Xbox reportedly looking to make more cuts in future

Reports have alleged new cost-cutting measures will be introduced by Microsoft in the near future.
microsoft business headquarters layoffs ftc

In early May, news broke that Microsoft would be shutting down four Bethesda studios, seemingly to cut costs and streamline overall management: Arkane Austin, Tango Gameworks, Alpha Dog Games, and Roundhouse Games. Now, Bloomberg reporter Jason Schreier has alleged the cuts aren’t over, and that other Xbox studios may face similar cuts in the weeks and months ahead.

Writing of the recent layoffs and studio closures, Schreier claimed, “The sudden closure of several video-game studios at Microsoft Corp’s Xbox division was the result of a widespread cost-cutting initiative that still isn’t finished.” Per this report, there is currently greater scrutiny being placed on Xbox business decisions, likely as a result of costly studio acquisitions, and drops in hardware revenue.

This scrutiny was not cited as a reason for the closure of the four Bethesda studios – instead, that was reportedly attributed to management being stretched thin “like peanut butter on bread” – but it’s fair to assume it may have contributed, in some manner.

“It’s hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do,” head of ZeniMax Studios Jill Braff reportedly said in a recent town hall meeting. “I think we were about to topple over.”

Read: Hi-Fi Rush 2, new Dishonored reportedly pitched prior to Arkane Austin and Tango Gameworks closure

This perception of instability may extend to other Xbox studios, which are now reportedly facing higher expectations and the pressures of cost-cutting. Beyond Bloomberg, Polygon has also reported studios feeling this pressure, with “whispers among employee” flagging potential cuts to other Xbox Game Studios next.

Polygon has also flagged a potential price rise for Xbox Game Pass in future, to contend with Xbox content and services revenue that “would have only been up a single percent” without the purchase of Activision Blizzard. Firm plans for a price rise have not been put into place yet, but Polygon has flagged this may be incoming, in the attempt to boost revenue.

There have also reportedly been discussions about the value of putting Call of Duty on Xbox Game Pass, and whether it would be more valuable to boost Xbox Game Pass subscriptions, or sell the game outright.

For now, it appears Microsoft and Xbox are deciding next steps, with internal debates around multiple factors reportedly continuing. No further cuts for Xbox studios have been announced as yet, but given the sudden closures of Arkane Austin, Tango Gameworks, and Alpha Dog Games, we’re unlikely to see a public, formal announcement before insider news reports break.

Leah J. Williams is a gaming and entertainment journalist who's spent years writing about the games industry, her love for The Sims 2 on Nintendo DS and every piece of weird history she knows. You can find her tweeting @legenette most days.