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Microsoft Announces DEVASTATING Cuts at Bethesda

Microsoft has announced the closure of several Bethesda studios, leading to widespread layoffs within the company. The affected studios include Arkane Austin, known for "Redfall," and Tango Gameworks, the team behind "Hi-Fi Rush" and "The Evil Within." Additionally, Alpha Dog Studios will shut down, and Roundhouse Games will merge into ZeniMax Online Studios.

The closures are part of Microsoft's strategic realignment to prioritize high-impact titles and bolster its investment in Bethesda's major franchises. Per IGN, Matt Booty, head of Xbox Game Studios, communicated these changes in an email to staff, emphasizing the company's focus on building and expanding its portfolio of games.

Per IGN, the verified email from Matt read as follows:

Today I’m sharing changes we are making to our Bethesda and ZeniMax teams. These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades.
To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.
Here are the changes going into effect:
Arkane Austin – This studio will close with some members of the team joining other studios to work on projects across Bethesda. Arkane Austin has a history of making impactful and innovative games and it is a pedigree that everyone should be proud of. Redfall’s previous update will be its last as we end all development on the game. The game and its servers will remain online for players to enjoy and we will provide make-good offers to players who purchased the Hero DLC.
Alpha Dog Studios – This studio will also close. We appreciate the team’s creativity in bringing Doom to new players. Mighty Doom will be sunset on August 7 and we will be turning off the ability for players to make any purchases in the game.
Tango Gameworks – Tango Gameworks will also close. We are thankful for their contributions to Bethesda and players around the world. Hi-Fi Rush will continue to be available to players on the platforms it is today.
Roundhouse Games – The team at Roundhouse Games will be joining ZeniMax Online Studios (ZOS). Roundhouse has played a key role in many of our recent game launches and bringing them into ZOS to work on The Elder Scrolls Online will mean we can do even more to grow the world that millions of players call home.
With this consolidation of our Bethesda studio teams, so that we can invest more deeply in our portfolio of games and new IP, a small number of roles across select Bethesda publishing and corporate teams will also be eliminated.
Those whose roles will be impacted will be notified today, and we ask that you please treat your departing colleagues with respect and compassion. We will provide our full support to those who are impacted in today’s notifications and through their transitions, including severance benefits informed by local laws.
These changes are not a reflection of the creativity and skill of the talented individuals at these teams or the risks they took to try new things. I acknowledge that these changes are also disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market. We are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.
Bethesda remains one of the key pillars of Xbox with a strong portfolio of amazing games and thriving communities. As we look to the future, there is an impressive line-up of games on the horizon. In 2024 alone we have Starfield Shattered Space, Fallout 76 Skyline Valley, Indiana Jones and The Great Circle, and The Elder Scrolls Online’s Golden Road. As we align our plans and resources to best set ourselves up for success in this complex and changing industry, our teams across Arkane Lyon, Bethesda Game Studios, id Software, MachineGames, ZeniMax Online Studios and the Bethesda publishing and corporate teams will be well-positioned to build new IP, explore new game concepts, and expand on our existing franchises.
- Matt

This shift comes as Microsoft aims to adapt to the evolving demands of the video game industry and ensure the sustainability of its business.

The discontinuation of "Redfall" is particularly notable, as Microsoft will cease all development on the game, though it will remain accessible online. The game was an abject failure upon release, so this one isn't too much of a shock - compared to some others. The company has pledged to offer compensation to those who purchased the Hero DLC from Redfall, recognizing the need to maintain trust with their customers... If that's even possible at this point.

Tango Gameworks closure is particularly notable, as The Evil Within and HiFi Rush were breakout hits, and their reward for years of hard work creating them was be shut down by Microsoft.

Aaron Greenberg, VP of Xbox Games Marketing, even stated on Twitter last month how well Hi-Fi rush was for them:

Despite the closures, other Bethesda entities like Arkane Lyon and id Software will continue their operations, working on upcoming projects like Marvel's "Blade" and continuing successful franchises such as "Doom."

This restructuring reflects broader industry trends, where layoffs have become increasingly common amid financial pressures and strategic pivots. The video game sector has faced a challenging period, with significant layoffs continuing into 2024, highlighting the volatile nature of the industry. But truth be told, this reflects a much more concerning trend. Microsoft closed at an all-time high recently thanks to progress and hype over Artificial Intelligence, and pairing that with this news... has to make you wonder.

Bethesda supposedly remains a vital component of Xbox's strategy, with a strong lineup of anticipated games slated for release in 2024, including "Starfield Shattered Space" and "The Elder Scrolls Online’s Golden Road." These decisions hope to show Microsoft's commitment to its gaming division in other ways, and its intent to navigate through the complexities of the market by focusing on core strengths and key titles. If it will be successful, remains to be seen.


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