Earlier this month, we got our first look at Senua, the next installment in the Hellblade series, during the Xbox Games Showcase. Of course, the audience watching this couldn’t have anticipated that only a short time after, we would get hit with three potential closures in the Xbox ecosystem, including Compulsion Games, Double Fine, and Hellblade developer Ninja Theory. And yet that is exactly what happened.
New CEO at Xbox, Asha Sharma, sent out a memo, suggesting a “rest was coming to the company, a signal that everybody took to mean there would be lay-offs and potential studio closures. The memo was published only days after what most had considered a fairly successful Xbox Games Showcase. In this memo, it was stated that Microsoft’s Gaming Business has a 3% accountability margin, which has been taken to mean profit margin, which is down year-over-year. It was stated that this needed to change.
We learned about these potential closures only this week, shortly after Xbox Games Studios boss Craig Duncan had stepped down. One of the biggest questions lingering from this shift was the announcement of Senua during the Xbox Games Showcase, which we now have reporting, thanks to Game File, that Microsoft had planned to close the studio before this point. Game File’s Stephen Totila has also suggested that Ninja Theory was most likely unaware of these plans, with Microsoft thinking that “the promise of a newly announced game would help draw investor interest in the studio.”
All three of these studios have yet to close as of yet. It is reported that they are currently in negotiations with Microsoft in hopes of a potential buyout to avoid closure, though most likely an infusion of capital would be needed for any of these studios to go independent. Even if this were to work, signifigant layoffs would likely be unavoidable. The only saving grace to this is that Hi-Fi Rush developer Tango Gameworks was saved from closure previously, so the same thing is possible here.
This does leave Senua up in the air. The idea of enticing investors with a new entry in the IP could work, but Microsoft is famous for holding onto IPs when parting ways with an IP. The closure of Lionshead had multiple parties interested, though deals consistently fell through when Microsoft would not agree to part with the Fable IP. This is also true of their flagship Halo series, as well as Gears of War. Tango Gameworks, however, was specifically acquired by Krafton for the purpose of developing Hi-Fi Rush 2, which they are now working on, so Microsoft might have softened on this policy. That said, The Evil Within, another Tango Gameworks title, remains owned by Microsoft.
Xbox under Asha Sharma seems prepped to throw more support into their biggest IPs at this point. Microsoft is reportedly planning to speed up development on The Elder Scrolls VI, a new Fallout title, and a new Halo Game. Microsoft’s financial year ends on June 30th, which is when it is expected these layoffs will be accounted for.
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