May 22, 2024

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Xbox chief Sarah Bond responds to Bethesda Studio cutbacks, cites lack of industry growth and need to manage business ‘during this moment of transition’

Xbox chief Sarah Bond responds to Bethesda Studio cutbacks, cites lack of industry growth and need to manage business ‘during this moment of transition’

Xbox chief Sarah Bond responded to questions about Microsoft’s decision to shut down a number of beloved studios this week, insisting it was about ensuring the Xbox business remained healthy in the long term during what she called “this moment of transition.”

Microsoft shocked the gaming world when it announced the closure of Redfall and Prey developer Arkane Austin, Hi-Fi Rush, The Evil Inside developer Tango Gameworks, and more in devastating cutbacks targeting Bethesda owner ZeniMax.

Microsoft bought ZeniMax Media, the parent company of developers like Bethesda, Arkane, id Software, and more, in 2021 for $7.5 billion. Since then, Call of Duty maker Activision has bought Blizzard for $69 billion.

In an email to employees sent by Matt Botti, head of Xbox Game Studios, Microsoft blamed the cuts on a “reprioritization of titles and resources.” In the email, first reported by IGN, Booty said: “We are making these difficult decisions to create the ability to further invest in other parts of our portfolio and focus on our priority games.”

Microsoft faced widespread criticism from the development community and Xbox fans following the move, with many noting that Hi-Fi Rush was a critically acclaimed release and, according to one Xbox executive, a very successful release.

talk in Interview with Bloomberg’s Dina Bass at Bloomberg Tech in San FranciscoXbox chief Sarah Bond was first asked about the current lack of growth in the video game industry — a troubling factor that Xbox chief Phil Spencer recently pointed out when asked for an explanation for Microsoft’s decision to cut 1,900 employees from its gaming business.

“You know, in the last year or so in video games, the industry has been pretty flat,” Bond replied. “And even in 2023, we’ve seen some massive releases and massively groundbreaking games. But growth did not follow all that. A lot of that has to do with our need to bring in new players and make games more accessible. But all of this was happening at the same time as the cost associated with making these wonderfully cool toys, and the time it takes to make them, was rising.

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“And so, a lot of our focus as Xbox is on how we do things to help the industry overall, while also ensuring that our brand, and everything we do, exists during this moment of transition.”

“It’s always very difficult when you have to make decisions like that.

Bond was then asked directly about the decision to close ZeniMax Studios this week. In its response, it pointed to the industry’s current failure to meaningfully grow its audience, and a desire to ensure Xbox survives this “transition.”

“You know, it’s always very difficult when you have to make decisions like that,” Bond said. “I’ll go back to what I was saying about the industry. And when we look at those fundamental trends, we feel a deep responsibility to make sure that the games we make, the hardware we build, and the services we provide are there for the moments, even when the industry isn’t growing and when it’s in a period of transition. And the news that The announcements we made earlier this week are a result of that, and our commitment to making sure the business is healthy for the long term.

“But with that said, our commitment to having our own studios and working with partners to get games big and small, we are a platform where you can play GTA, but you can also play Palworld, where you can play Call of Duty and you can also play Pentiment, and that doesn’t change. And frankly, our commitment Towards Bethesda and the role it plays is part of Xbox and everything we do.

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“It’s been really cool. I don’t know if you’ve gotten a chance to check it out. The Fallout TV show came out on Amazon and it was great to see people fall in love with that universe, but also what it’s done for the games themselves and people coming back and exploring everything In it there’s some other great stuff coming from our studios later this year Indiana Jones and The Great Circle I was a huge Indy fan growing up and it looks like you two were on it, so you should check that out.

“But right now for us and our teams, our focus is on the people affected and doing everything we can to help them through this difficult transition.”

Image credit: Bloomberg Live/YouTube.
Image credit: Bloomberg Live/YouTube.

Bond was then asked specifically about the closure of Tango Gameworks in the context of the success of Hi-Fi Rush, and how the studio behind an award-winning and seemingly commercially successful title could be shut down just over a year after release.

Here’s Bond’s response:

“You know, one of the things I really love about making games is that it’s a creative art form. This means that the status and successes of each studio’s game are also really unique. There’s no one-size-fits-all for us. And so we look To every studio, every game team, we look at a variety of factors when we’re faced with making decisions and trade-offs like this but it all comes back to our long-term commitment to the games we make, the hardware we build, the services, and making sure we set ourselves up to be able to. Keep these promises.

“We look at every studio, every game team, and we look at a whole range of factors when we’re faced with making decisions and trade-offs like this.

Bond’s answer has already gone viral here for its failure to properly address the issue at hand. As IGN reported, Xbox leadership held a town hall meeting with ZeniMax employees on Wednesday, May 8, during which they attempted to answer key questions about the decision to close Bethesda Studios. IGN has learned that Booty told employees that Arkane Austin’s closure was not related to Redfall’s disastrous failure last year, but rather about the future prospects of the studio. Bloomberg’s Jason Schreier reported ZeniMax was under pressure to make significant cuts, and chose Tango Gameworks and Arkane Austin because they were going to pitch projects that would have required increased investment, rather than studios already working on greenlit games. An attendee at the meeting told IGN that the suggestion was that since these studios were currently promoting new games, they had the weakest legs to stand on when it came to choosing who would be cut.

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At the city council meeting, Booty reiterated that Hi-Fi Rush had been a success, but according to one attendee, employees were told that the factors for that success had changed in the year since, and so the studio’s prospects had declined. As reported, Tango Gameworks has pitched Hi-Fi Rush 2 as a follow-up project. IGN understands that the Hi-Fi Rush 2 demo was rejected in part because it was deemed too expensive.

All of this supports concern about the overall health of Xbox’s business and the gaming industry more broadly. Microsoft, currently worth more than $3 trillion, faces a decline in year-over-year revenue for its gaming business when Activision is taken out of the equation, as well as stagnant subscriber growth for Game Pass. Sales of Xbox consoles have collapsed at a time of rising development costs. Add this to the reported increased internal scrutiny of Microsoft’s gaming business following the Activision Blizzard acquisition, and you have a recipe for disaster.

Image credit: Bloomberg Live/YouTube.

Wesley is IGN’s UK news editor. You can find him on Twitter at @wyp100. You can contact Wesley at [email protected] or confidentially at [email protected].