In an effort to reprioritize resources, Microsoft closes three Bethesda studios, prompting widespread layoffs and sparking industry backlash

Microsoft has announced the closure of three of Bethesda’s development studios, including Arkane Austin, Tango Gameworks, and Alpha Dog Games. These actions have left many workers facing layoffs, prompting an industry-wide reaction, notably from Arkane Lyon’s director, Dinga Bakaba, who called the decision “absolutely terrible.”

In 2020, Microsoft acquired ZeniMax Media, Bethesda’s parent company, for $7.5 billion. While the acquisition raised expectations for innovative content, it has seen mixed results. Arkane Austin’s vampire-themed Redfall, released to widespread disappointment, was one of the most significant underperformers, while Tango Gameworks’ rhythm-based game, Hi-Fi Rush, earned critical acclaim but struggled commercially. Meanwhile, Alpha Dog Games’ mobile title, Mighty Doom, found niche success but couldn’t prevent its closure.

This decision isn’t isolated. In January, Microsoft cut nearly 2,000 jobs across its Xbox business and has since reached a valuation of over $3 trillion. The current closures further signal strategic restructuring. Roundhouse Studios will be absorbed into ZeniMax Online Studios, likely to support The Elder Scrolls Online, a move that may also involve layoffs.

Arkane Studios had split into two developers: Arkane Austin, now affected by the closure, and Arkane Lyon, currently working on Marvel’s Blade. Arkane Lyon is safe, but Bakaba, co-director of Deathloop, voiced his frustration with the decision, condemning it as a “gut stab.” He urged executives to respect affected workers, pointing out that the video game industry should care for its creatives, rather than making them scapegoats for poor decisions.

Reports indicate that the development of Redfall will cease, and Microsoft promises to offer compensation for buyers of its Hero DLC. Support for Mighty Doom and other mobile games from Alpha Dog Games will also end. These closures and reallocations, according to an internal email from Xbox Game Studios head Matt Booty, stem from “reprioritization of titles and resources.”

Booty emphasized a desire to focus on Bethesda’s “high-impact titles,” but that this shift means “a few teams will be realigned, and some colleagues will be leaving.” The closures have triggered industry-wide concern. The gaming industry has lost over 10,000 jobs in the past year, raising questions about how major publishers plan to create diverse content without a strong and secure workforce.

Analysis: 

Microsoft’s studio closures highlight the volatile relationship between corporate consolidation and creativity. From a business perspective, the move allows Microsoft to streamline its resources and focus on proven franchises, protecting its bottom line. However, this consolidation results in the loss of creative potential and job stability.

Political Perspective:

The political implications are profound. Massive corporations like Microsoft operate beyond national borders, with regulatory scrutiny often lagging. The consolidation impacts regions differently, with layoffs mainly affecting Western developers while sparing Japanese studios, showcasing global inequalities.

Sociological Perspective:

These layoffs erode trust between creators and management. Bakaba’s outcry reflects a growing disenchantment among developers, who feel undervalued despite their pivotal role in entertainment. The disconnect between executive decisions and employee welfare could discourage new talent.

Economic Perspective: 

Economically, these closures illustrate a desire to maximize profitability through tried-and-tested franchises. However, the trend stifles innovation, with new titles overshadowed by reboots and sequels. Additionally, job losses could diminish the spending power of a significant consumer base.

Local Perspective:

Local economies reliant on these studios will feel the brunt of these closures. Reduced disposable income and unemployment in these areas could negatively impact other businesses, affecting the housing, dining, and retail sectors.

Marginalized Communities Perspective:

Job losses disproportionately affect marginalized groups due to systemic barriers in the tech and gaming industry. Losing these positions limits their presence, preventing diverse voices from contributing to future game narratives.