Xbox ended last week with the possibility of it being spun out of Microsoft as a separate entity. As it turns out, that’s not the end of it. Reports point to the possibility of the division closing or selling multiple studios under its wing, as well as the head of Xbox Game Studios Craig Duncan stepping down from his role and leaving the company.
Three Studios May Be Shut Down Or Sold
Bloomberg reports that Montreal-based Compulsion Games, San Francisco-based Double Fine, and Cambridge, England-based Ninja Theory may be on the chopping block. Before that happens though, the studios are noted to be in “active negotiations” to spin off to avoid closure. One option is to buy themselves back from Xbox and go independent, but this will likely be at the cost of many workers at those studios. The report also cites sources who claim that “employees at several studios have been informed of the situation and given permission to seek new work, but were told that the status of the studios is still in flux”.
This follows a memo sent to all Xbox employees by the top two of the division, Asha Sharma and Matt Booty. It starts off well enough, indicating that the first 100 days since the former’s appointment as Xbox CEO, the videogames division had built up goodwill among the playerbase. The next part, indicating what’s in store for the next 100 days, was much more grim. It details that the division has a profit margin of 3% (or accountability margin, per the Microsoft euphemism). It goes on to mention the US$ 20 billion (~RM81.25 billion) on ongoing investments, excluding the Activision Blizzard acquisition of course, and contrasting by a revenue decline by nearly half a billion.
Layoffs May Be Announced Shortly After 30 June
Taking all that into consideration, Asha and Matt claim that Xbox has overextended in its studio acquisitions for its first-party ambitions. As a result, they are not adequately funded “to compete and win”. So it seems ironic that the solution seems to be to cull them, so that resources saved that way can go to “a reliable pipeline of first- and third-party exclusives and new IP”. And that, in turn, leads to the potential studio closures and layoffs, per the industry pattern, bringing us to the situation with the aforementioned studios.
While the memo from leadership to staff does not specifically mention layoffs, Bloomberg cites sources who say that it is expected to happen shortly after 30 June. This will be after the close of Microsoft’s fiscal year, though the exact scale of said layoffs remain unknown. Xbox also plans to significantly cut budgets for some areas of the business, including marketing.
Xbox Game Studios Head Leaves Ahead Of Potential Layoffs
Not too long after the memo was sent out, Xbox Game Studios chief Craig Duncan is reported to be leaving his role, and the company. Duncan oversaw a lot of studios, including the three mentioned above, but they will now report to Chief Content Officer Matt Booty until a replacement is found. According to The Game Business, Xbox Game Studios chief of staff Louise O’Connor will also be leaving alongside.
On another barely related note, in markets where it’s possible to buy an Xbox directly from Microsoft, it looks like the company may be adding a Buy Now, Pay Later (BNPL) option. And within the BNPL options, one can choose to have either Klarna or PayPal be the one to handle your installments. On one hand, you can be charitable and think that it’s nice to have options than not. But on the flip side, you can be cynical and think that this is pre-empting either a price hike, or the introduction of the next-generation console at a much higher price.
(Source: Bloomberg [1], [2], Xbox, The Game Business, Better xCloud)
