Microsoft has shut down several Bethesda-owned game studios, including Hi-Fi Rush developer Tango Gameworks and Redfall maker Arkane Austin, in order to focus on its “priority games.” The Xbox parent is also shutting down Alpha Dog Games, creators of the mobile game Mighty Doom, while Roundhouse Studios, which also contributed to the development of Redfall, will be absorbed by ZeniMax Online Studios. The development, which was initially reported by IGN, was confirmed by the affected studios Tango Gameworks and Arkane in separate posts on Tuesday X afternoon. The closures come months after Microsoft announced layoffs at Xbox and Activision Blizzard earlier this year, making 1,900 roles redundant.
IGN's report, citing an internal email to employees sent by Xbox Game Studios head Matt Booty, said the closures would result in “significant redundancies,” but Microsoft has yet to confirm the number of roles affected.
Bethesda-owned Arkane Studios, which consisted of teams Arkane Lyon and Arkane Austin, confirmed to X that the latter would be shutting down and leaving all development on its latest game, Redfall. The vampire shooter will not receive further updates, but its servers will remain online for active players, the studio said.
Redfall was released in May 2023 to largely negative reviews, prompting Microsoft Gaming CEO Phil Spencer to take “full responsibility” for the game's disastrous launch. Spencer, however, had defended developer Arkane Austin at the time and promised that Xbox would continue to work on improving the game.
While Redfall fell short of expectations, Hi-Fi Rush was, in Microsoft's words, a “success” across “all key metrics and expectations.” Aaron Greenberg, Vice President of Game Marketing at Xbox, he had said last year that Microsoft “couldn't be happier” with Tango Gameworks' rhythm-based action title. However, the studio did not survive the latest round of cuts. Tango Gameworks confirmed on Tuesday X that the studio would be shutting down, thanking players and announcing that its previous games, which include The Evil Within series and Ghostwire: Tokyo, would be available and playable on all supported platforms.
The internal Booty email cited in the report said the closures would help prioritize “high-impact titles” and continue investing in Bethesda's “hit games.” Without putting a figure on the resulting layoffs, the email said: “This reprioritization of titles and resources means some teams will realign with others and some of our colleagues will leave us.
“We are making these difficult decisions to build capacity to increase investment in other parts of our portfolio and focus on our priority plays,” the email added.
Microsoft has yet to make an official announcement about the cuts, but the company will hold an Xbox Games Showcase event on June 9, where it will reveal its next lineup of exclusive and third-party titles.
The latest round of closures follows a string of layoffs this year at major studios including Riot Games, Eidos-Montréal, Sony, Electronic Arts, Embracer Group, Take-Two Interactive and more. In January, Microsoft laid off 1,900 employees at newly acquired Activision Blizzard and Xbox, an eight percent reduction in its overall gaming division.
