The highly rumored Xbox reset under new CEO Asha Sharma has begun. As part of Microsoft laying off nearly 5,000 total employees, 3,200 of those roles come from the Xbox division among various teams throughout the next year. 1,600 will happen today. In total, Xbox Game Studios will be losing five development teams, with four happening imminently.
South of Midnight developer Compulsion Games and Psychonauts/Kiln makers Double Fine will be going fully independent. Hellblade creator Ninja Theory and State of Decay studio Undead Labs have been sold to new publishers who will be announced after those deals are fully finished. Arkane, best known for Dishonored and Deathloop, will also be let go, though it’s unknown what its final fate is as of yet.
Xbox Lays Off over 3,000 Employees
This is, without a doubt, one of the largest single reductions in workforce we have ever seen for a single video game company yet. If you are looking for a silver lining, none of the studios mentioned above seem to be fully closed as of yet, which was heavily rumored to be in talks if Xbox didn’t like the sales talks. Sharma says that these decisions were largely made because of how awful Xbox’s financial situation is compared to other publishers, citing that Xbox makes 3-10 times less than Nintendo, PlayStation, and other companies.
For Compulsion and Double Fine, their studio management will take over ownership and maintain all control of their IP, as well as have “runway for their next games,” which seems to imply a little more financial backing for the immediate future. It is unknown how many employees these two studios will maintain as they return to the indie scene.
In Undead Labs and Ninja Theory’s case, new publishers have acquired both, but we don’t know who as of yet, as those deals are being finished. When that happens, the newly announced Senua game and State of Decay 3 will be fully published by the new owners, and seemingly, those franchises will be wholly owned by them as well, giving more room for them to release on PlayStation and Nintendo in the future, though we don’t know how their Game Pass situation will be handled as of yet. According to Game File, State of Decay 3 is no longer obligated to release on Game Pass.
Finally, we don’t quite yet understand Arkane’s future. Due to French law, Sharma says the team is undergoing “required consultation with its Works Council to review potential strategic options,” so they could potentially still be closed or sold off, and Blade’s future remains unknown.
What Else is Happening?
So the above studios leaving Xbox Game Studios will have big ripples on the Xbox Game Studios portfolio. We don’t know what this all means for the future of these games on Game Pass, so there’s still a lot in the air. We do know that every part of Xbox is being affected today, though. Activision, Blizzard, Bethesda/Zenimax, King, Mojang, and Xbox Game Studios as a whole will also have employees let go, though no games are being canceled today. Minecraft developer Mojang and Candy Crush creators King will directly report to Sharma starting today to manage their platforms.
Throughout all of the reductions, Sharma says that management under Xbox will be heavily simplified. As the overall player count for their games reduced, the team and management sizes kept growing, hopefully to make decision-making easier.
At the end of all this. Sharma says that all these moves are made to make Xbox bigger, not smaller. A lot of that future will almost surely focus on the big franchises Xbox owns today, with less of a focus on taking chances on new things for the foreseeable future.
