The sudden closure of several video-game studios at Microsoft Corp.'s Xbox division was the result of a widespread cost-cutting initiative that still isn't finished.
This week, Xbox began offering voluntary severance agreements to producers, quality assurance testers and other staff at ZeniMax, which it purchased in 2020 for $7.5 billion, according to people familiar with the company's plans.
Others across the Xbox organization have been told that more cuts are on the way. A spokesperson for Xbox declined to comment.
Employees were shocked by the unexpected shuttering Tuesday of three Xbox subsidiaries and the absorption of a fourth. The closures included Tokyo-based Tango Gameworks, which last year released the critically acclaimed action game Hi-Fi Rush.
Tango was in the process of pitching a sequel, said the people, who asked not to be identified discussing nonpublic information.During a town hall with ZeniMax staff on Wednesday morning, Xbox president Matt Booty praised Hi-Fi Rush but did not specify why the company had shut down the development studio behind it, according to three people who were in attendance.Speaking about the closures more broadly, Booty said that the company's studios had been spread too thin — like “peanut butter on bread” — and that leaders across the division had felt understaffed.