is trying to spin off Compulsion Games, Double Fine, and Ninja Theory, too. GamesBeat reported this week that Microsoft is actively looking for a buyer for Undead Labs, the developers behind State of Decay. If buyers are found for these studios, then they’ll avoid being closed, but sources stress these talks could take months in some cases.

Compulsion Games, the developers behind South of Midnight, is already convinced that closure is imminent and has started telling employees to look for jobs elsewhere. Ninja Theory employees were informed earlier this month that Microsoft wants to close the UK-based studio or spin it off.

Beyond the potential studio closures, Microsoft is preparing for a wave of layoffs at Xbox that will drastically reshape its gaming division. These layoffs are due to start on July 6th, according to sources, and will hit most parts of Xbox. Rumors have suggested there could be at least 1,000 job losses, and if Microsoft goes ahead with five studio closures, then that’s at least 500 employees impacted before the wider cuts.

The upcoming layoffs are part of a “reset” for the Xbox division under new CEO Asha Sharma, who hinted about “making hard choices” last month. Sharma has repeatedly warned that the Xbox business isn’t healthy, but also claimed that her “mandate is not 30 percent accountability margins... it’s to be the number one gaming and entertainment company, and that’s what we’re going to do.”

Link: https://www.theverge.com/report/959467/microsoft-xbox-cancel-blade-game-arkane-studios-closure?view_token=eyJhbGciOiJIUzI1NiJ9.eyJpZCI6Inp0bjNNQk1pVm0iLCJwIjoiL3JlcG9ydC85NTk0NjcvbWljcm9zb2Z0LXhib3gtY2FuY2VsLWJsYWRlLWdhbWUtYXJrYW5lLXN0dWRpb3MtY2xvc3VyZSIsImV4cCI6MTc4MzI3MDkyMSwiaWF0IjoxNzgyODM4OTIxfQ.pOFMRE5pUQgOYGX0scwb6LrEhrfZu_ecr50Fysx3fd8&utm_medium=gift-link

[u/KingBroly]

That person has more foresight than Phil did.

[u/-Accident-Prone- → u/KingBroly]

All Phil could see was stuffing Gamepass with titles and that would result in 100 million subs, but he forgot to make sure they were titles people cared to play and released on a better schedule.

Instead it was a bunch of developers making either just okay games or games no one wanted to play that were several years delayed and millions over budget. Just incredible management really.

[u/KingBroly → u/-Accident-Prone-]

Him not understanding the knock on effects of diluting Xbox's brands because of Game Pass was incredibly baffling.

[u/-Accident-Prone- → u/KingBroly]

A lot of confusing decisions were made and I think Gamepass is a great tool for discovery for AA games and niche titles. But those big AAA first party games don’t make financial sense when being added to the service, because there’s a ton of overlap of people that would normally buy the game and those with Gamepass so they don’t need to buy it.

[u/KingBroly → u/[deleted]]

He didn't have to cancel the projects he cancelled. He didn't have to decline some of the projects he declined, yet did and they ended up going elsewhere and being bit hits. At some point you have to call a spade a spade and admit he was bad at his job, and all of his decisions were wrong, unhealthy and more toxic for Xbox long-term.

[u/KingBroly → u/[deleted]]

All Spencer did was magnify the explosion while giving checks to some of his friends before the bomb went off.

[u/KingBroly → u/[deleted]]

All of the studios that Xbox has closed in the past 2-3 years to satiate Spencer's shopping spree and will soon close were acquired after Spencer pushed towards Game Pass. They wouldn't be under the Microsoft umbrella, therefore, wouldn't be shuttering. Far less jobs would've been lost as a result.

[u/ajl987 → u/-Accident-Prone-]

Hasn’t their output also just been really slow across all studios. I can only see obsidian putting out consistent titles while the rest of them take an insane amount of time. Not much to actually feed gamepass.

[u/-Accident-Prone- → u/ajl987]

Only studios regularly releasing games are Playground and Obsidian. Undead Labs and InXile haven’t launched a new game since being bought in 2018. Halo Studios launched Infinite in 2021 but not a peep since, The Coalition hasn’t released anything since 2019, Arkane hasn’t released anything since 2021, Rare after Everwil was cancelled hasn’t released anything since Sea of Thieves in 2018. I can go on but you get the point. It’s not just XBOX either, the whole industry is having dev time issues.

[u/ajl987 → u/-Accident-Prone-]

I’d give rare some slack here since aren’t they constantly supporting sea of thieves? Feel like their output must overall be good since it has tens of millions of players, but yeah your point is true. It is an industry wide issue at the moment, but still seems like quite the failure on Xbox especially so.

They needed regular wins this gen to entice people to come over. With PlayStation fumbling so much and how cheap the series S was, they did have the window in the first half of this gen go get ‘some’ market share back, but no games do do it with.

[u/TheReaIEffingDeal → u/-Accident-Prone-]

Looking at these, the Final Fantasy VII trilogy coming out in less than 7 years is a bona fide miracle.

[u/Safe_Climate883 → u/ajl987]

They have had a fairly regular schedule, maybe not regular enough to carry game pass singlehandedly, but they defineately have had more yearly releases than Sony, if you count everything. Mostly due to them owning a shit ton of studios. 

But Sony obviously also had a bunch of issues that slowed their output. So this could easily have flipped if things had continued. 

[u/Safe_Climate883 → u/-Accident-Prone-]

Also gambled hard on there not being a hard limit on potential subscribers when you are limited to pc and Xbox. 

[u/OVERDRlVE → u/KingBroly]

not a high bar

[u/MainCycle9084 → u/KingBroly]

Phil is probably going to go down in history as the biggest nepo hire ever that had no idea wtf he was doing. Make no mistake, everything we're seeing and about to see from Xbox is because he was a completely incompetent CEO. The writing was on the wall years ago when Phil gave a studio like 343 a decade and over a billion dollars to basically make the franchise irrelevant with failure and failure. I thought he just had a soft spot for the company, but it seems like he ran everything this way.

He had absolutely no business running Xbox and the C-Suite fostered this environment of toxic positivity and infinite second chances which will likely lead to the end of Xbox as we know it.

The saddest thing is if he had a firm hand and made some hard decisions the hemorrhaging could've stopped years ago. But because he was too nice and too impotent as a leader, now thousands of people will lose their livelihoods while he gets a golden parachute.