In a recent article, Bloomberg takes a look at what's currently happening in the Xbox division. According to sources, the purchase of Activision Blizzard led to the Xbox division becoming the focus of executives. To save costs and optimize profits, Microsoft could make more layoffs.
This week Microsoft announced the closure from a total of four studios from the publisher Bethesda Softworks, which was taken over in 2021. While Arkane Austin (“Redfall”), Tango Gameworks (“Hi-Fi Rush”) and Alpha Dog are completely closed, Roundhouse Studios is being merged into ZeniMax Online.
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In a detailed article, Bloomberg sheds light on the current events at Microsoft and the Xbox division. As internal sources are said to have confirmed to Bloomberg, part of the workforce was just as surprised by the studio closures as the gaming community.
The employees are said to have reacted to the announcement with corresponding shock. According to Bloomberg, internal sources say further austerity measures and cuts are to be expected. It remained unclear whether the cuts meant layoffs or further studio closures.
Microsoft should pay more attention to the Xbox division
As Bloomberg pointed out, the current development could be attributed to some extent to the 2023 acquisition of Activision Blizzard. The deal worth almost 69 billion US dollars is said to have led to Microsoft's management team now taking a closer look at the Xbox division and its balance sheet.
In order to strengthen Xbox Game Pass, Xbox has acquired numerous studios in recent years. These include the two publishers Bethesda Softworks (7.5 billion US dollars) and Activision Blizzard. At the same time, Microsoft promised to support small and creative projects such as “Hi-Fi Rush” or “Pentiment” as part of the takeovers.
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“It didn’t matter if a game sold tens of millions of copies as long as it helped strengthen the Game Pass library,” Bloomberg said. However, it recently became apparent that the Xbox Game Pass was not developing as desired and clearly missed the forecast growth. This in turn could lead to the Xbox division's internal focus shifting to established brands and big blockbusters in the future.
To make matters worse, it was basically just the takeover of Activision Blizzard, which was the Xbox division's last one helped to grow. Industry analyst Daniel Ahmad concluded in an analysis that without the acquisition of Activision Blizzard, Xbox division sales would have declined by about 5 percent year-on-year.
What's next for the Xbox division?
But it wasn't just the lack of growth in Xbox Game Pass that could have led to a rethink at Microsoft. The declining hardware sales of the Xbox Series
A development that, according to internal sources, suggests that with the mass layoffs At the beginning of 2024 and the closure of the four Bethesda studios this week it is not yet done. It remains to be seen to what extent the statements made by the sources cited correspond to the facts. When contacted by Bloomberg, a Microsoft spokesman declined to comment.
But even without an official statement, it has become clear in recent months that the Xbox division is changing. So Microsoft didn't just publish four Xbox titles for other consoles like the PS5. In addition, insiders pointed out that the ports are from “Sea of Thieves”. was a kind of key test.
Assuming the appropriate success, according to unconfirmed reports further porting of Xbox titles. Despite the current development, Microsoft has recently emphasized several times that it is working on Xbox hardware wanting to hold on.
However, what this will ultimately look like remains to be seen.
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