'We look at a whole variety of factors when we're faced with making decisions and trade-offs like that.'
Xbox president Sarah Bond claims Microsoft's decision to shutter key studios such as Arkane Austin and Tango Gameworks is about ensuring the company's video game business is "healthy for the long term."
Bond was addressing the closures during an interview at Bloomberg Live and described the decision to wind down major studios as "extraordinarily hard." In justifying the move, she claimed Microsoft has a "deep responsibility" to ensure its games, devices, and services can survive moments of transition within the game industry. "The news we announced earlier this week is an outcome of that," she said.
Bond said the industry has been "flat" over the last year despite a lot of "tremendous releases" in 2023. "The growth didn't follow all of that. And a lot of that's related to our need to bring new players in and make gaming more accessible," she continued.
"But all of that has been happening at the same time that the cost associated with making these beautiful triple-A blockbuster games is going up—and the time it takes to make them is going up."
In spite of the closures, Bond said Microsoft is "committed" to supporting its own studios and working with external partners to bring "large and small" titles to Xbox. "You know, we're a platform where you can play Grand Theft Auto but you can also play Palworld. Where you can play Call of Duty and can also play Pentiment. That doesn't change," she said.
Bond added Microsoft is focused on helping those impacted by the closures through the "hard transition." Yet, when asked how developers can thrive within the Xbox Game Studios family when successful studios like Tango Gameworks—which was inundated with praise and awards for its work on Hi-Fi Rush—are being put to the sword, Bond struggled to provide a concrete answer.
"One of the things I really love about the games industry, is it's a creative art form. It means that the situation, and what success is for each game and studio, is also really unique. There's no one size fits all for us," she said.
"We look at each studio and each game team, and we look at a whole variety of factors when we're faced with making decisions and trade-offs like that. But it all comes back to our long-term commitment to the games we create, the devices we build, and the services—and ensuring we're setting ourselves up to deliver on those promises."
Microsoft announced 1,900 layoffs within Xbox at the beginning of the year following its colossal $68.7 billion merger with Activision Blizzard. Those cuts resulted in redundancies at Bethesda, Blizzard, Sledgehammer Games, Infinity Ward, and more. Studio closures within ZeniMax followed, with Microsoft shuttering Arkane Austin, Tango Gameworks, and Alpha Dog Games earlier this week.
Leaked emails and audio from town hall meetings revealed Xbox feels it's currently spread too thin, like "peanut butter on bread." Despite spending billions expanding its first-party roster over the past few years, Xbox Game Studios boss Matt Booty reportedly claimed the company needs to "double down" on "high-impact" titles.
ZeniMax studio head Jill Braff reportedly feels the same way, and claimed ZeniMax has struggled to support "nine studios all across the world with a lean central team with an ever-growing plate of things to do."
Microsoft recently delivered $15.6 billion in revenue within its More Personal Computing segment, which houses Xbox, but the company's overall gaming revenue was largely bolstered by the Activision Blizzard merger. Xbox hardware revenue fell by 31 percent year-on-year due to waning console sales.
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