Microsoft has announced the closure of several game studios under the Bethesda umbrella, including Tango Gameworks, the company behind Hi-Fi Rush, and Arkane Austin, the developer of Redfall. This decision aims to shift Microsoft’s focus toward its “priority games.” The tech giant is also shutting down Alpha Dog Games, creators of the mobile game Mighty Doom, while Roundhouse Studios, which contributed to Redfall, will be integrated into ZeniMax Online Studios. The news, first reported by IGN, was subsequently confirmed by the affected studios on the social media platform X.
According to an internal communication shared by Xbox Game Studios head Matt Booty, these closures are expected to result in “significant layoffs,” though Microsoft has yet to disclose the exact number of employees who will be impacted.
Arkane Studios, which consists of the teams from Arkane Lyon and Arkane Austin, announced on X that the latter will cease operations along with development on Redfall. The studio confirmed that while there will be no further updates for the vampire shooting game, its servers will remain active for current players.
Redfall, released in May 2023, faced harsh criticism upon its launch, leading Microsoft Gaming CEO Phil Spencer to take “full responsibility” for its underwhelming performance. Despite this, he had expressed support for Arkane Austin and emphasized Xbox’s commitment to enhancing the game’s future.
In contrast, Hi-Fi Rush has seen success, described by Microsoft as a “breakout hit” across key performance indicators. Last year, Aaron Greenberg, Vice President of Xbox Games Marketing, stated that Microsoft was “thrilled” with the reception of Tango Gameworks’ rhythm-based action title. Nevertheless, the studio confirmed its impending closure via a post on X, thanking players and noting that its previous titles, including The Evil Within series and Ghostwire: Tokyo, will remain accessible on all supported platforms.
The internal email from Booty highlighted the need to prioritize “high-impact titles” and continued investment in blockbuster games from Bethesda. The communication noted a realignment of teams and indicated that some employees would be leaving the company.
“These difficult decisions are designed to create capacity for greater investment in other areas of our portfolio and to focus on our priority games,” the email stated.
While Microsoft has yet to issue an official statement regarding the closures, the company is scheduled to present an Xbox Games Showcase on June 9, which will showcase its upcoming slate of exclusive and third-party games.
This latest round of studio closures follows a trend of layoffs permeating the gaming industry this year, affecting major studios such as Riot Games, Eidos-Montréal, Sony, and Electronic Arts, among others. Previously, Microsoft made headlines in January when it laid off 1,900 employees at newly acquired Activision Blizzard and Xbox, marking an eight percent reduction in its gaming division.
