Microsoft closes Arkane Austin, Tango Gameworks and Alpha Dog Games

Microsoft is making many high-profile cuts at the ZeniMax branch of Xbox Game Studios. Today the company emailed employees to let them know that it is closing Redfall developer Arkane Austin, Hi-Fi Rush developer Tango Gameworks, and Mighty Doom developer Alpha Dog Games.

Wisconson-area developer Roundhouse Studios (which has served as a support studio to other arms of ZeniMax) will also be absorbed into The Elder Scrolls Online developer ZeniMax Online Studios.

Word of these closures comes from IGN, which reviewed an email sent by Xbox Game Studios boss Matt Booty to staff early this morning. Tango Gameworks has confirmed on Twitter that it is ceasing operations.

"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," Booty wrote in his email, adding that in order to "double down" on these franchises, Xbox Game Studios needed to "look across the business to identify the opportunities that are best positioned for success."

An Xbox spokesperson confirmed the legitimacy of Booty's email, but declined to provide any further comment.

Not all employees across the shuttered studios will be losing their jobs. Some employees at Arkane Austin will be offered positions elsewhere in Xbox Game Studios. Booty said impacted employees were notified by email early this morning.

Xbox employees are paying the price for poor decisions made by studio leaders

As with Microsoft's January layoffs of over 1,900 workers, many across the recently-acquired Activision Blizzard, the impacted employees are paying the price for business decisions made by people way above their paygrade.

Microsoft's Xbox Game Pass-focused strategy doesn't appear to be earning the returns investors had hoped for, meaning titles like Redfall and Hi-Fi Rush may not be providing as strong a return on investment as investors would have liked. Since its launch, growth on the service has not appeared to line up with Microsoft's projections.

Some market analysis has also indicated subscription services like Game Pass are eating into sales of games released on the service.

It's not unfair to say that shuttered studios Arkane Austin and Tango Gameworks were struggling with recent output—but that's not the fault of the people losing their jobs today. Reporting on the development of Redfall indicated that studio management's zeal for making a live service game led to high turnover and precarious investment in a genre the studio did not have prior design or technical experience in.

An admission of mismanagement even came from head of Xbox Phil Spencer, who indicated his team should have intervened sooner after Microsoft finished its acquisition of ZeniMax.

And while Tango Gameworks' Hi-Fi Rush launched to huge critical praise, attracted three million players, and helped springboard Xbox Game Studios' 2024 multiplatform expansion, the studio's most recently-released games Tokyo Ghostwire and Evil Within 2 don't appear to have been major commercial successes (though both have become cult classics).

However it should be said Xbox seemed plenty happy with the performance of Hi-Fi Rush last year when vice president of games marketing Aaron Greenberg tweeted that the game was a "breakout hit" and that the company "couldn't be happier with Tango Gameworks."

Meanwhile, Roundhouse Studios' absorption into ZeniMax Online Studios concludes the strange saga of a company that was rapidly formed out of the ashes of Prey developer Human Head Studios.

While the commercial struggles these studios faced are surely a key reason they were picked for closure, those who made poor decisions leading to this moment are not liable to face consequences for their ill-advised ideas.

As with many of the game industry layoffs we've seen since the beginning of 2023, it's workers who pay the price for the whims of executives whose eyes have grown bigger than their plates.

Update: This story has been updated to correctly update the name of Alpha Dog Games. A previous version referred to it as Alpha Dog Studios.