Xbox President Sarah Bond addressed concerns surrounding Microsoft Corp's (NASDAQ:MSFT) recent closure of four studios.
Bond stressed the decision's necessity for the long-term health of the Xbox business amidst what she calls "this moment of transition."
Microsoft's acquisition of ZeniMax Media included prominent developers like Bethesda and Arkane for $7.5 billion in 2021. It also purchased Activision Blizzard for $69 billion. The gaming community was subsequently shocked by the announcement of studio closures, including Arkane Austin and Tango Gameworks.
Bond, in an interview with Bloomberg, discussed stagnant growth in the gaming industry despite significant game releases. She also mentioned the increasing costs and time required for developing blockbuster games.
Bond expressed the need to navigate industry transitions while upholding Xbox's brand and offerings. She highlighted their dedication to providing diverse gaming experiences, citing titles such as Call of Duty and Pentiment.
Xbox President: 'No One Size Fits All;
"It's always extraordinarily hard 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 looked at those fundamental trends, we feel a deep responsibility to ensure that the games we make, the devices we build, the services that we offer are there through moments, even when the industry isn't growing and when you're through a time of transition."
She added: "The news we announced earlier this week is an outcome of that, and our commitment to make sure that the business is healthy for the long term."
Regarding the closure of Tango Gameworks despite the apparent success of Hi-Fi Rush, Bond underscored the uniqueness of each studio's situation and the multitude of factors considered in such decisions.
"There's no one size fits all to it for us. So we look at each studio, each game team, and we look at a whole variety of factors when we're faced with making decisions and tradeoffs like that," Xbox's president noted. "But it all comes back to our long term commitment to the games we create, the devices we build, the services, and ensuring that we're setting ourselves up to be able to deliver on those promises."
However, her response drew criticism for not directly addressing the concerns raised.
IGN reported that studio closures were driven by a need to reprioritize resources and focus on key projects. Despite acknowledging the success of Hi-Fi Rush, Xbox leadership indicated a shift in the studio's prospects, influencing the decision-making process. Tango Gameworks' pitch for Hi-Fi Rush 2 was reportedly rejected due to cost concerns.
Microsoft's gaming business faces challenges such as declining revenue excluding Activision. It also suffers from stagnant Game Pass subscriber growth, and decreased console sales plus rising development costs. Internal scrutiny following the Activision Blizzard acquisition adds further pressure.
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