Microsoft's Xbox division has decided to shut down four Bethesda Softworks studios, the most prominent being Arkane Austin and Tango Gameworks.
Arkane Austin was essentially one and the same with Arkane Lyon up until Dishonored 2, which was the first game to be developed specifically by the French office. Austin then delivered Prey, which attracted controversy ahead of its release because it appropriated the name of the 2006 cult game by Human Head Studios and also forced a name change on an indie game. On the other hand, Prey was an absolutely fantastic game that received high critical praise upon release, albeit without a big commercial success (though that's always been a trademark of Arkane).
However, Arkane Austin famously blundered the release of Redfall. Xbox Game Studios head Matt Booty and Bethesda's Pete Hines had promised the studio would improve the game over time, but despite a few patches, owners of the Bite Back Edition never received the two additional heroes that were supposed to be released as part of the included Redfall Hero Pass. Now, it is likely they never will, though Microsoft has promised 'make-good offers' for those who own the DLC.
As for Tango Gameworks, its closure is arguably even more baffling. The Japanese studio founded in 2010 by industry legend Shinji Mikami released acclaimed games like the two The Evil Within survival horror titles, Ghostwire: Tokyo and, most recently, Hi-Fi Rush, which became something of a surprise hit among hardcore gamers. Granted, none of these games ever set the sales charts on fire, but this was also the only Japanese studio owned by Microsoft, and it's now gone.
The other two studios are Alpha Dog Games (also known as ZeniMax Halifax), the mobile developer behind the game The Mighty Doom, and Roundhouse Studios. The latter studio was actually born out of Human Head Studios in late 2019. According to a letter penned by Xbox Game Studios head Matt Booty (via IGN), Roundhouse has been acting in a support role for a while and will be absorbed by ZeniMax Online to work on The Elder Scrolls Online.
In the letter, Booty admits this isn't ideal but adds that this consolidation will allow Xbox to 'invest more deeply in our portfolio of games and new IP'. As a reminder, Microsoft acquired Bethesda for around $7.5 billion a few years ago. Earlier this year, Microsoft ordered massive layoffs of around 1900 employees across its gaming division, mostly aimed at the most recent acquisition, Activision Blizzard.
While flourishing in other areas, Microsoft still seeks to optimize its gaming business after massive investments to acquire various studios. A couple of months ago, Phil Spencer stressed the industry's need to find new customers as game budgets are constantly on the rise. As part of this mandate, a few games (including Hi-Fi Rush) have been ported to PlayStation and/or Nintendo consoles, and more could follow suit.
The latest financial report from the end of April shows that Activision Blizzard provided a solid boost to Microsoft's gaming business, but Xbox hardware sales continue to decline.
